Document:

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                        COMPANY: WORLD OF SCIENCE, INC.
                                 TICKER: WOSI
                                 EXCHANGE: NMS

                                FORM-TYPE: 10-K
                          Exhibit 10.8 Loan Agreement

                          FILING-DATE: April 28, 2000

                                 Exhibit 10.8

================================================================================

                                LOAN AGREEMENT

                                    Between

                         IBJ WHITEHALL RETAIL FINANCE
                    Agent for the Revolving Credit Lenders

                                      And

                            WORLD OF SCIENCE, INC.
                               Lead Borrower For
                            World of Science, Inc.
                             WOSI on the Web, Inc.

                             As of March 21, 2000

================================================================================
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                                   CONTENTS

<TABLE>
     <S>                                                                <C>
     Introduction:                                                       1

     1.     Definitions:                                                 1

     2.     The Revolving Credit:                                       19
     (a)    Establishment of Revolving Credit.                          19
     (b)    Advances in Excess of Borrowing Base (Overloans).           19
     (c)    Valuation of Collateral                                     20
     (d)    Revolving Credit Lenders' Commitment.                       20
     (e)    Revolving Credit Loan Requests                              20
     (f)    Making of Revolving Credit Loans                            22
     (g)    SwingLine Loans                                             22
     (h)    The Loan Account                                            23
     (i)    The Revolving Credit Notes                                  24
     (j)    Payment of the Loan Account                                 24
     (k)    Interest on Revolving Credit Loans.                         25
     (l)    Revolving Credit Commitment Fee                             26
     (m)    OverAdvance Facility Fee                                    26
     (n)    Agent's Fee                                                 26
     (o)    Unused Line Fee.                                            26
     (p)    Early Termination Fee.                                      26
     (q)    Concerning Fees.                                            28
     (r)    Agent's and Revolving Credit Lenders' Discretion            28
     (s)    Procedures For Issuance of L/C's                            29
     (t)    Fees For L/C's                                              29
     (u)    Changed Circumstances                                       30
     (v)    Designation of Lead Borrower as Borrowers' Agent.           31
     (w)    Lenders' Commitments                                        32

     3.     Conditions Precedent:                                       33
     (a)    Corporate Due Diligence.                                    33
     (b)    Opinion.                                                    33
     (c)    Additional Documents.                                       33
     (d)    Officers' Certificates.                                     34
     (e)    Representations and Warranties.                             34
     (f)    Minimum Day One Availability.                               34
     (g)    All Fees and Expenses Paid.                                 34
     (h)    No Borrower InDefault.                                      34
     (i)    No Adverse Change.                                          34

     4.     General Representations, Covenants and Warranties:          35
     (a)    Payment and Performance of Liabilities.                     35
     (b)    Due Organization. Corporate Authorization. No Conflicts.    35
</TABLE>
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<TABLE>
     <S>                                                                <C>
     (c)    Trade Names.                                                36
     (d)    Infrastructure.                                             36
     (e)    Indebtedness                                                37
     (f)    Licenses                                                    37
     (g)    Leases.                                                     37
     (h)    Requirements of Law                                         38
     (i)    Labor Relations                                             38
     (j)    Taxes.                                                      38
     (k)    The Tax Refunds.                                            39
     (l)    No Margin Stock.                                            40
     (m)    ERISA                                                       41
     (n)    Hazardous Materials                                         41
     (o)    Litigation                                                  41
     (p)    Dividends. Investments. Corporate Action                    41
     (q)    Loans                                                       42
     (r)    Line of Business                                            42
     (s)    Affiliate Transactions                                      42
     (t)    Adequacy of Disclosure                                      42
     (u)    No Restrictions on Liabilities                              43
     (v)    Other Covenants                                             43

     5.     Financial Reporting and Performance Covenants:              43
     (a)    Maintain Records                                            43
     (b)    Access to Records                                           44
     (c)    Immediate Notice to Agent                                   45
     (d)    Borrowing Base Certificate                                  46
     (e)    Weekly Reports                                              46
     (f)    Monthly Reports                                             46
     (g)    Quarterly Reports                                           47
     (h)    Annual Reports                                              47
     (i)    Officers' Certificates                                      48
     (j)    Inventories, Appraisals, and Audits                         49
     (k)    Additional Financial Information                            50
     (l)    Financial Performance Covenants                             50

     6.     Cash Management. Payment of Liabilities:                    51
     (a)    Depository Accounts                                         51
     (b)    Credit Card Receipts                                        51
     (c)    The Concentration, Blocked, and Operating Accounts          51
     (d)    Proceeds and Collections                                    52
     (e)    Payment of Liabilities                                      53
     (f)    The Operating Account                                       53
</TABLE>
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<TABLE>
     <S>                                                                <C>
     7.     Events of Default:                                          54
     (a)    Failure to Pay the Revolving Credit.                        54
     (b)    Failure To Make Other Payments                              54
     (c)    Failure to Perform Covenant or Liability (No Grace Period)  54
     (d)    Failure to Perform Covenant or Liability (Grace Period)     54
     (e)    Misrepresentation                                           55
     (f)    Acceleration of Other Debt. Breach of Lease                 55
     (g)    Default Under Other Agreements                              55
     (h)    Uninsured Casualty Loss                                     55
     (i)    Attachment. Judgment. Restraint of Business                 55
     (j)    Business Failure                                            55
     (k)    Bankruptcy                                                  56
     (l)    Default by Guarantor                                        56
     (m)    Indictment - Forfeiture                                     56
     (n)    Termination of Guaranty                                     56
     (o)    Challenge to Loan Documents                                 56
     (p)    Key Management.                                             57
     (q)    Change in Control.                                          57

     8.     Rights and Remedies Upon Default:                           57
     (a)    Acceleration                                                57
     (b)    Rights and Remedies                                         57

     9.     Revolving Credit Fundings and Distributions:                58
     (a)    Revolving Credit Funding Procedures.                        58
     (b)    SwingLine Loans.                                            58
     (c)    Agent's Covering of Fundings:                               59
     (d)    Ordinary Course Distributions.                              61

     10.    Acceleration and Liquidation:                               62
     (a)    Acceleration Notices.                                       62
     (b)    Acceleration.                                               62
     (c)    Initiation of Liquidation.                                  62
     (d)    Actions At and Following Initiation of Liquidation          62
     (e)    Agent's Conduct of Liquidation.                             62
     (f)    Distribution of Liquidation Proceeds:                       63
     (g)    Relative Priorities To Proceeds of Liquidation.             63

     11.    The Agent:                                                  64
     (a)    Appointment of the Agent.                                   64
     (b)    Responsibilities of Agent.                                  64
     (c)    Concerning Distributions By the Agent.                      65
     (d)    Dispute Resolution.                                         66
     (e)    Distributions of Notices and of Documents.                  66
</TABLE>
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<TABLE>
     <S>                                                                <C>
     (f)    Confidential Information.                                   67
     (g)    Reliance by Agent.                                          67
     (h)    Non-Reliance.                                               67
     (i)    Indemnification.                                            68
     (j)    Resignation of Agent.                                       68

     12.    Action By Agents - Consents - Amendments - Waivers:         69
     (a)    Administration of Credit Facilities.                        69
     (b)    Actions Requiring  Majority Lenders.                        70
     (c)    Actions Requiring SuperMajority Lenders.                    70
     (d)    Action Requiring Certain Consent.                           70
     (e)    Actions Requiring Unanimous Consent.                        71
     (f)    Actions Requiring SwingLine Lender Consent.                 72
     (g)    Actions Requiring Agent's Consent.                          72
     (h)    Miscellaneous Actions.                                      72
     (i)    Actions Requiring Lead Borrower's Consent.                  73
     (j)    NonConsenting Revolving Credit Lender.                      73

     13.    Assignments By Revolving Credit Lenders:                    74
     (a)    Assignments and Assumptions.                                74
     (b)    Assignment Procedures.                                      75
     (c)    Effect of Assignment.                                       76

     14.    Notices:                                                    76
     (a)    Notice Addresses                                            76
     (b)    Notice Given                                                77

     15.    Term:                                                       78
     (a)    Termination of Revolving Credit                             78
     (b)    Actions On Termination                                      78

     16.    General:                                                    79
     (a)    Publicity.                                                  79
     (b)    Successors and Assigns.                                     79
     (c)    Severability                                                79
     (d)    Amendments.  Course of Dealing                              79
     (e)    Power of Attorney                                           80
     (f)    Application of Proceeds                                     80
     (g)    Increased Costs                                             80
     (h)    Costs and Expenses of the Agent                             81
     (i)    Copies and Facsimiles                                       81
     (j)    Massachusetts Law                                           82
     (k)    Consent to Jurisdiction                                     82
     (l)    Indemnification                                             83
     (m)    Rules of Construction.                                      83
</TABLE>
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<TABLE>
     <S>                                                                <C>
     (n)    Intent                                                      84
     (o)    Participations.                                             85
     (p)    Right of Set-Off                                            85
     (q)    Pledges To Federal Reserve Banks:                           85
     (r)    Maximum Interest Rate.                                      85
     (s)    Waivers.                                                    86
</TABLE>
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                         IBJ WHITEHALL RETAIL FINANCE
                                                            As of March 21, 2000

World of Science, Inc., As Lead Borrower
900 Jefferson Road, Building 4
Rochester, New York  14623
Attention:  Mr. Charles A. Callahan
            Vice President and Chief Financial Officer

Re:       Loan Agreement

Dear Sir/Madam:

     Introduction:  This letter sets forth the basis under which the Revolving
Credit Lenders, acting through IBJ Whitehall Retail Finance, a division of IBJ
Whitehall Business Credit Corporation (in such capacity, the "Agent"), will make
loans and advances to World of Science, Inc., a New York corporation, (the "Lead
Borrower") and WOSI on the Web, Inc., a New York corporation (collectively, the
"Borrowers" and each a "Borrower")

     If accepted by you, this letter, as amended from time to time hereafter,
shall be referred to as the "Loan Agreement".

I.        .    Definitions:

     As herein used, the following terms have the following meanings or are
defined in the section of this Loan Agreement so indicated and terms used herein
which are defined in the Security Agreement are used as so defined therein:

               "Acceleration":   The making of demand or declaration that any
indebtedness, not otherwise due and payable, is due and payable. Derivations of
the word "Acceleration" (such as "Accelerate") are used with like meaning in
this Loan Agreement.

               "Acceleration Notice":    Written notice as follows:

               (a)  From the Agent to the Revolving Credit Lenders, as provided
          in Section.

               (b)  From the SuperMajority Lenders, as provided in Section.

               "ACH":  Automated clearing house.

               "Advance Rate Grid":  Annexed hereto as EXHIBIT (a).

               "Affiliate":  (a) With respect to any two Persons other than any
natural person, a relationship in which (i) one holds, directly or indirectly,
not less
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than Twenty Five Percent (25%) of the capital stock, beneficial interests,
partnership interests, or other equity
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World of Science IBJ Whitehall Retail Finance
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interests of the other; or (ii) one has, directly or indirectly, the right,
under ordinary circumstances, to vote for the election of a majority  of the
directors (or other body or Person who has those powers customarily vested in a
board of directors of a corporation); or (iii) not less than Twenty Five Percent
(25%) of their respective ownership is directly or indirectly held by the same
third Person.
               (b) Any Person, other than a natural person, which: is a parent,
          brother-sister, subsidiary, or affiliate, of a Borrower; could have
          such enterprise's tax returns or financial statements consolidated
          with that Borrower's; could be a member of the same controlled group
          of corporations (within the meaning of Section 1563(a)(1), (2) and (3)
          of the Internal Revenue Code of 1986, as amended from time to time) of
          which any Borrower is a member; controls or is controlled by any
          Borrower.

               "Agent":  Is defined in the Introduction.

               "Agent's Cover":  Defined in Section.

               "Agent's Fee": Is defined in Section.

               "Agent's Rights and Remedies":  Is defined in Section.

               "Applicable Law":   As to any Person (i) All statutes, rules,
regulations, orders, or other requirements having the force of law and (ii) all
court orders and injunctions, arbitrator's decisions, and/or similar rulings in
each instance ((i) and (ii)) of or by any federal, state, municipal, and other
governmental authority, or court, tribunal, panel, or other body which has or
claims jurisdiction over such Person, or any property of such Person, or of any
other Person for whose conduct such Person would be responsible, and any
interpretation thereof by any court or administrative or governmental authority
charged with the administration of any statute, rule, regulation, order, or
other requirement having the force of law.

               "Appraised Inventory Liquidation Value":  The product of (a) the
Cost of Eligible Inventory (net of Inventory Reserves) multiplied by (b) that
percentage, determined from the then most recent appraisal of the Borrowers'
Inventory undertaken at the request of the Agent, to reflect the appraiser's
estimate of the net realization on the Liquidation of the Borrowers' Inventory.

               "Appraised Inventory Percentage":  As set forth on the Advance
Rate Grid.

               "Assigning Revolving Credit Lender":  Defined in Section.

               "Assignment and Acceptance":  Defined in Section.

               "Availability":  The lesser of (a) or (b), where
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World of Science IBJ Whitehall Retail Finance
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               (a)  is the result of

                    (i)   The Revolving Credit Ceiling
                    Minus
                    (ii)  The aggregate unpaid balance of the Loan Account
                    Minus
                    (iii) The aggregate undrawn Stated Amount of all then
                    outstanding L/C's.
                    Minus
                    (iv)  The aggregate of the Availability Reserves.

               (b)  is the result of
                    (i)   The Borrowing Base
                    Minus
                    (ii)  The aggregate unpaid balance of the Loan Account
                    Minus
                    (iv)  The aggregate undrawn Stated Amount of all then
                          outstanding L/C's.
                    Minus
                    (v)   The aggregate of the Availability Reserves.

               "Availability Reserves":  Such reserves as the Agent from time to
time determines in the Agent's discretion as being appropriate to reflect the
impediments to the Agent's ability to realize upon the Collateral.

               "Bankruptcy Code":  Title 11, U.S.C., as amended from time to
time.

               "Base":  The base commercial lending rate of IBJ Whitehall Bank
as publicly announced to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate.  This rate of interest is determined from time to time by IBJ
Whitehall Bank as a means of pricing some loans to its customers and is neither
tied to any external rate of interest or index nor necessarily reflective of
the lowest rate of interest actually charged by IBJ Whitehall Bank to any
particular class or category of customers of IBJ Whitehall Bank or the Agent.

               "Base Margin Loan":  Each Revolving Credit Loan while bearing
interest at the Base Margin Rate.

               "Base Margin Rate":  Base.

               "Blocked Account":  Any DDA into which the contents of any other
DDA is transferred.

               "Blocked Account Agreement":  An Agreement, in form satisfactory
to the Agent, which Agreement recognizes the Agent's Collateral Interest in
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World of Science IBJ Whitehall Retail Finance
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the contents of the DDA which is the subject of such Agreement and agrees that
such contents shall be transferred only to the Concentration Account or as
otherwise instructed by the Agent.

               "Borrower" and "Borrowers":  Defined in the Introduction.

               "Borrowing Base":  The lesser of (a)(i) the product of the Cost
of Eligible Inventory (net of Inventory Reserves) multiplied by the Inventory
Advance Rate plus (ii) the OverAdvance Facility plus (iii) until July 31, 2000,
the product of the Tax Refund Advance Rate multiplied by the Tax Refunds plus
(iv) Seventy percent (70%) of the face amount of Eligible Credit Card
Receivables of the Borrowers or (b) the product of the Appraised Inventory
Percentage multiplied by the Appraised Inventory Liquidation Value.

               "Borrowing Base Certificate":  Is defined in Section.

               "Business Day": Any day other than (a) a Saturday or Sunday; (b)
any day on which banks in Boston, Massachusetts or in Rochester, New York,
generally are not open to the general public for the purpose of conducting
commercial banking business; or (c) a day on which the principal office of the
Agent is not open to the general public to conduct business.

               "Business Plan":  Defined in Section.

               "Capital Expenditures":   The expenditure of funds or the
incurrence of liabilities which may be capitalized in accordance with GAAP.

               "Capital Lease":  Any lease which may be capitalized in
accordance with GAAP.

               "Change in Control": The occurrence of any of the following:

               (a)  The acquisition, by any group of persons (within the meaning
          of the Securities Exchange Act of 1934, as amended) or by any Person,
          of beneficial ownership (within the meaning of Rule 13d-3 of the
          Securities and Exchange Commission) of 20% or more of the issued and
          outstanding capital stock of the Lead Borrower having the right, under
          ordinary circumstances, to vote for the election of directors of the
          Lead Borrower.

               (b)  More than half of the persons who were directors of the Lead
          Borrower on the first day of any period consisting of Twelve (12)
          consecutive calendar months (the first of which Twelve (12) month
          periods commencing with the first day of the month during which this
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World of Science IBJ Whitehall Retail Finance
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          Loan Agreement was executed), cease, for any reason other than death
          or disability, to be directors of the Lead Borrower.

               (c) Any failure of the Lead Borrower to own, beneficially and of
          record, 100% of the capital stock of all other Borrowers.

               "Collateral":  Any asset or interest therein in which the Agent
is granted a Collateral Interest to secure the Liabilities.

               "Collateral Interest":  Any interest in property to secure an
obligation, including, without limitation, a security interest, mortgage, and
deed of trust.

               "Concentration Account":  Is defined in Section.

               "Consent": Actual consent given by the Revolving Credit Lender
from whom such consent is sought; or the passage of Seven (7) Business Days from
receipt of written notice to a Revolving Credit Lender from the Agent of a
proposed course of action to be followed by the Agent without such Revolving
Credit Lender's giving the Agent written notice of that Revolving Credit
Lender's objection to such course of action, provided that the Agent may rely on
such passage of time as consent by a Revolving Credit Lender only if such
written notice states that consent will be deemed effective if no objection is
received within such time period.

               "Consolidated":  When used to modify a financial term, test,
statement, or report, refers to the application or preparation of such term,
test, statement or report (as applicable) based upon the consolidation, in
accordance with GAAP, of the financial condition or operating results of the
Borrowers.

               "Cost":  The lower of

                    (a) the calculated cost of purchases, based upon the
               Borrowers' accounting practices known to the Agent, which
               practices are in effect on the date on which this Loan Agreement
               was executed as such calculated cost is determined from: invoices
               received by the Borrowers;  the Borrowers' purchase journal; or
               the Borrowers' stock ledger; or

                    (b) the cost equivalent of the lowest ticketed or promoted
               price at which the subject Inventory is offered to the public,
               after all mark-downs (whether or not such price is then reflected
               on the Borrowers' accounting system), which cost equivalent is
               determined in accordance with the Borrowers' accounting practices
               in effect on March 1, 2000.

          "Cost" does not include inventory capitalization costs or other non-
          purchase price charges (such as freight) used in the Borrowers'
          calculation of cost of goods sold.
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World of Science IBJ Whitehall Retail Finance
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               "Costs of Collection":  Includes, without limitation, all
attorneys' reasonable fees and reasonable out-of-pocket expenses incurred by the
Agent's attorneys, and all reasonable out-of-pocket costs incurred by the Agent
in the administration of the Liabilities and/or the Loan Documents, including,
without limitation, reasonable costs and expenses associated with travel on
behalf of the Agent, where such costs and expenses are directly or indirectly
related to or in respect of the Agent's: administration and management of the
Liabilities; negotiation, documentation, and amendment of any Loan Document; or
efforts to preserve, protect, collect, or enforce the Collateral, the
Liabilities, and/or the Agent's Rights and Remedies and/or any of the rights and
remedies of the Agent against or in respect of any guarantor or other person
liable in respect of the Liabilities (whether or not suit is instituted in
connection with such efforts). "Costs of Collection shall also include the
reasonable fees and expenses of Lenders' Special Counsel. The Costs of
Collection are Liabilities, and at the Agent's option may bear interest at the
then effective Base Margin Rate.

               "DDA":  Any checking or other demand daily depository account
maintained by any Borrower.

               "Delinquent Revolving Credit Lender":  Defined in Section.

               "EBITDA":  The Borrowers' Consolidated earnings before interest,
taxes, depreciation, and amortization, each as determined in accordance with
GAAP.

               "Eligible Assignee":  A bank, insurance company, or company
engaged in the business of making commercial loans having a combined capital and
surplus in excess of $200,000,000.00, or any Affiliate of any Revolving Credit
Lender, or any Person to whom a Revolving Credit Lender assigns its rights and
obligations under this Loan Agreement as part of a programmed assignment and
transfer of such Revolving Credit Lender's rights of a material portion of such
Revolving Credit Lender's portfolio of asset based credit facilities.

               "Eligible Credit Card Receivables":  Such of the Borrowers' under
four (4) Business Day Accounts due on a non-recourse basis from major credit
card processors (which, if due on account of a private label credit card
program, is deemed in the discretion of the Agent to be eligible).

               "Eligible In-Transit Inventory":  Inventory (without duplication
as to Eligible L/C Inventory and other Eligible Inventory), title to which has
passed to a Borrower and which is then being shipped from a foreign location for
receipt, within sixty (60) days, at a warehouse of the Borrower, provided that
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World of Science IBJ Whitehall Retail Finance
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                         (a)  Such Inventory is of such types, character,
                    qualities and quantities (net of Inventory Reserves) as the
                    Agent in its discretion from time to time determines to be
                    eligible  for borrowing; and

                         (b)  The documents which relate to such shipment names
                    the Agent as consignee of the subject Inventory and the
                    Agent has control over the documents which evidence
                    ownership of the subject Inventory pursuant to documentation
                    in form and substance satisfactory to the Agent (such as by
                    the providing to the Agent of a Customs Brokers Agreement in
                    form reasonably satisfactory to the Agent).

               "Eligible Inventory":  All of the following:

               Such of the Borrowers' Inventory (not duplicative of Borrowers'
               Eligible In-Transit Inventory or Eligible L/C Inventory), at such
               locations, and of such types, character, qualities and
               quantities, as the Agent in its discretion from time to time
               determines to be acceptable for borrowing, as to which Inventory,
               the Agent has a perfected security interest which is prior and
               superior to all security interests, claims, and all Encumbrances
               other than Permitted Encumbrances.

               Eligible In-Transit Inventory not to exceed $300,000.00 in the
               aggregate at any time.

               Eligible L/C Inventory.

               In no event, however, does "Eligible Inventory" include: non-
               merchandise Inventory (such as labels, bags, and packaging
               materials); damaged goods; return to vendor merchandise;
               packaways; consigned inventory; goods not conforming to the
               representations and warranties contained in the Security
               Agreement; and other similar categories of Goods.

               "Eligible L/C Inventory":  Such of the  Borrowers' Inventory
          (without duplication as to Eligible In-Transit Inventory and other
          Eligible Inventory), the purchase of which is supported by a
          documentary L/C,  provided that

                         (a)  Such Inventory is of such types, character,
                    qualities and quantities (net of Inventory
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World of Science IBJ Whitehall Retail Finance
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                    Reserves) as the Agent in its discretion from time to time
                    determines to be eligible for borrowing; and

                         (b)  The documentary L/C supporting such purchase names
                    the Agent as consignee of the subject Inventory and/or the
                    Agent has control over the documents which evidence
                    ownership of the subject Inventory pursuant to documentation
                    in form and substance satisfactory to the Agent (such as by
                    the providing to the Agent of a Customs Brokers Agreement in
                    form reasonably satisfactory to the Agent); and

                         (c)  The subject Inventory is due at the Borrowers'
                    distribution facility within sixty (60) days, as determined
                    by the Agent.

               "Employee Benefit Plan":  As defined in ERISA.

               "End Date":  The date upon which both (a) all Liabilities have
been indefeasibly paid in full and (b) all obligations of any Revolving Credit
Lender to make loans and advances and to provide other financial accommodations
to the Borrowers hereunder shall have been irrevocably terminated.

               "Environmental Laws":  All of the following:

                    (a)  Any and all federal, state, local or municipal laws,
          rules, orders, regulations, statutes, ordinances, codes, decrees or
          requirements which regulate or relate to, or impose any standard of
          conduct or liability on account of or in respect to environmental
          protection matters, including, without limitation, Hazardous
          Materials, as are now or hereafter in effect.

                    (b)  The common law relating to damage to Persons or
          property from Hazardous Materials.

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

               "ERISA Affiliate":  Any Person which is under common control with
a Borrower within the meaning of Section 4001 of ERISA or is part of a group
which includes any Borrower and which would be treated as a single employer
under Section 414 of the Internal Revenue Code of 1986, as amended.

               "Events of Default":  Is defined in Article . An "Event of
Default" shall be deemed to have occurred and to be continuing unless and until
that Event of Default has been duly waived by the requisite Revolving Credit
Lenders or by the Agent as applicable.
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World of Science IBJ Whitehall Retail Finance
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               "Exempt DDA":  A depository account maintained by any Borrower,
the only contents of which may be transfers from the Operating Account and
actually used solely (i) for petty cash purposes; or (ii) for payroll.

               "Fiscal":  When followed by "month" or "quarter", the relevant
fiscal period based on the Borrower's fiscal year and accounting conventions.
When followed by reference to a specific year, the fiscal year which ends in
January of the following calendar year to the  year to which reference is being
made (e.g. the Borrower's fiscal year ending in January 2001 is the Borrower's
"Fiscal 2000").

               "Fee Letter":  That letter dated on or about February 17, 2000
and styled "Fee Letter" between the Lead Borrower and the Agent, as such letter
may from time to time be amended.

               "GAAP":   Principles which are consistent with those promulgated
or adopted by the Financial Accounting Standards Board and its predecessors (or
successors) in effect and applicable to that accounting period in respect of
which reference to GAAP is being made, provided, however, in the event of a
Material Accounting Change, then unless otherwise specifically agreed to by the
Agent, (a) the Borrowers' compliance with the financial performance covenants
imposed pursuant to Section  shall be determined as if such Material Accounting
Change had not taken place and (b) the Lead Borrower shall include, with its
monthly,  quarterly, and annual financial statements a schedule, certified by
the Lead Borrower's chief financial officer, on which the effect of such
Material Accounting Change to that statement shall be described.

               "Goods":  Has the meaning given that term in the UCC.

               "Gross Margin":  With respect to the subject accounting period
for which it is being calculated, the decimal equivalent of the following
(determined in accordance with the retail method of accounting):

                       Sales (Minus) Cost of Goods Sold
                       --------------------------------
                                     Sales

               "Hazardous Materials":   Any (a) hazardous materials, hazardous
waste, hazardous or toxic substances or petroleum products, which (as to any of
the foregoing) are defined or regulated as a hazardous material in or under any
Environmental Law and (b) oil in any physical state.

               "IBJ Whitehall Bank":   IBJ Whitehall Bank & Trust Company, a New
York banking corporation with offices at One State Street, New York, New York
10004.

               "IWRF":  IBJ Whitehall Retail Credit.
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World of Science IBJ Whitehall Retail Finance
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               "IWRF Qualified Refinancing":  A refinancing provided by IWRF
following its exercise of its right of last refusal as described in Section .

               "Indebtedness":  All indebtedness and obligations of or assumed
by any Person on account of or in respect to any of the following:

               (a)  In respect of money borrowed (including any indebtedness
          which is non-recourse to the credit of such Person but which is
          secured by an Encumbrance on any asset of such Person) whether or not
          evidenced by a promissory note, bond, debenture or other written
          obligation to pay money.

               (b)  In connection with any letter of credit or acceptance
          transaction (including, without limitation, the face amount of all
          letters of credit and acceptances issued for the account of such
          Person or reimbursement on account of which such Person would be
          obligated).

               (c)  In connection with the sale or discount of accounts
          receivable or chattel paper of such Person.

               (d)  On account of deposits or advances.

               (e)  As lessee under Capital Leases.

               (f)  In connection with any sale and leaseback transaction.

          "Indebtedness" also includes:

                    (x)  Indebtedness of others secured by an Encumbrance on any
               asset of such Person, whether or not such Indebtedness is assumed
               by such Person.

                    (y)  Any guaranty, endorsement, suretyship or other
               undertaking pursuant to which that Person may be liable on
               account of any obligation of any third party.

                    (z)  The Indebtedness of a partnership or joint venture in
               which such Person is a general partner or joint venturer.

               "Indemnified Person":  Is defined in Section.

               "Interest Payment Date":  With reference to:

               Each Libor Loan: The last day of the Interest Period relating
          thereto; the Termination Date; and the End Date.

               Each Base Margin Loan: the first day of each month; the
          Termination Date; and the End Date.

               "Interest Period":  (a)  With respect to each Libor Loan: Subject
to Subsection (c), below, the period commencing on the date of the making or
continuation of, or conversion to, the subject Libor Loan and ending one, two,
or three months thereafter, as the Lead Borrower may elect by notice (pursuant
to Section ) to the Agent.
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World of Science IBJ Whitehall Retail Finance
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                    (b)  With respect to each Base Margin Loan: Subject to
          Subsection (c), below, the period commencing on the date of the making
          or continuation of or conversion to such Base Margin Loan and ending
          on that date (i) as of which the subject Base Margin Loan is converted
          to a Libor Loan, as the Lead Borrower may elect by notice (pursuant to
          Section ) to the Agent, or (ii) on which the subject Base Margin Loan
          is paid by the Borrowers.

                    (c)  The setting of Interest Periods is in all instances
          subject to the following:

                         (i)    Any Interest Period for a Base Margin Loan which
                    would otherwise end on a day which is not a Business Day
                    shall be extended to the next succeeding Business Day.

                         (ii)   Any Interest Period for a Libor Loan which would
                    otherwise end on a day that is not a Business Day shall be
                    extended to the next succeeding Business Day, unless that
                    succeeding Business Day is in the next calendar month, in
                    which event such Interest Period shall end on the last
                    Business Day of the month during which the Interest Period
                    ends.

                         (iii)  Subject to Subsection (iv), below, any Interest
                    Period applicable to a Libor Loan, which Interest Period
                    begins on a day for which there is no numerically
                    corresponding day in the calendar month during which such
                    Interest Period ends, shall end on the last Business Day of
                    the month during which that Interest Period ends.

                         (iv)   Any Interest Period which would otherwise end
                    after the Termination Date shall end on the Termination
                    Date.

                         (v)    The number of Interest Periods in effect at any
                    one time is subject to Section hereof.

               "InDefault":   Any occurrence, circumstance, or state of facts
with respect to a Borrower which (a) is an Event of Default; or (b) would become
an Event of Default if any requisite notice were given and/or any requisite
period of time were to run and such occurrence, circumstance, or state of facts
were not cured within any applicable grace period.

               "Inventory Advance Rate":  As set forth on the Advance Rate Grid.

               "Inventory Reserves":  Such reserves as may be established from
time to time by the Agent in the Agent's discretion with respect to the
determination of the saleability, at retail, of, or other factors relating to
the market value of, the Eligible Inventory.

               "Issuer":  The issuer of any L/C.
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World of Science IBJ Whitehall Retail Finance
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               "L/C":  Any letter of credit, the issuance of which is procured
by the Agent for the account of any Borrower and any acceptance made on account
of such letter of credit.

               "Lease":  Any lease or other agreement, no matter how styled or
structured, pursuant to which a Borrower is entitled to the use or occupancy of
any space.

               "Lenders' Special Counsel":  A single counsel, selected by the
Majority Lenders following the occurrence of an Event of Default, to represent
the interests of the Revolving Credit Lenders in connection with the
enforcement, attempted enforcement, or preservation of any rights and remedies
under this, or any other Loan Document, as well as in connection with any
"workout", forbearance, or restructuring of the credit facility contemplated
hereby.

               "Liabilities":  Includes, without limitation, the following:

          (a)   All and each of the following, whether now existing or hereafter
arising under this Loan Agreement or under any of the other Loan Documents:

          (i)   Any and all direct and indirect liabilities, debts, and
     obligations of each Borrower to the Agent or any Revolving Credit Lender,
     each of every kind, nature, and description.

          (ii)  Each obligation to repay any loan, advance, Indebtedness, note,
     obligation, overdraft, or amount now or hereafter owing by any Borrower to
     the Agent or any Revolving Credit Lender (including all future advances
     whether or not made pursuant to a commitment by the Agent or any Revolving
     Credit Lender), whether or not any of such are liquidated, unliquidated,
     primary, secondary, secured, unsecured, direct, indirect, absolute,
     contingent, or of any other type, nature, or description, or by reason of
     any cause of action which the Agent or any Revolving Credit Lender may hold
     against any Borrower.

          (iii) All notes and other obligations of each Borrower now or
     hereafter assigned to or held by the Agent or any Revolving Credit Lender,
     each of every kind, nature, and description.

          (iv)  All interest, fees, and charges and other amounts which may be
     charged by the Agent or any Revolving Credit Lender to any Borrower and/or
     which may be due from any Borrower to the Agent or any Revolving Credit
     Lender from time to time.

          (v)   All costs and expenses incurred or paid by  the Agent or any
     Revolving Credit Lender in respect of any agreement between any Borrower
     and the Agent or any Revolving Credit Lender or instrument furnished by
     any Borrower to the Agent or any Revolving Credit Lender (including,
     without limitation, Costs of Collection, attorneys' reasonable fees, and
     all court and litigation costs and expenses).
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World of Science IBJ Whitehall Retail Finance
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          (vi)  Any and all covenants of each Borrower to or with the Agent or
     any Revolving Credit Lender and any and all obligations of each Borrower to
     act or to refrain from acting in accordance with any agreement between that
     Borrower and the Agent or any Revolving Credit Lender or instrument
     furnished by that Borrower to the Agent or any Revolving Credit Lender.

          (vii) Each of the foregoing as if each reference to the " the Agent
     or any Revolving Credit Lender" were to each Affiliate of the Agent.

          (b)   Any and all direct or indirect liabilities, debts, and
obligations of each Borrower to the Agent or any Affiliate of the Agent, each of
every kind, nature, and description owing on account of any service or
accommodation provided to, or for the account of any Borrower pursuant to this
or any other Loan Document, including cash management services and the issuances
of L/C's.

               "Libor":  For any Libor Loan for the then current Interest Period
relating thereto, the rate per annum quoted by the Agent to the Borrowers two
(2) Libor Business Days prior to the first day of such Interest Period as the
rate available to IBJ Whitehall Bank in the interbank market for offshore Dollar
deposits in immediately available funds for a period equal to such Interest
Period and in an amount equal to the amount of such Libor Loan.

               "Libor Business Day":  Any day which is both a Business Day and a
day on which the principal interbank market for Libor deposits in London in
which IBJ Whitehall Bank participates is open for dealings in United States
Dollar deposits.

               "Libor Loan":  Any Revolving Credit Loan which bears interest at
a Libor Rate.

               "Libor Offer Rate":  For any Libor Loan for the then current
Interest Period relating thereto,  the rate per annum (rounded upwards, if
necessary,  to the next higher 1/100  of one (1%) percent ) equal to the
quotient of (a) Libor divided by (b) a number equal to 1.00 minus the aggregate
of the rates (expressed as a decimal) of reserve requirements current on the day
that is two (2) Libor Business Days prior to the beginning of the relevant
Interest Period under any regulation promulgated by the Board of Governors of
the Federal Reserve System (or any other governmental authority having
jurisdiction over IBJ Whitehall Bank) as in effect from time to time, dealing
with reserve requirements prescribed for Eurocurrency funding including any
reserve requirements with respect to "Eurocurrency liabilities" under Regulation
D of the Board of Governors of the Federal Reserve System.

               "Libor Margin":  250 basis points, subject to a mutually agreed
to downward adjustment on the first day of the month following that month during
which the Lead Borrower provides the Agent with the Borrowers' Consolidated
certified
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World of Science IBJ Whitehall Retail Finance
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financial statement for a Fiscal Year commencing after the Borrowers' Fiscal
1999 for which the Borrowers' Consolidated EBITDA is equal to or greater than $3
Million.

               "Libor Rate":  That per annum rate which is the aggregate of the
Libor Offer Rate plus the Libor Margin.

               "Liquidation":  The exercise, by the Agent, of those rights
accorded to the Agent under the Loan Documents as a creditor of the Borrowers
following and on account of the occurrence of an Event of Default looking
towards the realization on the Collateral.  Derivations of the word
"Liquidation" (such as "Liquidate") are used with like meaning in this Loan
Agreement.

               "Loan Account":  Is defined in Section.

               "Loan Commitment":  With respect to each Revolving Credit Lender,
that respective Revolving Credit Lender's Revolving Credit Dollar Commitment.

               "Loan Documents":  This Loan Agreement, each instrument and
document executed and/or delivered as contemplated by Article , below, and each
other instrument or document from time to time executed and/or delivered in
connection with the arrangements contemplated hereby or in connection with any
transaction with the Agent or any Affiliate of the Agent, including, without
limitation, any transaction which arises out of any cash management, depository,
investment, letter of credit, interest rate protection, or equipment leasing
services provided by the Agent or any Affiliate of the Agent, as each may be
amended from time to time.

               "Majority Lenders":  Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 51% or more of the Loan Commitments
(other than any Loan Commitments held by Delinquent Revolving Credit Lenders)
except that where (a) any single Revolving Credit Lender holds 51% or more of
the Loan Commitments and (b) there is at least one other Revolving Credit Lender
which is not then a Delinquent Revolving Credit Lender, the term "Majority
Lenders" shall refer to the Revolving Credit Lender which holds 51% or more of
the Loan Commitments and not less than one other Revolving Credit Lender (other
than a Delinquent Revolving Credit Lender or an Affiliate of the Agent).

               "Material Accounting Change":  Any change in GAAP applicable to
accounting periods subsequent to the Borrowers' Fiscal Year most recently
completed prior to the execution of this Loan Agreement, which change has a
material effect on the Borrowers' financial condition or operating results, as
reflected on financial statements and reports prepared by or for the Borrowers,
when compared with such condition or results as if such change had not taken
place or where preparation of the Borrowers' statements and reports in
compliance with such change results in the breach
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World of Science IBJ Whitehall Retail Finance
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of a financial performance covenant imposed pursuant to Section (if applicable)
where such a breach would not have occurred if such change had not taken place
or vice versa.

               "Maturity Date":  March 31, 2003.

               "Nominee":  A business entity (such as a corporation, limited
partnership or other Person) formed by the Agent to own or manage any Post
Foreclosure Asset.

               "Operating Account":  Is defined in Section.

               "OverAdvance":  A Revolving Credit Loan supported by the
OverAdvance Facility.

               "OverAdvance Facility":  That component of Borrowing Base,
available (if at all) only where "Availability" otherwise would be zero, and
consisting of the Cost of Eligible Inventory (net of Inventory Reserves and
exclusive of Eligible In-Transit Inventory and Eligible L/C Inventory)
multiplied by the OverAdvance Rate.

               "OverAdvance Margin":  The aggregate of Base plus two percent
(2%) per annum.

               "OverAdvance Rate":  As set forth on the Advance Rate Grid.

               "Overloan":  A loan, advance, or providing of credit support
(such as the issuance of any L/C) to the extent that, immediately after its
having been made, Availability is less than zero.

               "Participant":  Is defined in Section, hereof.

               "Permanent Store":  Any location at which the Lead Borrower
offers its Inventory for sale to the general public other than any Seasonal
Store.

               "Permissible Redemption":  Redemptions of the Lead Borrower's
common stock, not exceeding an aggregate out-of-pocket expenditure to the
Borrowers of the following and only if the Borrowers' Consolidated EBITDA for
their then immediately prior Fiscal year was not less than $5 Million:

          Fiscal 2000:  None
          Fiscal 2001:  $500 Thousand
          Fiscal 2002:  $500 Thousand

               "Permissible Overloans":  Revolving Credit Loans which are
Overloans, but as to which each of the following conditions is satisfied: (a)
the Revolving Credit Ceiling is not exceeded; and (b) when aggregated with all
other Permissible
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World of Science IBJ Whitehall Retail Finance
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Overloans, such Revolving Credit Loans do not exceed 10% of the Borrowing Base;
and (c) such Revolving Credit Loans are made or undertaken in the Agent's
discretion to protect and preserve the interests of the Revolving Credit
Lenders.

               "Person":  Any natural person, and any corporation, limited
liability company, trust, partnership, joint venture, or other enterprise or
entity.

               "Post Foreclosure Asset":  All or any part of the Collateral,
ownership of which is acquired by the Agent or a Nominee on account of the
"bidding in" at a disposition as part of a Liquidation or by reason of a "deed
in lieu" type of transaction.

               "Qualified Refinancing":  Is defined in Section.

               "Receipts":  All cash, cash equivalents, checks, and credit card
slips, receipts and other Proceeds from any sale of the Collateral.

               "Register":  Is defined in Section.

               "Requirement of Law":  As to any Person:

               (a)  Applicable Law.

               (b)  That Person's charter, certificate of incorporation,
          articles of organization, and/or other organizational documents, as
          applicable.

               (c)  That Person's by-laws and/or other instruments which deal
          with corporate or similar governance, as applicable.

               "Reserves":  The following: Availability Reserves and Inventory
Reserves.

               "Revolving Credit":  Is defined in Section.

               "Revolving Credit Ceiling": $20,000,000.00.

               "Revolving Credit Commitment Fee":  Is defined in Section.

               "Revolving Credit Dollar Commitment":  As set forth on EXHIBIT,
annexed hereto (as such amounts may change in accordance with the provisions of
this Loan Agreement).

               "Revolving Credit Early Termination Fee":  Is defined in Section.

               "Revolving Credit Lenders":   Those financial institutions
identified on the signature pages of this Loan Agreement and who in the future
are those
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World of Science IBJ Whitehall Retail Finance
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Persons (if any) who become "Revolving Credit Lenders" in accordance with the
provisions of Section, below,

               "Revolving Credit Loans": Loans made under the Revolving Credit,
except that where the term "Revolving Credit Loan" is used with reference to
available interest rates applicable to the loans under the Revolving Credit, it
refers to so much of the unpaid principal balance of the Loan Account as bears
the same rate of interest for the same Interest Period. (See Section).

               "Revolving Credit Note":  Is defined in Section.

               "Revolving Credit Obligations":  The aggregate of the Borrowers'
Liabilities of any character on account of or in respect to the Revolving
Credit.

               "Revolving Credit Percentage Commitment":  As set forth on
EXHIBIT , annexed hereto (as such amounts may change in accordance with the
provisions of this Loan Agreement).

               "Seasonal Store":  Any location at which the Lead Borrower offers
its Inventory for sale to the general public where both of the following
conditions ((a) and (b)) are met:

          (a) The Lease for such location has a term (including any extensions
     thereof) of 36 or fewer  months and is terminable by either the Lead
     Borrower or the lessor on not more than 30 days notice.

          (b) No funds are expended for tenant build out.

               "SEC":  The Securities and Exchange Commission, or any successor
commission or agency.

               "Security Agreement":   The Security Agreement of even date
herewith between the Lead Borrower and the Borrowers, on the one hand, and the
Agent, on the other, as the same may be amended from time to time hereafter.
Terms used herein which are defined in the Security Agreement are used herein as
so defined therein. In the event that the Security Agreement is ever terminated
or any term defined therein and used herein is deleted from the Security
Agreement, then unless otherwise agreed in writing, any such term used herein
which had been defined in the Security Agreement shall continue to be used
herein as then most recently defined in the Security Agreement.

               "Stated Amount":  The maximum amount for which an L/C may be
honored.

               "Store":  Any location at which any  Borrower offers its
Inventory for sale to the general public.
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World of Science IBJ Whitehall Retail Finance
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               "SuperMajority Lenders":  Revolving Credit Lenders (other than
Delinquent Revolving Credit Lenders) holding 66-2/3% or more the Loan
Commitments (other than Loan Commitments held by a Delinquent Revolving Credit
Lender).

               "SwingLine":  The facility pursuant to which the SwingLine Lender
may advance Revolving Credit Loans aggregating up to the SwingLine Loan Ceiling.

               "SwingLine Lender":  IWRF.

               "SwingLine Loan Ceiling":  $5,000,000.00 (subject to increase as
provided in Section).

               "SwingLine Loans":  Defined in Section.

               "SwingLine Note":  Defined in Section.

               "Tax Refund Advance Rate":  80%.

               "Tax Refunds":  Subject to Section below, collectively, the
income tax refunds claimed, or to be claimed by the Borrowers for their Fiscal
1999 from the United States federal government and various States, which claims
are described on EXHIBIT (b), annexed hereto.

               "Termination Date":  The earliest of (a) the Maturity Date; or
(b) the occurrence of any event described in Section, below; or (c) the Agent's
notice to the Lead Borrower setting the Termination Date on account of the
occurrence of any Event of Default other than as described in Section, below;
or (d) that date, set by the Lead Borrower, on not less than ninety (90) days
irrevocable written notice to the Agent.

               "Transfer":  Wire transfer pursuant to the wire transfer system
maintained by the Board of Governors of the Federal Reserve Board, or as
otherwise may be agreed to from time to time by the Agent making such Transfer
and the subject Revolving Credit Lender. Wire instructions may be changed in the
same manner that notice addresses may be changed (Section), except that no
change of the wire instructions for Transfers to any Revolving Credit Lender
shall be effective without the consent of the Agent.

               "UCC":  The Uniform Commercial Code as presently in effect in
Massachusetts (Mass. Gen. Laws, Ch. 106), as may be amended from time to time.
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World of Science IBJ Whitehall Retail Finance
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               "Unanimous Consent":  Consent of Revolving Credit Lenders (other
than Delinquent Revolving Credit Lenders) holding 100% or more of the Loan
Commitments (other than Loan Commitments held by a Delinquent Revolving Credit
Lender).

               "Unused Line Fee":  Is defined in Section.

I.        .    The Revolving Credit:

A.             Establishment of  Revolving Credit.

1.             The Revolving Credit Lenders hereby establish a revolving line of
credit (the "Revolving Credit") in the Borrowers' favor pursuant to which each
Revolving Credit Lender, subject to, and in accordance with, this Loan
Agreement, acting through the Agent, shall make loans and advances and otherwise
provide financial accommodations to and for the account of the Borrowers as
provided herein.

2.             Loans,  advances, and financial accommodations under the
Revolving Credit shall be made with reference to the Borrowing Base and shall be
subject to Availability.  The Borrowing Base and  Availability shall be
determined by the Agent by reference to Borrowing Base Certificates furnished as
provided in Section, below, and shall be subject to the following:

a)                  Such determination shall take into account those Reserves as
the Agent may determine as being applicable thereto.

b)                  The Cost of Eligible Inventory will be determined in a
manner consistent with current tracking practices, based on the Borrowers' stock
ledger inventory.

3.             The commitment of each Revolving Credit Lender to provide such
loans, advances, and financial accommodations is subject to Section.

4.             The proceeds of borrowings under the Revolving Credit shall be
used solely in accordance with the Business Plan for the Borrowers' working
capital and Capital Expenditures, all solely to the extent permitted by this
Loan Agreement. No proceeds of a borrowing under the Revolving Credit may be
used, nor shall any be requested, with a view towards the accumulation of any
general fund or funded reserve of the Borrowers other than in the ordinary
course of the Borrowers' business and consistent with the provisions of this
Loan Agreement.

A.             Advances in Excess of Borrowing Base (Overloans).

1.             Subject to Section below, no Revolving Credit Lender has any
obligation to make any loan or advance, or otherwise to provide any credit to or
for the benefit of the Borrowers where the result of such loan, advance, or
credit is an Overloan.

2.             The Revolving Credit Lenders' obligations, among themselves, are
subject to Section (which relates to each Revolving Credit Lender's making
amounts available to the Agent) and to Section (which relates to Permissible
Overloans).
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World of Science IBJ Whitehall Retail Finance
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3.             The Revolving Credit Lenders' providing of an Overloan on any one
occasion does not affect the obligations of each Borrower hereunder (including
each Borrower's obligation to immediately repay any amount which otherwise
constitutes an Overloan) nor obligate the Revolving Credit Lenders to do so on
any other occasion.

A.             Valuation of Collateral. The Agent's reference to a given asset
in connection with the making of loans, credits, and advances and the providing
of financial accommodations under the Revolving Credit and/or the monitoring of
compliance with the provisions hereof shall not be deemed a determination by the
Agent or any Revolving Credit Lender relative to the actual value of the asset
in question. All risks concerning the value of the Collateral are and remain
upon the Borrowers. All Collateral secures the prompt, punctual, and faithful
performance of the Liabilities whether or not relied upon by the Agent in
connection with the making of loans, credits, and advances and the providing of
financial accommodations under the Revolving Credit.

A.             Revolving Credit Lenders' Commitment. Subject to the provisions
of this Loan Agreement, the Revolving Credit Lenders shall make a loan or
advance under the Revolving Credit and the Agent shall endeavor to have an L/C
issued for the account of the Lead Borrower, in each instance if duly and timely
requested by the Lead Borrower as provided herein provided that:

1.             The Borrowing Base will not be exceeded.

2.             The amount of the loan or advance or L/C so requested does not
exceed Availability.

3.             No Borrower is InDefault.

A.             Revolving Credit Loan Requests.

1.             Requests for loans and advances under the Revolving Credit or for
the continuance or conversion of an interest rate applicable to a Revolving
Credit Loan may be requested by the Lead Borrower in such manner as may from
time to time be acceptable to the Agent.

2.             Subject to the provisions of this Loan Agreement, the Lead
Borrower may request a Revolving Credit Loan and elect an interest rate and
Interest Period to be applicable to that Revolving Credit Loan by giving notice
to the Agent by no later than the following:

a)                  If such Revolving Credit Loan is to be or is to be converted
to a Base Margin Loan: By 11:30AM on the Business Day on which the subject
Revolving Credit Loan is to be made or is to be so converted. Base Margin Loans
requested by the Lead Borrower, other than those resulting from the conversion
of a Libor Loan, shall not be less than $10,000.00.

b)                  If such Revolving Credit Loan is to be, or is to be
continued as, or converted to, a Libor Loan: By 1:00PM Three (3) Libor Business
Days before the commencement of any new Interest Period or the end of the then
applicable Interest Period (it being agreed that no Libor Loan may be requested
for any Interest Period which commences prior to August 15, 2000). Libor Loans
and conversions to
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World of Science IBJ Whitehall Retail Finance
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Libor Loans shall each be not less than $1,000,000.00 and in increments of
$250,000.00 in excess of such minimum.

c)                  Any Libor Loan which matures while any Borrower is In
Default shall be converted, at the option of the Agent, to a Base Margin Loan
notwithstanding any notice from the Lead Borrower that such Loan is to be
continued as a Libor Loan.

3.             Any request for a Revolving Credit Loan or for the continuance or
conversion of an interest rate applicable to a Revolving Credit Loan which is
made after the applicable deadline therefor, as set forth above, shall be deemed
to have been made at the opening of business on the then next Business Day or
Libor Business Day, as applicable.

4.             The Lead Borrower may request that the Agent cause the issuance
by the Issuer of L/C's for the account of the Borrowers as provided in Section.

5.             The Agent may rely on any request for a loan or advance, or other
financial accommodation under the Revolving Credit which the Agent, in good
faith, believes to have been made by a Person duly authorized to act on behalf
of the Lead Borrower and may decline to make any such requested loan or advance,
or issuance, or to provide any such financial accommodation pending the Agent's
being furnished with such documentation concerning that Person's authority to
act as may be satisfactory to the Agent.

6.             A request by the Lead Borrower for a loan or advance, or other
financial accommodation under the Revolving Credit shall be irrevocable and
shall constitute certification by each Borrower that as of the date of such
request, each of the following is true and correct:

a)                  There has been no material adverse change in the Borrowers'
financial condition from the most recent financial information furnished Agent
or any Revolving Credit Lender pursuant to this Loan Agreement.

b)                  All or a portion of any loan or advance so requested will be
set aside by the Borrowers to cover the Borrowers' obligations for sales tax on
account of sales since the then most recent borrowing pursuant to the Revolving
Credit.

c)                  Each representation which is made herein or in any of the
Loan Documents is then true and complete in all material respects as of and as
if made on the date of such request.

d)                  No Borrower is In Default.

7.             If, at any time or from time to time, any Borrower is In Default:

a)                  The Agent may suspend the Revolving Credit immediately.

b)                  Neither the Agent nor any Revolving Credit Lender shall be
obligated, during such suspension, to make any loans or advance, or to provide
any financial accommodation hereunder or to seek the issuance of any L/C.

c)                  The Agent may suspend the right of the Lead Borrower to
request any Libor Loan or to convert any Base Margin Loan to a Libor Loan.

A.             Making of Revolving Credit Loans.
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World of Science IBJ Whitehall Retail Finance
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1.             A loan or advance under the Revolving Credit shall be made by
the transfer of the proceeds of such loan or advance to the Operating Account or
as otherwise instructed by the Lead Borrower.

2.             A loan or advance shall be deemed to have been made under the
Revolving Credit (and the Borrowers shall be indebted to the Agent and the
Revolving Credit Lenders for the amount thereof immediately) at the following:

a)                  The Agent's initiation of the transfer of the proceeds of
such loan or advance in accordance with the Lead Borrower's instructions (if
such loan or advance is of funds requested by the Lead Borrower).

b)                  The charging of the amount of such loan to the Loan Account
(in all other circumstances).

3.             There shall not be any recourse to or liability of the Agent or
any Revolving Credit Lender, on account of:

a)                  Any delay in the making of any loan or advance requested
under the Revolving Credit.

b)                  Any delay by any bank or other depository institution in
treating the proceeds of any such loan or advance as collected funds.

c)                  Any delay in the receipt, and/or any loss, of funds which
constitute a loan or advance under the Revolving Credit, the wire transfer of
which was properly initiated by the Agent in accordance with wire instructions
provided to the Agent by the Lead Borrower.

A.             SwingLine Loans.

1.             For ease of administration, Base Margin Loans may be made by the
SwingLine Lender (in the aggregate, the "SwingLine Loans") in accordance with
the procedures set forth in this Loan Agreement for the making of loans and
advances under the Revolving Credit. The unpaid principal balance of the
SwingLine Loans shall not at any one time be in excess of the SwingLine Loan
Ceiling.

2.             The aggregate unpaid principal balance of SwingLine Loans shall
bear interest at the rate applicable to Base Margin Loans and shall be repayable
as a loan under the Revolving Credit.

3.             The Borrowers' obligation to repay SwingLine Loans shall be
evidenced by a note in the form of EXHIBIT, annexed hereto, executed by the
Borrowers, and payable to the SwingLine Lender.  Neither the original nor a copy
of that Note shall be required, however, to establish or prove any Liability.
The Borrowers shall execute a replacement of any SwingLine Note which has been
lost, mutilated, or destroyed thereof and deliver such replacement to the
SwingLine Lender.

4.             For all purposes of this Loan Agreement, the SwingLine Loans and
the Borrowers' obligations to the SwingLine Lender constitute Revolving Credit
Loans and are secured as "Liabilities".

5.             SwingLine Loans may be subject to periodic settlement with the
Revolving Credit Lenders as provided in this Loan Agreement.

A.             The Loan Account.
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 24

1.             An account ("Loan Account") shall be opened on the books of the
Agent in which a record shall be kept of all loans and advances made under the
Revolving Credit.

2.             The Agent shall also keep a record (either in the Loan Account or
elsewhere, as the Agent may from time to time elect) of all interest, fees,
service charges, costs, expenses, and other debits owed to the Agent and each
Revolving Credit Lender on account of the Liabilities and of all credits against
such amounts so owed.

3.             All credits against the Liabilities shall be conditional upon
final and indefeasible payment to the Agent for the account of each Revolving
Credit Lender of the items giving rise to such credits.  The amount of any item
credited against the Liabilities which is charged back against the Agent or any
Revolving Credit Lender for any reason or is not so paid shall be a Liability
and shall be added to the Loan Account, whether or not the item so charged back
or not so paid is returned.

4.             Except as otherwise provided herein, all fees, service charges,
costs, and expenses for which any Borrower is obligated hereunder are payable on
demand.  In the determination of Availability, the Agent may deem fees, service
charges, accrued interest, and other payments which will be due and payable
between the date of such determination and the first day of the then next
succeeding month as having been advanced under the Revolving Credit whether or
not such amounts are then due and payable.

5.             The Agent, without the request of the Lead Borrower, may advance
under the Revolving Credit any interest, fee, service charge, or other payment
to the Agent or any Revolving Credit Lender which is then due and payable from
any Borrower pursuant hereto and may charge the same to the Loan Account
notwithstanding that such amount so advanced may result in the Borrowing Base's
being exceeded.  Such action on the part of the Agent shall not constitute a
waiver of the Agent's rights and each Borrower's obligations under Section. Any
amount which is added to the principal balance of the Loan Account as provided
in this Section  shall bear interest at the interest rate then and thereafter
applicable to Base Margin Loans or OverAdvances, as applicable.

6.             Any statement rendered by the Agent or any Revolving Credit
Lender to the Lead Borrower concerning the Liabilities shall be considered
correct and accepted by each Borrower and shall be conclusively binding upon
each Borrower unless the Lead Borrower provides the Agent with written objection
thereto within twenty (20) days from receipt of such statement, which written
objection shall indicate, with particularity, the reason for such objection.
The Loan Account and the Agent's books and records concerning the loan
arrangement contemplated herein and the Liabilities shall be prima facie
evidence and proof of the items described therein.

A.             The Revolving Credit Notes. The Borrowers' obligation to repay
loans and advances under the Revolving Credit, with interest as provided herein,
shall be evidenced by Notes (each, a "Revolving Credit Note") in the form of
EXHIBIT, annexed hereto, executed by each Borrower, one payable to each
Revolving Credit Lender. Neither the original nor a copy of any Revolving Credit
Note shall be required, however, to establish or prove any Liability. In the
event that any Revolving Credit Note
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 25

is ever lost, mutilated, or destroyed, each Borrower shall execute a replacement
thereof and deliver such replacement to the Agent.

A.             Payment of the Loan Account.

1.             Subject to Section  below, the Borrowers may repay, without
premium or penalty, all or any portion of the principal balance of the Loan
Account from time to time until the Termination Date.

2.             The Borrowers, without notice or demand from the Agent or any
Revolving Credit Lender, shall pay the Agent that amount, from time to time,
which is necessary so that there is no Overloan outstanding.

3.             The Borrowers shall repay the then entire unpaid balance of the
Loan Account and all other Liabilities on the Termination Date.

4.             The Borrowers shall indemnify the Agent and each Revolving Credit
Lender and hold the Agent and each Revolving Credit Lender harmless from and
against any and all losses or expenses which the Agent or any such Revolving
Credit Lender may sustain or incur as a consequence of any prepayment,
conversion of or any default by any Borrower in the payment of the principal of
or interest on any Libor Loan or failure by that Borrower to complete a
borrowing of, a prepayment of or conversion of or to, a Libor Loan after notice
thereof has been given, including, but not limited to, any interest payable by
the Agent or such Revolving Credit Lender to sources of funds obtained by it in
order to make or maintain its Libor Loans hereunder. In the absence of manifest
error, a certificate as to any such additional amounts payable pursuant to this
Section shall be conclusive.

A.             Interest on Revolving Credit Loans.

1.             Each Revolving Credit Loan shall bear interest at the Base Margin
Rate unless either:

a)                  Timely notice is given (as provided in Section ) that the
subject Revolving Credit Loan (or a portion thereof) is, or is to be converted
to, a Libor Loan (it being agreed that no Libor Loan may be requested for any
Interest Period which commences prior to August 15, 2000); or

b)                  The subject Revolving Credit Loan is an OverAdvance.

2.             Each Revolving Credit Loan, to the extent that it consists of an
OverAdvance, shall bear interest at the OverAdvance Margin.

3.             Each Revolving Credit Loan which consists of a Libor Loan shall
bear interest at the Libor Rate.

4.             Subject to, and in accordance with, the provisions of this Loan
Agreement, the Lead Borrower may cause all or a part of the unpaid principal
balance of the Loan Account to bear interest at the Base Margin Rate or the
Libor Rate as specified from time to time by the Lead Borrower.

5.             The Lead Borrower shall not select, renew, or convert any
interest rate for a Revolving Credit Loan such that, in addition to interest at
the Base Margin Rate, there are any Libor Loans outstanding prior to August 15,
2000, nor thereafter more than four (4) Libor Rates applicable to the Revolving
Credit Loans at any one time.
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World of Science IBJ Whitehall Retail Finance
Page 26

6.             The Borrowers shall pay accrued and unpaid interest on each
Revolving Credit Loan in arrears as follows:

a)                  On the applicable Interest Payment Date for that Revolving
Credit Loan.

b)                  On the Termination Date and on the End Date.

c)                  Following the occurrence of any Event of Default, with such
frequency as may be determined by the Agent.

7.             Following the occurrence of any Event of Default (and whether or
not the Agent exercises the Agent's rights on account thereof), all Revolving
Credit Loans shall bear interest, at the option of the Agent or at the
instruction of the Super Majority Lenders at the following rates:

a)                  All Revolving Credit Loans, except to the extent that they
constitute OverAdvances: At the aggregate of the interest rate then applicable
from time to time to Base Margin Loans plus Two Percent (2%) per annum.

b)                  All Revolving Credit Loans, to the extent that they
constitute OverAdvances: At the aggregate of the interest rate applicable from
time to time to OverAdvances plus Two Percent (2%) per annum.

A.             Revolving Credit Commitment Fee.

1.             In consideration of the commitment to make loans and advances to
the Borrowers under the Revolving Credit, and to maintain sufficient funds
available for such purpose, there has been earned and the Borrowers shall pay
the "Revolving Credit Commitment Fee" (so referred to herein) in the amount and
payable as provided in the Fee Letter.

2.             Upon the termination of the Revolving Credit and upon the
occurrence of any Event of Default described in Section and at the option of the
Agent upon the occurrence of any other Event of Default, any remaining
installments of the Revolving Credit Commitment Fee shall be immediately due and
payable.

A.             OverAdvance Facility Fee.  On the first day of each month
following any month during which any Revolving Credit Loan is made under, or is
outstanding under, the OverAdvance Facility, the Borrowers shall pay a fee of
$5,000.00.

A.             Agent's Fee.  In addition to any other fee or expense to be paid
by the Borrowers on account of the Revolving Credit, the Borrowers shall pay the
Agent the "Agent's Fee" at the times and in the amounts as set forth the Fee
Letter.

A.             Unused Line Fee.  In addition to any other fee to be paid by the
Borrowers on account of the Revolving Credit, the Borrowers shall pay the Agent
the "Unused Line Fee" (so referred to herein) of 0.25% per annum of the average
difference, during the quarter just ended (or relevant period with respect to
the payment being made on the Termination Date) between the Revolving Credit
Ceiling and the aggregate of the unpaid principal balance of the Loan Account
(including any SwingLine
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 27

Loans) and the undrawn Stated Amount of L/C's outstanding during the relevant
period. The Unused Line Fee shall be paid in arrears, on the first day of each
quarter after the execution of this Loan Agreement and on the Termination Date.

A.             Early Termination Fee.

1.             In the event that the Termination Date occurs, for any reason,
prior to the Maturity Date, the Borrowers shall pay to the Agent, for the
ratable benefit of the Revolving Credit Lenders, the "Revolving Credit Early
Termination Fee" (so referred to herein) consisting of the following percentage
of the Revolving Credit Ceiling:

        Early Termination Fee as Percentage of Revolving Credit Ceiling

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Date                      Unless Early              Unless Early              Unless Early
                          Termination Is            Termination Is            Termination Is
                          Contemporaneous with      Contemporaneous with      Contemporaneous with
                          Qualified Refinancing     Qualified Refinancing     IWRF Refinancing
                          or IWRF Refinancing
----------------------------------------------------------------------------------------------------
<S>                      <C>                        <C>                       <C>
On or Prior to March     2.0%                       1.5%                      0.0%
31, 2001
----------------------------------------------------------------------------------------------------
After March 31, 2001     1.5%                       1.0%                      0.0%
and on or prior to
March 31, 2002
----------------------------------------------------------------------------------------------------
After March 31, 2002     1.0%                       1.0%                      1.0%
----------------------------------------------------------------------------------------------------
</TABLE>

1.             The Lead Borrower, in conjunction with its providing of ninety
(90) days irrevocable notice of the setting of the Termination Date, may (but
shall not be obligated to) give the Agent the opportunity of last refusal to
provide the Borrowers with a working capital facility to refinance the Revolving
Credit on terms which are equal to or better than the most favorable bona fide
proposal for working capital which the Borrower shall have obtained in
anticipation of the early termination of the Revolving Credit.

a)                  Such right of last refusal may be exercised by the Agent
within fifteen (15) days following receipt by the Agent of written notice from
the Lead Borrower, with reasonable detail, of the terms of such bona fide
proposal (which reasonable detail may consist of a copy of the subject
proposal).

b)                  In the event that

(1)            the Agent fails to exercise its right of last refusal; and

(2)            no Event of Default occurs earlier than the date set as the
Termination Date by the Lead Borrower's irrevocable written notice to the Agent;
and

(3)            the Borrowers, on the date set as the Termination Date by the
Lead Borrower's irrevocable written notice to the Agent (or such earlier date to
which the Agent may agree)

          actually refinances the Revolving Credit on terms which are identical
          to or better than those outlined in the bona fide proposal, a copy of
          which had
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 28

          been provided to the Agent pursuant to Section, then such refinancing
          shall constitute a "Qualified Refinancing.".

A.             Concerning Fees.  The Borrowers shall not be entitled to any
credit, rebate or repayment of any fee earned by the Agent or any Revolving
Credit Lender pursuant to this Loan Agreement or any Loan Document
notwithstanding any termination of this Loan Agreement or suspension or
termination of the Agent's and any Revolving Credit Lender's respective
obligation to make loans and advances hereunder.

A.             Agent's and Revolving Credit Lenders' Discretion.

1.             Each reference in the Loan Documents to the exercise of
discretion or the like by the Agent or any Revolving Credit Lender shall be to
such Person's exercise of its judgment, in good faith (which shall be presumed),
based upon such Person's consideration of any such factors as the Agent or that
Revolving Credit Lender, taking into account information of which that Person
then has actual knowledge, believes:

a)                  Will or reasonably could be expected to affect the value of
the Collateral, the enforceability of the Agent's Collateral Interests therein,
or the amount which the Agent would likely realize therefrom (taking into
account delays which may possibly be encountered in the Agent's realizing upon
the Collateral and likely Costs of Collection).

b)                  Indicates that any report or financial information delivered
to the Agent or any Revolving Credit Lender by or on behalf of any Borrower is
incomplete, inaccurate, or misleading in any material manner or was not prepared
in accordance with the requirements of this Loan Agreement.

c)                  Suggests an increase in the likelihood that any Borrower
will become the subject of a bankruptcy or insolvency proceeding.

d)                  Suggests that any Borrower is In Default.

2.             In the exercise of such judgement, the Agent and each Revolving
Credit Lender also may take into account any of the following factors:

a)                  Those included in, or tested by, the definitions of
"Eligible Inventory" and "Cost".

b)                  The current financial and business climate of the industry
in which each Borrower competes (having regard for that Borrower's position in
that industry).

c)                  General macroeconomic conditions which have a material
effect on the Borrowers' cost structure.

d)                  Material changes in or to the mix of the Borrowers'
Inventory.

e)                  Seasonality with respect to the Borrowers' Inventory and
patterns of retail sales.

f)                  Such other factors as the Agent and each Revolving Credit
Lender determines as having a material bearing on credit risks associated with
the providing of loans and financial accommodations to the Borrowers.
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 29

3.             The burden of establishing the failure of the Agent or any
Revolving Credit Lender to have acted in a reasonable manner in such Person's
exercise of such discretion shall be the Borrowers' and may be made only by
clear and convincing evidence.

A.             Procedures For Issuance of L/C's.

1.             The Lead Borrower may request that the Agent cause the issuance
by the Issuer of L/C's for the account of any Borrower.  Each such request shall
be in such manner as may from time to time be acceptable to the Agent.

2.             The Agent will endeavor to cause the issuance of any L/C so
requested by the Lead Borrower, provided that, at the time that the request is
made, the Revolving Credit has not been suspended as provided in Section and if
so issued:

a)                  The aggregate Stated Amount of all L/C's then outstanding,
does not exceed Two Million Dollars and No Cents ($2,000,000.00).

b)                  The expiry of the L/C is not later than the earlier of
Thirty (30) days prior to the Maturity Date or the following:

(1)            Standby's: One (1) year from initial issuance.

(2)            Documentary's: Sixty (60) days from issuance.

c)                  An Overloan will not result from the issuance of the subject
L/C.

3.             Each Borrower shall execute such documentation to apply for and
support the issuance of an L/C as may be required by the Issuer.

4.             There shall not be any recourse to, nor liability of, the Agent
or any Revolving Credit Lender on account of

a)                  Any delay or refusal by an Issuer to issue an L/C;

b)                  Any action or inaction of an Issuer on account of or in
respect to, any L/C.

5.             The Borrowers shall reimburse the Issuer for the amount of any
honoring of a drawing under an L/C on the same day on which such honoring takes
place. The Agent, without the request of any Borrower, may advance under the
Revolving Credit (and charge to the Loan Account) the amount of any honoring of
any L/C and other amount for which any Borrower, the Issuer, or the Revolving
Credit Lenders become obligated on account of, or in respect to, any L/C. Such
advance shall be made whether or not any Borrower is InDefault or such advance
would result in an Overloan. Such action shall not constitute a waiver of the
Agent's rights under Section hereof.

A.             Fees For L/C's.

1.             The Borrowers shall pay to the Agent a fee, on account of L/C's,
the issuance of which had been procured by the Agent, monthly in arrears, and on
the Termination Date and on the End Date, equal to 2.25% per annum of the
weighted average Stated Amount of all L/C's outstanding during the period in
respect of which such fee is being paid except that, following the occurrence of
any Event of Default, such fee shall be increased by two percent (2%) per annum.
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 30

2.             In addition to the fee to be paid as provided in Subsection,
above, the Borrowers shall pay to the Agent (or to the Issuer, if so requested
by the Agent), on demand, all issuance, processing, negotiation, amendment, and
administrative fees and other amounts charged by the Issuer on account of, or in
respect to, any L/C.

3.             If any change in Applicable Law shall either:

a)                  impose, modify or deem applicable any reserve, special
deposit or similar requirements against letters of credit heretofore or
hereafter issued by any Issuer or with respect to which any Revolving Credit
Lender or any Issuer has an obligation to lend to fund drawings under any L/C;
or

b)                  impose on any Issuer any other condition or requirements
relating to any such letters of credit;

and the result of any event referred to in Section or, above, shall be to
increase the cost to any Revolving Credit Lender or to any Issuer of issuing or
maintaining any L/C (which increase in cost shall be the result of such Issuer's
reasonable allocation among that Revolving Credit Lender's or Issuer's letter of
credit customers of the aggregate of such cost increases resulting from such
events), then, upon demand by the Agent and delivery by the Agent to the Lead
Borrower of a certificate of an officer of the subject Revolving Credit Lender
or the subject Issuer describing such change in law, executive order,
regulation, directive, or interpretation thereof, its effect on such Revolving
Credit Lender or such Issuer, and the basis for determining such increased costs
and their allocation, the Borrowers shall immediately pay to the Agent, from
time to time as specified by the Agent, such amounts as shall be sufficient to
compensate the subject Revolving Credit Lender or the subject Issuer for such
increased cost.  Any Revolving Credit Lender's or any Issuer's determination of
costs incurred under Section or, above, and the allocation, if any, of such
costs among the Borrowers and other letter of credit customers of such Revolving
Credit Lender or such Issuer, if done in good faith and made on an equitable
basis and in accordance with such officer's certificate, shall be conclusive and
binding on the Borrowers.

A.             Changed Circumstances.

1.             The Agent may advise the Lead Borrower that the Agent has made
the good faith determination (which determination shall be final and conclusive)
of any of the following:

a)                  Adequate and fair means do not exist for ascertaining the
rate for Libor Loans.

b)                  The continuation of or conversion of any Revolving Credit
Loan to a Libor Loan has been made impracticable or unlawful by the occurrence
of a contingency that materially and adversely affects the applicable market or
the compliance by the Agent or any Revolving Credit Lender with Applicable Law.

c)                  The indices on which the interest rates for Libor Loans are
based shall no longer represent the effective cost to IBJ Whitehall Bank for
U.S. dollar deposits in the interbank market for deposits in which it regularly
participates.
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 31

2.             In the event that the Agent advises the Lead Borrower of an
occurrence described in Section, then, until the Agent notifies the Lead
Borrower that the circumstances giving rise to such notice no longer apply:

a)                  All affected Revolving Credit Loans shall thereafter bear
interest at the Base Margin Rate.

b)                  The obligation of the Agent or each Revolving Credit Lender
to make loans of the type affected by such changed circumstances or to permit
the Lead Borrower to select the affected interest rate as otherwise applicable
to any Revolving Credit Loans shall be suspended.

c)                  Any notice which the Lead Borrower had given the Agent with
respect to any Libor Loan, the time for action with respect to which has not
occurred prior to the Agent's having given notice pursuant to Section, shall be
deemed at the option of the Agent to not having been given.

A.             Designation of Lead Borrower as Borrowers' Agent.

1.             Each Borrower hereby designates the Lead Borrower as that
Borrower's agent to obtain loans and advances under the Revolving Credit, the
proceeds of which shall be available to each Borrower for those uses set forth
in Section.  As the disclosed principal for its agent, each Borrower shall be
obligated to the Agent and each Revolving Credit Lender on account of loans and
advances so made under the Revolving Credit as if made directly by the Revolving
Credit Lenders to that Borrower, notwithstanding the manner by which such loans
and advances are recorded on the books and records of the Lead Borrower and of
any Borrower.

2.             The Lead Borrower shall act as a conduit for each Borrower
(including itself, as a "Borrower") on whose behalf the Lead Borrower has
requested a Revolving Credit Loan.

3.             The proceeds of each loan and advance provided under the
Revolving Credit which is requested by the Lead Borrower shall be deposited into
the Operating Account or as otherwise indicated by the Lead Borrower.  The Lead
Borrower shall cause the transfer of the proceeds thereof to the (those)
Borrower(s) on whose behalf such loan and advance was obtained.  Neither the
Agent nor any Revolving Credit Lender shall have any obligation to see to the
application of such proceeds.

4.             Notwithstanding anything to the contrary in this Section , each
Borrower shall be jointly and severally liable for all Liabilities.

A.             Lenders' Commitments.

1.             Subject to Section (which Section  provides for assignments and
assumptions of commitments), each Revolving Credit Lender's "Revolving Credit
Percentage Commitment" and  "Revolving Credit Dollar Commitment" (respectively
so referred to herein) are set forth on EXHIBIT, annexed hereto.

2.             The obligations of each Revolving Credit Lender are several and
not joint.  No Revolving Credit Lender shall have any obligation to make any
loan or advance under the Revolving Credit in excess of the lesser of the
following:
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 32

a)                  That Revolving Credit Lender's Revolving Credit Commitment
Percentage of the subject loan or advance or of Availability.

b)                  that Revolving Credit Lender's Revolving Credit Dollar
Commitment.

3.             No Revolving Credit Lender shall have any liability to the
Borrowers on account of the failure of any other Revolving Credit Lender to
provide any loan or advance under the Revolving Credit nor any obligation to
make up any shortfall which may be created by such failure.

4.             The Revolving Credit Dollar Commitments, Revolving Credit
Commitment Percentages, and identities of the Revolving Credit Lenders may be
changed, from time to time by the reallocation or assignment of Revolving Credit
Dollar Commitments and Revolving Credit Commitment Percentages amongst the
Revolving Credit Lenders or with other Persons who determine to become
"Revolving Credit Lenders", provided, however unless an Event of Default has
occurred (in which event, no consent of any Borrower is required) any assignment
to a Person not then a Revolving Credit Lender shall be subject to the prior
consent of the Lead Borrower (not to be unreasonably withheld), which consent
will be deemed given unless the Lead Borrower provides the Agent with written
objection, not more than Five (5) Business Days after the Agent shall have given
the Lead Borrower written notice of a proposed assignment).

5.             Upon written notice given the Lead Borrower from time to time by
the Agent, of any assignment or allocation referenced in Section:

a)                  Each Borrower shall execute one or more replacement
Revolving Credit Notes to reflect such changed Revolving Credit Dollar
Commitments, Revolving Credit Commitment Percentages, and identities and shall
deliver such replacement Revolving Credit Notes to the Agent (which promptly
thereafter shall deliver to the Lead Borrower the Revolving Credit Notes so
replaced) provided however, in the event that a Revolving Credit Note is to be
exchanged following its acceleration or the entry of an order for relief under
the Bankruptcy Code with respect to any Borrower, the Agent, in lieu of causing
the Borrowers to execute one or more new Revolving Credit Notes, may issue the
Agent's certificate confirming the resulting Revolving Credit Dollar Commitments
and Revolving Credit Percentage Commitments.

b)                  Such change shall be effective from the effective date
specified in such written notice and any Person added as a Revolving Credit
Lender shall have all rights,  privileges, and obligations of a Revolving
Credit Lender hereunder thereafter as if such Person had been a signatory to
this Loan Agreement and any other Loan Document to which a Revolving Credit
Lender is a signatory and any Person removed as a Revolving Credit Lender shall
be relieved of any obligations or responsibilities of a Revolving Credit Lender
hereunder thereafter.

I.        .    Conditions Precedent:

     As a condition to the effectiveness of this Loan Agreement, the
establishment of the Revolving Credit, and the making of the first loan under
the Revolving Credit, each of
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 33

the documents respectively described in Sections through and including, (each
in form and substance satisfactory to the Agent) shall have been delivered to
the Agent, and the conditions respectively described in Sections through and
including, shall have been satisfied:

A.             Corporate Due Diligence.

1.             Certificates of corporate good standing for each Borrower,
respectively issued by the Secretary of State for the State in which that
Borrower is incorporated.

2.             Certificates of due qualification, in good standing, issued by
the Secretary(ies) of State of each State in which the nature of the business of
each Borrower conducted or assets owned by each Borrower could require such
qualification.

3.             Certificates of each Borrower's Secretary of the due adoption,
continued effectiveness, and setting forth the texts of, each corporate
resolution adopted in connection with the establishment of the loan arrangement
contemplated by the Loan Documents and attesting to the true signatures of each
Person authorized as a signatory to any of the Loan Documents.

A.             Opinion.  An opinion of counsel to the Borrowers in form and
substance satisfactory to the Agent.

A.             Additional Documents.  Such additional instruments and documents
as the Agent or its counsel reasonably may require or request including, without
limitation, the following:

1.             Satisfactory background checks on the Lead Borrower's key
management personnel.

2.             Satisfactory reconciliation of the Borrowers' year end physical
inventory to its general ledger and stock ledger balances.

3.             Satisfactory evidence of the filing of the Borrowers' tax returns
on  account of which the Tax Refunds are anticipated and of an opinion of the
Borrowers' accountants which reflects a high confidence of the validity of the
Borrowers' claims to the Tax Refunds.

A.             Officers' Certificates.  Certificates executed by the President
and the Chief Financial Officer of the Lead Borrower and stating that the
representations and warranties made by the Borrowers to the Agent and the
Revolving Credit Lenders in the Loan Documents are true and complete in all
material respects as of the date of such Certificate, and that no event has
occurred which is or which, solely with the giving of notice or passage of time
(or both) would be an Event of Default.

A.             Representations and Warranties.  Each of the representations
made by or on behalf of each Borrower in this Loan Agreement or in any of the
other Loan Documents or in any other report, statement, document, or paper
provided by or on
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 34

behalf of each Borrower shall be true and complete in all material respects as
of the date as of which such representation or warranty was made.

A.             Minimum Day One Availability. After giving effect to the
first funding  under the Revolving Credit; all checks (if any) written by any
Borrower and then being held in the possession of any Borrower (i.e. "held
checks"); accounts payable which are beyond credit terms then accorded the
Borrowers (other than those (if any)  which, in the ordinary course of the
Borrower's business, have gone beyond normal credit terms on account of a bona
fide dispute or adjustment or on account of a delay in the issuance, by the
creditor, of an offsetting credit); overdrafts (excluding float, in the ordinary
course of business); any charges to the Loan Account made in connection with the
establishment of the credit facility contemplated hereby; and L/C's to be issued
at, or immediately subsequent to, such establishment, Availability shall not be
less than $1,300,000.00.

A.             All Fees and Expenses Paid.  All fees due at or immediately
after the first funding under the Revolving Credit and all costs and expenses
incurred by the Agent in connection with the establishment of the credit
facility contemplated hereby (including the fees and expenses of counsel to the
Agent) shall have been paid in full.

A.             No Borrower InDefault.  No Borrower shall be InDefault.

A.             No Adverse Change. No event shall have occurred or failed to
occur, which occurrence or failure is having or could have a materially adverse
effect upon any Borrower's financial condition when compared with such financial
condition at the close of the Borrowers' Fiscal 1999 on January 29, 2000.

A.             Payoff Letter/Termination Statements. The Agent shall have
received a payoff letter from the Borrowers' existing lender, in form and
substance satisfactory to the Agent, concerning the amounts necessary to satisfy
all obligations to such lender, including, without limitation, an agreement by
said lender therein to provide all necessary UCC-3 Termination Statements and
other Collateral discharges as the Agent may request from time to time.

No document shall be deemed delivered to the Agent or any Revolving Credit
Lender until received and accepted by the Agent at its head offices in
Braintree, Massachusetts.  Under no circumstances shall this Loan Agreement take
effect until executed and accepted by the Agent at said head office.

I.        .    General Representations, Covenants and Warranties:

     To induce each Revolving Credit Lender to establish the credit facility
contemplated herein and to induce the Revolving Credit Lenders to provide loans
and
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World of Science IBJ Whitehall Retail Finance
Page 35

advances under the Revolving Credit (each of which loans shall be deemed to
have been made in reliance thereupon) the Borrowers, in addition to all other
representations, warranties, and covenants made by any Borrower in any other
Loan Document, make those representations, warranties, and covenants included in
this Article of the Loan Agreement.

A.             Payment and Performance of Liabilities. The Borrowers shall pay
each payment Liability when due (or when demanded, if payable on demand) and
shall promptly, punctually, and faithfully perform each other Liability.

A.             Due Organization. Corporate Authorization. No Conflicts.

1.             Each Borrower presently is and hereafter shall remain in good
standing as a corporation under the laws of the State of its incorporation, as
set forth in the Introduction to this Loan Agreement and is and shall hereafter
remain duly qualified and in good standing in every other State in which, by
reason of the nature or location of each Borrower's assets or operation of each
Borrower's business, such qualification may be necessary, except where the
failure to so qualify would have no more than a de minimis adverse effect on the
business or a assets of any Borrower.

2.             Each Affiliate is listed on EXHIBIT, annexed hereto. The Lead
Borrower shall provide the Agent with prior written notice of any entity's
becoming or ceasing to be an Affiliate.

3.             No Borrower shall not change its State of incorporation nor its
taxpayer identification number.

4.             Each Borrower has all requisite corporate power and authority to
execute and deliver all Loan Documents to which that Borrower is a party and has
and will hereafter retain all requisite corporate power to perform all
Liabilities.

5.             The execution and delivery by each Borrower of each Loan Document
to which it is a party; each Borrower's consummation of the transactions
contemplated by such Loan Documents (including, without limitation, the creation
of Collateral Interests by that Borrower to secure the Liabilities); each
Borrower's performance under those of the Loan Documents to which it is a party;
the borrowings hereunder; and the use of the proceeds thereof:

a)                  Have been duly authorized by all necessary corporate action.

b)                  Do not, and will not, contravene in any material respect any
provision of any Requirement of Law or obligation of that Borrower.

c)                  Will not result in the creation or imposition of, or the
obligation to create or impose, any Encumbrance upon any assets of that Borrower
pursuant to any Requirement of Law or obligation, except pursuant to the Loan
Documents.

6.             The Loan Documents have been duly executed and delivered by each
Borrower and are the legal, valid and binding obligations of each Borrower,
enforceable against each Borrower in accordance with their respective terms.
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World of Science IBJ Whitehall Retail Finance
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A.             Trade Names.

1.             EXHIBIT, annexed hereto, is a listing of:

a)                  All names under which any Borrower ever conducted its
business.

b)                  All Persons with whom any Borrower ever consolidated or
merged, or from whom any Borrower ever acquired in a single transaction or in a
series of related transactions substantially all of such Person's assets.

2.             The Lead Borrower will provide the Agent with not less than
twenty-one (21) days prior written notice (with reasonable particularity) of any
change to any Borrower's name from that under which that Borrower is conducting
its business at the execution of this Loan Agreement and will not effect such
change unless each Borrower is then in compliance with all provisions of this
Loan Agreement.

A.             Infrastructure.

1.             Each Borrower has and will maintain a sufficient infrastructure
to conduct its business as presently conducted and as contemplated to be
conducted as described in the Business Plan.

2.             Each Borrower owns and possesses, or has the right to use (and
will hereafter own, possess, or have such right to use) all patents, industrial
designs, trademarks, trade names, trade styles, brand names, service marks,
logos, copyrights, trade secrets, know-how, confidential information, and other
intellectual or proprietary property of any third Person necessary for that
Borrower's conduct of that Borrower's business.

3.             The conduct by each Borrower of that Borrower's business does not
presently infringe (nor will any Borrower conduct its business in the future so
as to infringe) the patents, industrial designs, trademarks, trade names, trade
styles, brand names, service marks, logos, copyrights, trade secrets, know-how,
confidential information, or other intellectual or proprietary property of any
third Person.

A.             Indebtedness.  No Borrower has, and none shall have any
Indebtedness with the exceptions of:

1.             Any Indebtedness on account of the Revolving Credit.

2.             The Indebtedness (if any) listed on EXHIBIT, annexed hereto.

A.             Licenses.  Each license, distributorship, franchise, and similar
agreement issued to, or to which any Borrower is a party is in full force and
effect. No party to any such license or agreement is in default or violation
thereof. No Borrower has received any notice or threat of cancellation of any
such license or agreement.

A.             Leases.

1.             EXHIBIT, annexed hereto, is a schedule of all presently effective
Leases and Capital Leases. Each of such Leases and Capital Leases is in full
force and effect. No party to any such Lease or Capital Lease is in default or
violation of any such
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World of Science IBJ Whitehall Retail Finance
Page 37

Lease or Capital Lease. No Borrower has received any notice or threat of
cancellation of any such Lease or Capital Lease.

2.             No Borrower will amend any Lease except where such amendment or
termination is favorable to that Borrower

3.             The Borrowers may open and close the following number of
Permanent Stores during their Fiscal 2000 and such number of Permanent Stores
for Fiscal years thereafter as the Agent may reasonably determine following its
review of the Borrower's Business Plan for the relevant Fiscal year provided
pursuant to Section:

a)                  Open: Up to 4 Permanent Stores.

b)                  Close: Up to 10 Permanent Stores.

4.             The Borrowers may have up to the following number of Season
Stores open during the following periods in their Fiscal 2000 and such number of
Seasonal Stores for Fiscal years thereafter as the Agent may reasonably
determine following its review of the Borrower's Business Plan for the relevant
Fiscal year provided pursuant to Section:

a)                  February 1 to July 31:   Up to 25 Seasonal Stores.

b)                  August 1 to January 31:  Up to 70 Seasonal Stores.

A.             Requirements of Law.  Each Borrower is in compliance, in all
material respects with, and shall hereafter comply with and use its assets in
compliance in all material respects with, all Requirements of Law except where
the failure of such compliance would have not more than a de minimis adverse
effect on the Borrowers' business or assets. No Borrower has received any notice
of any violation of any Applicable Law (other than of a violation which has no
more than a de minimis adverse effect on the Borrowers' business or assets),
which violation has not been cured or otherwise remedied.

A.             Labor Relations.

1.             No Borrower has been, and none is presently a party to any
collective bargaining or other labor contract.

2.             There is not presently pending and, to any Borrower's knowledge,
there is not threatened any of the following:

a)                  Any strike, slowdown, picketing, work stoppage, or employee
grievance process.

b)                  Any proceeding against or affecting any Borrower relating to
the alleged violation of any Applicable Law pertaining to labor relations or
employment practices.

c)                  Any lockout of any employees by any Borrower, (and no such
action is contemplated by any Borrower).

d)                  Any application for the certification of a collective
bargaining agent.

3.             No event has occurred or circumstance exists which could provide
the basis for any work stoppage or other labor dispute.
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World of Science IBJ Whitehall Retail Finance
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4.             Each Borrower has complied in all material respects with all
Applicable Law pertaining to labor relations or employment practices.

A.             Taxes. With respect to each Borrower's federal, state, and local
tax liabilities and obligations:

1.             That Borrower, in compliance with Applicable Law, has properly
filed all returns due to be filed up to the date of this Loan Agreement.

2.             Except as described on EXHIBIT,

a)                  at no time has any  Borrower received from any taxing
authority any request to perform any examination of or with respect to that
Borrower nor written or verbal notice in any way relating to any claimed failure
by that Borrower to comply with Applicable Law concerning payment of any taxes
or other amounts in the nature of taxes.

b)                  No agreement is extant which waives or extends any statute
of limitations applicable to the right of any taxing authority to assert a
deficiency or make any other claim for or in respect any taxes or obligations in
the nature of taxes.

3.             Each Borrower has, and hereafter shall: pay, as they become due
and payable, all taxes and unemployment contributions and other charges of any
kind or nature levied, assessed or claimed against that Borrower or the
Collateral by any person or entity whose claim could result in an Encumbrance
upon any asset of that Borrower or by any governmental authority; properly
exercise any trust responsibilities imposed upon that Borrower by reason of
withholding from employees' pay or by reason of that Borrower's receipt of sales
tax or other funds for the account of any third party; timely make all
contributions and other payments as may be required pursuant to any Employee
Benefit Plan now or hereafter established by that Borrower; and timely file all
tax and other returns and other reports with each governmental authority to whom
that Borrower is obligated to so file.

A.             The Tax Refunds.

1.             A Tax Refund shall not be included in the Borrowing Base unless
the Lead Borrower has provided the Agent either:

a)                  with a copy of and proof of  the filing, with the
appropriate governmental authority, of all  materials requisite to establish its
entitlement to that Tax Refund; or

b)                  written confirmation from the Lead Borrower's accountants
which confirms such accountants' high confidence in the Borrowers' entitlement
to the Tax Refund and the likelihood of its being paid, without any claim or
set-off, within a reasonable period of time after the filing for the relevant
Tax Refund.

2.             The Lead Borrower shall diligently and expeditiously, in good
faith, and by appropriate procedures,  prosecute its collection of  the Tax
Refunds in compliance with all Applicable Laws.

3.             The Lead Borrower shall:
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World of Science IBJ Whitehall Retail Finance
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a)                  provide the Agent, when received by the Lead Borrower  or
when filed or submitted on behalf of the Lead Borrower, all papers,
correspondence, and communications with respect to the Tax Refunds; and

b)                  provide the Agent with written advice (with reasonable
particularity) of any material event or occurrence with respect to any Tax
Refund.

4.             The Borrowers will not compromise or settle any Tax Refund
without the prior written consent of the Agent (which consent will not be
unreasonably withheld or delayed) where, as a result of such compromise or
settlement, the percentage of the subject Tax Refund which would be realized by
the  Borrowers would be less than the Tax Refund Advance Rate.

5.             The Borrowers, following  the occurrence of any Event of Default,

a)                    will permit the Agent, at the Agent's option, to the
exclusion of the Borrowers, to negotiate, prosecute, settle or compromise each
Tax Refund claim and for such purpose hereby appoint the Agent as the Borrowers'
attorney in fact to negotiate, prosecute, settle, and compromise such Tax
Refund claim and to endorse in favor of the Agent any and all drafts and other
instruments with respect to such Tax Refund;

b)                  will execute such Powers of Attorney as the Internal Revenue
Service or any other taxing authority may require with respect to the Agent's
exercise of its rights set forth in Section, which appointment, being coupled
with an interest, is irrevocable until this Loan Agreement is terminated by a
written instrument executed by a duly authorized officer of the Agent.

6.             A claim shall cease to be a "Tax Refund" at the earliest of the
following:

a)                  Failure to have filed for the subject Tax Refund within30
days of its having been included in the Borrowing Base.

b)                  Receipt of payment of all or any part of that Tax Refund.

c)                  Disallowance of the claim by the relevant tax authority.

d)                  Failure by the Lead Borrower diligently and expeditiously
to prosecute the relevant claim by appropriate procedures.

e)                  Abandonment of the claim by the Lead Borrower.

f)                  Failure of the Borrowers to file all required tax returns
(with respect to the federal government and those States for which a Tax Refund
has been sought) on or before April 15, 2000 and to provide the Agent (within
Three (3) Business Days after such filing) with true and correct copies of all
such tax returns.

g)                  July 31, 2000.

A.             No Margin Stock.  No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U, T, and X of the Board of Governors of the
Federal Reserve System of the United States). No part of the proceeds of any
borrowing hereunder will be used at any time to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
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World of Science IBJ Whitehall Retail Finance
Page 40

A.             ERISA.

1.             Neither any Borrower nor any ERISA Affiliate has ever:

a)                  Violated or failed to be in full compliance with any
Borrower's Employee Benefit Plan.

b)                  Failed timely to file all reports and filings required by
ERISA to be filed by any Borrower.

c)                  Engaged in any nonexempt "prohibited transactions" or
"reportable events" (respectively as described in ERISA).

d)                  Engaged in, or commit, any act such that a tax or penalty
reasonably could be imposed upon any Borrower on account thereof pursuant to
ERISA.

e)                  Accumulated any material cumulative funding deficiency
within the meaning of ERISA.

f)                  Terminated any Employee Benefit Plan such that a lien could
be asserted against any assets of any Borrower on account thereof pursuant to
ERISA.

g)                  Been a member of, contributed to, or have any obligation
under any Employee Benefit Plan which is a multiemployer plan within the meaning
of Section 4001(a) of ERISA.

2.             Neither any Borrower nor any ERISA Affiliate shall ever engage in
any action of the type described in Section.

A.             Hazardous Materials.

1.             No Borrower has ever been alleged to have been legally
responsible for any release or threat of release of any Hazardous Material.

2.             Each Borrower shall dispose of any Hazardous Material only in
compliance with all Environmental Laws.

A.             Litigation.   Except as described in EXHIBIT, annexed hereto,
there is not presently pending or threatened by or against any Borrower any
suit, action, proceeding, or investigation which, if determined adversely to any
Borrower, would have more than a de minimis adverse effect upon a Borrower's
financial condition or ability to conduct its business as such business is
presently conducted or is contemplated to be conducted in the foreseeable
future.

A.             Dividends. Investments. Corporate Action. No Borrower shall:

1.             Pay any cash dividend or make any other distribution in respect
of any class of that Borrower's capital stock.

2.             Except for a Permissible Redemption, own, redeem, retire,
purchase, or acquire any of any Borrower's capital stock.

3.             Invest in or purchase any stock or securities or rights to
purchase any such stock or securities, of any Person.

4.             Merge or consolidate or be merged or consolidated with or into
any other corporation or other entity.
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World of Science IBJ Whitehall Retail Finance
Page 41

5.             Consolidate any of that Borrower's operations with those of any
other Person other than of another Borrower.

6.             Organize or create any Affiliate.

7.             Subordinate any debts or obligations owed to that Borrower by any
third party to any other debts owed by such third party to any other Person.

8.             Acquire any assets other than in the ordinary course and conduct
of that Borrower's business as conducted at the execution of this Loan Agreement
or as permitted by Section.

A.             Loans.  No Borrower shall make any loans or advances to, nor
acquire the Indebtedness of, any Person, provided, however, the foregoing does
not prohibit any of the following:

1.             Advance payments made to that Borrower's suppliers in the
ordinary course.

2.             Advances to that Borrower's officers, employees, and salespersons
with respect to reasonable expenses to be incurred by such officers, employees,
and salespersons for the benefit of that Borrower, which expenses are properly
substantiated by the person seeking such advance and properly reimbursable by
that Borrower.

A.             Line of Business.  No Borrower shall engage in any business other
than the business in which it is currently engaged or a business reasonably
related thereto (the conduct of which reasonably related business is reflected
in the Business Plan).

A.             Affiliate Transactions.  No Borrower shall make any payment, nor
give any value to any Affiliate except for goods and services actually purchased
by that Borrower from, or sold by that Borrower to, such Affiliate for a price
and on terms which shall

1.             be competitive and fully deductible as an "ordinary and necessary
business expense" and/or fully depreciable under the Internal Revenue Code of
1986 and the Treasury Regulations, each as amended; and

2.             be no less favorable to that Borrower than those which would have
been charged and imposed in an arms length transaction.

A.             Adequacy of Disclosure.

1.             All financial statements furnished to the Agent and to each
Revolving Credit Lender by each Borrower have been prepared in accordance with
GAAP consistently applied and present fairly the condition of the Borrowers at
the date(s) thereof and the results of operations and cash flows for the
period(s) covered (provided however, that unaudited financial statements are
subject to normal year end adjustments and to the absence of footnotes). There
has been no change in the Consolidated financial condition, results of
operations, or cash flows of the Borrowers since the date(s) of such financial
statements, other than changes in the ordinary course of
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World of Science IBJ Whitehall Retail Finance
Page 42

business, which changes have not been materially adverse, either singularly or
in the aggregate.

2.             At the date of this Loan Agreement, no Borrower had any
contingent obligations or obligation under any Lease or Capital Lease not
disclosed on those of the above referenced financial statements on which, under
GAAP, such disclosure is required.

3.             No document, instrument, agreement, or paper now or hereafter
given the Agent and to each Revolving Credit Lender by or on behalf of each
Borrower or any guarantor of the Liabilities in connection with the execution of
this Loan Agreement by the Agent and each Revolving Credit Lender 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 therein not
misleading.  There is no fact known to any Borrower which has, or which, in the
foreseeable future could have, a material adverse effect on the financial
condition of any Borrower or any such guarantor which has not been disclosed in
writing to the Agent and to each Revolving Credit Lender.

A.             No Restrictions on Liabilities.  No Borrower shall enter into
or directly or indirectly become subject to any agreement which prohibits or
restricts, in any manner, any Borrower's:

1.             Creation of, and granting of Collateral Interests in favor of the
Agent.

2.             Incurrence of Liabilities.

A.             Other Covenants.  No Borrower shall indirectly do or cause
to be done any act which, if done directly by that Borrower, would breach any
covenant contained in this Loan Agreement.

I.        .    Financial Reporting and Performance Covenants:

A.             Maintain Records.  The Borrowers shall:

1.             At all times, keep proper books of account, in which full, true,
and accurate entries shall be made of all of the Borrowers' financial
transactions, all in accordance with GAAP applied consistently with prior
periods to fairly reflect the Consolidated financial condition of the Borrowers
at the close of, and its results of operations for, the periods in question.

2.             Timely provide the Agent with those financial reports,
statements, and schedules required by this Article or otherwise, each of which
reports, statements and schedules shall be prepared, to the extent applicable,
in accordance with GAAP applied consistently with prior periods to fairly
reflect the Consolidated financial condition of the Borrowers at the close of,
and the results of operations for, the period(s) covered therein.
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World of Science IBJ Whitehall Retail Finance
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3.             At all times, keep accurate current records of the Collateral
including, without limitation, accurate current stock, cost, and sales records
of its Inventory, accurately and sufficiently itemizing and describing the
kinds, types, and quantities of Inventory and the cost and selling prices
thereof.

4.             At all times, retain independent certified public accountants who
are reasonably satisfactory to the Agent and instruct such accountants to fully
cooperate with, and be available to, the Agent to discuss the Borrowers'
financial performance, financial condition, operating results, controls, and
such other matters, within the scope of the retention of such accountants, as
may be raised by the Agent.

5.             Not change any Borrower's Fiscal Year.

A.             Access to Records.

1.             Each Borrower shall accord the Agent with access from time to
time as the Agent may require to all properties owned by or over which any
Borrower has control. The Agent shall have the right, and each Borrower will
permit the Agent from time to time as Agent may request, to examine, inspect,
copy, and make extracts from any and all of the Borrowers' books, records,
electronically stored data, papers, and files. Each Borrower shall make all of
that Borrower's copying facilities available to the Agent.

2.             Each Borrower hereby authorizes the Agent to:

a)                  Inspect, copy, duplicate, review, cause to be reduced to
hard copy, run off, draw off, and otherwise use any and all computer or
electronically stored information or data which relates to any Borrower, or any
service bureau, contractor, accountant, or other person, and directs any such
service bureau, contractor, accountant, or other person fully to cooperate with
the Agent with respect thereto.

b)                  Verify at any time the Collateral or any portion thereof,
including verification with Account Debtors, and/or with each Borrower's
computer billing companies, collection agencies, and accountants and to sign the
name of each Borrower on any notice to each Borrower's Account Debtors or
verification of the Collateral.

3.             The Agent from time to time may designate one or more
representatives to exercise the Agent's rights under this Section  as fully as
if the Agent were doing so.

A.             Immediate Notice to Agent.

1.             The Lead Borrower shall provide the Agent with written notice
promptly upon the occurrence of any of the following events, which written
notice shall be with reasonable particularity as to the facts and circumstances
in respect of which such notice is being given:

a)                  Any change in any Borrower's President, chief executive
officer, chief operating officer, and chief financial officer (without regard to
the title(s) actually given to the Persons discharging the duties customarily
discharged by officers with those titles).
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World of Science IBJ Whitehall Retail Finance
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b)                  Any ceasing of any Borrower's making of payment, in the
ordinary course, to any of its creditors (other than its ceasing of making of
such payments on account of a de minimis dispute).

c)                  The occurrence of any default, and the expiry of any
applicable grace period, on any Lease of any Borrower.

d)                  Any material adverse change in the business, operations, or
financial affairs of any Borrower.

e)                  Any Borrower's becoming InDefault.

f)                  Any intention on the part of any Borrower to discharge that
Borrower's present independent accountants or any withdrawal or resignation by
such independent accountants from their acting in such capacity (as to which,
see Subsection).

g)                  Any litigation which, if determined adversely to any
Borrower, might have a material adverse effect on the financial condition of
that Borrower.

2.             The Lead Borrower shall:

a)                  Provide the Agent, when so distributed, with copies of any
materials distributed to the shareholders of the Lead Borrower (qua such
shareholders).

b)                  Provide the Agent:

(1)                 When filed, copies of all filings with the SEC.

(2)                 When received, copies of all correspondence from the SEC,
other than routine non-substantive general communications from the SEC.

c)                  Add the Agent as an addressee on all mailing lists
maintained by or for each Borrower.

d)                  At the request of the Agent, from time to time, provide the
Agent with copies of all advertising (including copies of all print advertising
and duplicate tapes of all video and radio advertising).

e)                  Provide the Agent, when received by any Borrower, with a
copy of any management letter or similar communications from any accountant of
any Borrower.

A.             Borrowing Base Certificate.  The Lead Borrower shall provide the
Agent by 11:30a.m., daily, with a Borrowing Base Certificate in form designated
from time to time by the Agent. Such Certificate may be sent to the Agent by
facsimile transmission, provided that the original thereof is forwarded to the
Agent on the date of such transmission.

A.             Weekly Reports.  Weekly, on Tuesday of each week (as of the then
immediately preceding Saturday) the Lead Borrower shall provide the Agent with a
sales audit report and a flash collateral report (each in such form as may be
specified from time to time by the Agent). Such report may be sent to the Agent
by facsimile transmission, provided that the original thereof is forwarded to
the Agent on the date of such transmission.

A.             Monthly Reports.
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World of Science IBJ Whitehall Retail Finance
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1.             Monthly, the Lead Borrower shall provide the Agent with original
counterparts of the following (each in such form as the Agent from time to time
may specify):

a)                  Within Fifteen (15) days of the end of the previous month:

(1)                 A "Stock Ledger Inventory Report" and a Certificate (signed
by the Lead Borrower's President, Chief Financial Officer, or Controller)
concerning the Borrowers' Inventory.

(2)                 A Balance to Purchase Report on which is shown whether
inventory levels are adequate to meet sales forecasts.

b)                  Within Thirty (30) days of the end of the previous month:

(1)                 Reconciliation of the above described Report and Inventory
Certificate (Section) to Availability and to the general ledger as of the end of
the subject month.

(2)                 A reconciliation between the Borrowers' stock ledger and
their general ledger.

(3)                 A schedule of purchases from the Borrowers' ten largest
vendors (in terms of year to date purchases), which schedule shall be in such
form as may be satisfactory to the Agent and shall include year to date
cumulative purchases and an aging of payables to each such vendor.

(4)                 An aging of the Borrowers' accounts payable.

(5)                 A Report of Store Openings and Closings.

(6)                 The officer's compliance certificate described in Section.

(7)                 An internally prepared financial statement of the Borrowers'
Consolidated financial condition and the results of its operations for, the
period ending with the end of the subject month, which financial statement shall
include, at a minimum, a balance sheet, income statement (on a store
"consolidated" basis), cash flow and comparison of same store sales for the
corresponding month of the then immediately previous year, as well as to the
Business Plan.

2.             For purposes of Sections, above, and, above, the first
"previous month" in respect of which the items respectively required by those
Sections shall be the month prior to that which dates this Loan Agreement,
except that the first group of items required to be provided pursuant to Section
shall be included with those provided pursuant to Section; thereafter, those
items shall be provided in accordance with the requirements of Section.

A.             Quarterly Reports.  Quarterly, within Forty Five (45) days
following the end of each of the Borrowers' first three fiscal quarters, the
Lead Borrower shall provide the Agent with the following:

1.             An original counterpart of a management prepared financial
statement of the Borrowers for the period from the beginning of the Borrowers'
then current Fiscal Year through the end of the subject quarter, with
comparative information for the same period of the previous Fiscal Year, which
statement shall include, at a minimum, a balance sheet, income statement (on a
store "consolidated" basis), statement
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of changes in shareholders' equity, and cash flows and comparisons for the
corresponding quarter of the then immediately previous year, as well as to the
Business Plan.

2.             The officer's compliance certificate described in Section

A.             Annual Reports.

1.             Annually, within ninety (90) days following the end of the
Borrowers' Fiscal Year, the Lead Borrower shall furnish the Agent with the
following:

a)                  An original signed counterpart of the Borrowers' annual
financial statement, which statement shall have been prepared by, and bear the
unqualified opinion of, the Lead Borrower independent certified public
accountants (i.e. said statement shall be "certified" by such accountants) and
shall include, at a minimum (with comparative information for the then prior
Fiscal Year) a balance sheet, income statement, statement of changes in
shareholders' equity, cash flows, and schedules of consolidation.

b)                  The officer's compliance certificate described in Section.

2.             No later than the earlier of Fifteen (15) days prior to the end
of each of the Borrowers' Fiscal Years or the date on which such accountants
commence their work on the preparation of the Borrowers' annual financial
statement, the Lead Borrower shall give written notice to such accountants (with
a copy of such notice, when sent, to the Agent) that:

a)                  Such annual financial statement will be delivered by the
Lead Borrower to the Agent (for subsequent distribution to each Revolving Credit
Lender).

b)                  It is the primary intention of the Borrowers, in its
engagement of such accountants, to satisfy the financial reporting requirements
set forth in this Article.

c)                  The Lead Borrower has been advised that the Agent and each
Revolving Credit Lender will rely thereon with respect to the administration of,
and transactions under, the credit facility contemplated by this Loan Agreement.

3.             Each annual statement shall be accompanied by such accountant's
Certificate indicating that, in conducting the audit for such annual statement,
nothing came to the attention of such accountants to believe that any Borrower
is InDefault (or that if any Borrower is InDefault, the facts and circumstances
thereof).

A.             Officers' Certificates.  The Lead Borrower shall cause the Lead
Borrower's President, Chief Financial Officer, or Controller, respectively to
provide such Person's Certificate with those monthly statements required
pursuant to Section, quarterly, and annual statements to be furnished pursuant
to this Loan Agreement, which Certificate shall:

1.             Indicate that the subject statement was prepared in accordance
with GAAP consistently applied and presents fairly the Consolidated financial
condition of the Borrowers at the close of, and the results of the Borrowers'
operations and cash flows for, the period(s) covered, subject, however to the
following:
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World of Science IBJ Whitehall Retail Finance
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a)                  Usual year end adjustments (this exception shall not be
included in the Certificate which accompanies such annual statement).

b)                  Material Accounting Changes (in which event, such
Certificate shall include a schedule (in reasonable detail) of the effect of
each such Material Accounting Change) not previously specifically taken into
account in the determination of the financial performance covenant imposed
pursuant to Section.

2.             Indicate either that (i) no Borrower is InDefault, or (ii) if
such an event has occurred, its nature (in reasonable detail) and the steps (if
any) being taken or contemplated by the Borrowers to be taken on account
thereof.

3.             Include calculations concerning the Borrowers' compliance (or
failure to comply) at the date of the subject statement with each of the
financial performance covenants included in Section hereof.

A.             Inventories, Appraisals, and Audits.

1.             The Borrowers, at their own expense, shall cause physical
inventories to be conducted in a manner consistent with the Borrowers' practices
and methodology employed during Fiscal 1999 and the results of such inventories
provided to the Agent, as follows:

a)                  Not less than the following number in each twelve (12) month
period during which this Loan Agreement is in effect:

(1)                 Warehouse: 2.

(2)                 Permanent Stores: 1.

(3)  Seasonal Stores which are open for 6 or more consecutive months: 1.

(4)  Seasonal Stores which are open for less than 6 consecutive months: 0.

          The spacing of such inventories shall be subject to the Agent's
          reasonable discretion, having due regard for the Borrowers' past
          practices in that regard.

a)                  The Lead Borrower shall provide the Agent with a copy of the
preliminary results of each such inventory (as well as of any other physical
inventory undertaken by any Borrower) within twenty (20) days following the
completion of such inventory.

b)                  The Lead Borrower, within thirty-five (35) days following
the completion of such inventory, shall provide the Agent with a reconciliation
of the results of each such inventory (as well as of any other physical
inventory undertaken by any Borrower) and shall post such results to the
Borrowers' stock ledger and, as applicable to the Borrowers' other financial
books and records.

c)                  The Agent, in its discretion, if any Borrower is InDefault,
may cause such additional inventories to be taken as the Agent determines (each,
at the expense of the Borrowers).

2.             The Agent may obtain not more than 3 appraisals of the
Collateral, from time to time (in all events, at the Borrowers' expense) in each
twelve (12) month period during which this Loan Agreement is in effect (of which
one shall be
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of limited scope) conducted by such appraisers as are satisfactory to the Agent
and may obtain additional such appraisals (each, at the Borrowers' expense) if
any Borrower is InDefault.

3.             The Agent may obtain not more than 3 commercial field
examinations of the Borrowers' books and records from time to time (in all
events, at the Borrowers' expense) in each twelve (12) month period during which
this Loan Agreement is in effect and may obtain additional such examinations
(each, at the Borrowers' expense) if any Borrower is InDefault.

4.             The Agent from time to time (in all events, at the Borrowers'
expense) may undertake "mystery shopping" (so-called) visits to all or any of
the Borrowers' business premises.

A.             Additional Financial Information.

1.             In addition to all other information required to be provided
pursuant to this Article, the Lead Borrower promptly shall provide the Agent
(and any guarantor of the Liabilities), with such other and additional
information concerning the Borrowers, the Collateral, the operation of the
Borrowers' business, and the Borrowers' financial condition, including original
counterparts of financial reports and statements, as the Agent may from time to
time request from the Lead Borrower.

2.             The Borrowers' Business Plan is annexed hereto as EXHIBIT, which
consists of the Borrowers' forecast of the Borrowers' anticipated performance
and operating results.

3.             The Lead Borrower may provide the Agent, from time to time
hereafter, with an updated Business Plan.

4.             In all events, the Lead Borrower, no earlier than Ninety (90) nor
later than Sixty (60) days prior to the end of each of the Borrowers' Fiscal
years, shall provide the Agent with an updated and extended Business Plan,
substantially in the same form and utilizing the same methodology  as the
Business Plan annexed hereto as EXHIBIT, which updated and extended Business
Plan  shall go out at least through the end of the then next Fiscal year and
shall include an income statement, balance sheet, and statement of cash flow, by
month, each Consolidated (with consolidating schedules) and each prepared in
conformity with GAAP and consistent with the Borrowers' then current practices.

A.             Financial Performance Covenants.

1.             The Borrowers shall observe and comply with those financial
performance covenants set forth on EXHIBIT for its Fiscal 2000.

2.             The Borrowers shall observe and comply with those financial
performance covenants for subsequent years as reasonably may be set by the Agent
following the Agent's review of the Borrowers' Business Plan for that subsequent
year, as provided pursuant to Section, which covenants

a)                  shall be so set by the Agent utilizing the same methodology
as had been used by the Agent in its setting of the financial performance
covenants annexed hereto as EXHIBIT); and
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World of Science IBJ Whitehall Retail Finance
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b)                  are agreed to by the Lead Borrower.

          Pending agreement by the Agent and the Lead Borrower on such financial
          performance covenants for a subsequent year, the Borrowers shall not
          suffer or permit Availability to be less than $750,000.00.

1.             The Agent may determine the Borrowers' compliance with such
covenants based upon financial reports and statements provided by the Lead
Borrower to the Agent (whether or not such financial reports and statements are
required to be furnished pursuant to this Loan Agreement) as well as by
reference to interim financial information provided to, or developed by, the
Agent.

I.        .    Cash Management. Payment of Liabilities:

A.             Depository Accounts.

1.             The Lead Borrower shall deliver the following to the Agent, as a
condition to the effectiveness of this Loan Agreement:

a)                  Notification, executed on behalf of each Borrower, to each
depository institution with which any DDA is maintained (other than any Exempt
DDA and the Blocked Account), in form satisfactory to the Agent of the Agent's
interest in such DDA.

b)                  A Blocked Account Agreement with any depository institution
at which a Blocked Account is maintained.

2.             No Borrower will establish any DDA hereafter (other than an
Exempt DDA) unless, contemporaneous with such establishment, the Lead Borrower
delivers to the Agent notification to the depository at which such DDA is
established if the same would have been required pursuant to Section  if the
subject DDA were open at the execution of this Loan Agreement.

A.             Credit Card Receipts.  The Lead Borrower shall deliver to the
Agent, as a condition to the effectiveness of this Loan Agreement, notification,
executed on behalf of each Borrower, to each of each Borrower's credit card
clearinghouses and processors of notice (in form satisfactory to the Agent),
which notice provides that payment of all credit card charges submitted by that
Borrower to that clearinghouse or other processor and any other amount payable
to that Borrower by such clearinghouse or other processor shall be directed to
the Concentration Account or as otherwise designated from time to time by the
Agent. No Borrower shall change such direction or designation except upon and
with the prior written consent of the Agent.

A.             The Concentration, Blocked, and Operating Accounts.

1.             The following checking accounts have been or will be established
(and are so referred to herein):

a)                  The "Concentration Account" (so referred to herein):
Established by the Agent with IBJ Whitehall Bank.
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World of Science IBJ Whitehall Retail Finance
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b)                  The "Blocked Account" (so referred to herein): Established
by the Lead Borrower with IBJ Whitehall Bank.

c)                  The "Operating Account" (so referred to herein):
Established by the Lead Borrower with IBJ Whitehall Bank.

2.             The contents of each DDA (other than the Operating Account) and
of the Blocked Account constitutes Collateral and Proceeds of Collateral. The
contents of the Concentration Account constitutes the Agent's property held for
the ratable benefit of the Revolving Credit Lenders.

3.             The Borrowers shall pay all fees and charges of, and maintain
such impressed balances as may be required by the depository in which any
account is opened as required hereby (even if such account is opened by and/or
is the property of the Agent).

A.             Proceeds and Collections.

1.             All Receipts and all cash proceeds of any sale or other
disposition of any of each Borrower's assets:

a)                  Constitute Collateral and Proceeds of Collateral.

b)                  Shall be held in trust by the Borrowers for the Agent.

c)                  Shall not be commingled with any of any Borrower's other
funds.

d)                  Shall be deposited and/or transferred only to the Blocked
Account or the Concentration Account.

2.             The Lead Borrower shall cause the ACH or wire transfer to the
Blocked or the Concentration Account, no less frequently than twice each week
(daily if a Borrower is InDefault) (and whether or not there is then an
outstanding balance in the Loan Account) of the following:

a)                  The then contents of each DDA (other than any Exempt DDA),
each such transfer to be net of any minimum balance, not to exceed $750.00, as
may be required to be maintained in the subject DDA by the bank at which such
DDA is maintained).

b)                  The proceeds of all credit card charges not otherwise
provided for pursuant hereto.

3.             Whether or not any Liabilities are then outstanding, the Lead
Borrower shall cause the ACH or wire transfer to the Concentration Account, no
less frequently than twice each week (daily if a Borrower is InDefault), of then
entire ledger balance of the Blocked Account, net of such minimum balance, not
to exceed $1,000.00, as may be required to be maintained in the Blocked Account
by the depository which the Blocked Account is maintained.

4.             In the event that, notwithstanding the provisions of this
Section, any Borrower receives or otherwise has dominion and control of any
Receipts, or any proceeds or collections of any Collateral, such Receipts,
proceeds, and collections shall be held in trust by that Borrower for the Agent
and shall not be commingled with any of that Borrower's other funds or deposited
in any account of any Borrower other than as instructed by the Agent.
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World of Science IBJ Whitehall Retail Finance
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A.             Payment of Liabilities.

1.             On each Business Day, the Agent shall apply the then collected
balance of the Concentration Account (net of fees charged, and of such impressed
balances as may be required by the bank at which the Concentration Account is
maintained) First, towards the SwingLine Loans and Second, towards the unpaid
balance of the Loan Account and all other Liabilities, provided, however, for
purposes of the calculation of interest on the unpaid principal balance of the
Loan Account (but not for purposes of the calculation of Availability) such
payment shall be deemed to have been made Two (2) Business Days after such
transfer.

2.             The following rules shall apply to deposits and payments under
and pursuant to this Loan Agreement:

a)                  Funds shall be deemed to have been deposited to the
Concentration Account on the Business Day on which deposited, provided that
notice of such deposit is available to the Agent by 2:00PM on that Business Day.

b)                  Funds paid to the Agent, other than by deposit to the
Concentration Account, shall be deemed to have been received on the Business Day
when they are good and collected funds, provided that notice of such payment is
available to the Agent by 2:00PM on that Business Day.

c)                  If notice of a deposit to the Concentration Account
(Section) or payment (Section) is not available to the Agent until after 2:00PM
on a Business Day, such deposit or payment shall be deemed to have been made at
9:00AM on the then next Business Day.

d)                  All deposits to the Concentration Account and other payments
to the Agent are subject to clearance and collection.

3.             The Agent shall transfer to the Operating Account any surplus in
the Concentration Account remaining after the application towards the
Liabilities referred to in Section, above (less those amount which are to be
netted out, as provided therein) provided, however, in the event that

a)                  any Borrower is InDefault; and

b)                  one or more L/C's are then outstanding,

then the Agent may establish a funded reserve of up to 110% of the aggregate
Stated Amounts of such L/C's. Such funded reserve shall either be (i) returned
to the Lead Borrower provided that no Borrower is InDefault or (ii) applied
towards the Liabilities following the occurrence of any Event of Default
described in Section or acceleration following the occurrence of any other Event
of Default.

A.             The Operating Account. Except as otherwise specifically provided
in, or permitted by, this Loan Agreement, all checks shall be drawn by the Lead
Borrower upon, and other disbursements shall be made by the Lead Borrower solely
from, the Operating Account.
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I.        .    Events of Default:

     The occurrence of any event described in this Article respectively shall
constitute an "Event of Default" herein. Upon the occurrence of any Event of
Default described in Section , any and all Liabilities shall become due and
payable without any further act on the part of the Agent. Upon the occurrence of
any other Event of Default, the Agent may, and on the instruction of the
SuperMajority Lenders as provided in Section shall, declare any and all
Liabilities shall become immediately due and payable. The occurrence of any
Event of Default shall also constitute, without notice or demand, a default
under all other agreements between the Agent or any Revolving Credit Lender and
any Borrower and instruments and papers heretofore, now, or hereafter given the
Agent or any Revolving Credit Lender by any Borrower.

A.             Failure to Pay the Revolving Credit. The failure by any Borrower
to pay when due any principal of, interest on, or fees in respect of, the
Revolving Credit.

A.             Failure To Make Other Payments. The failure by any Borrower to
pay when due (or upon demand, if payable on demand) any payment Liability other
than any payment Liability on account of the principal of or interest on, or
fees or charges in respect of, the Revolving Credit.

A.             Failure to Perform Covenant or Liability. The failure by any
Borrower to promptly, (No Grace Period) punctually, faithfully and timely
perform, discharge, or comply with any covenant or Liability included in any of
the following provisions hereof:

               Section           Relates to:
               -----------------------------
                     Name Change
                          Indebtedness
                          Pay taxes
                          Dividends.
                          Investments. Other Corporate Actions
                          Affiliate Transactions
               Article    Reporting Requirements and Financial Performance
                          Covenants
               Article    Cash Management

A.             Failure to Perform Covenant or Liability. (Grace Period) The
failure by any, Borrower within fifteen (15) days following the earlier of any
Borrower's knowledge of a breach of any covenant or Liability not described in
any of Sections, or or of its receipt of written notice from the Agent of the
breach of any of such covenants or Liabilities.

A.             Misrepresentation. The determination by the Agent that any
representation or warranty at any time made by any Borrower to the Agent or any
Revolving Credit Lender was not true or complete in all material respects when
given.

A.             Acceleration of Other Debt. Breach of Lease. The occurrence of
any event such that any Indebtedness of any Borrower to any creditor other than
the Agent or any Revolving Credit Lender could be accelerated or, without the
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World of Science IBJ Whitehall Retail Finance
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consent of any Borrower, any Lease (other than of a Seasonal Store) could be
terminated (whether or not the subject creditor or lessor takes any action on
account of such occurrence).

A.             Default Under Other Agreements.  The occurrence of any breach or
default under any agreement (including any Loan Document) between the Agent or
any Revolving Credit Lender and any Borrower or instrument given by any Borrower
to the Agent or any Revolving Credit Lender and the expiry, without cure, of any
applicable grace period (notwithstanding that the subject Agent or Revolving
Credit Lender may not have exercised all or any of its rights on account of such
breach or default).

A.             Uninsured Casualty Loss. The occurrence of any uninsured loss,
theft, damage, or destruction of or to any material portion of the Collateral.

A.             Attachment. Judgment. Restraint of Business.

1.             The service of process upon the Agent or any Revolving Credit
Lender or any Participant seeking to attach, by trustee, mesne, or other
process, any funds of any Borrower on deposit with, or assets of any Borrower in
the possession of, the Agent or that Revolving Credit or such Participant.

2.             The entry of any judgment against any Borrower, which judgment is
not satisfied (if a money judgment) or appealed from (with execution or similar
process stayed) within thirty (30) days of its entry.

3.             The entry of any order or the imposition of any other process
having the force of law, the effect of which is to restrain in any material way
the conduct by any Borrower of its business in the ordinary course.

A.             Business Failure.  Any act by, against, or relating to any
Borrower, or its property or assets, which act constitutes the determination, by
any Borrower, to initiate a program of partial or total self-liquidation;
application for, consent to, or sufferance of the appointment of a receiver,
trustee, or other person, pursuant to court action or otherwise, over all, or
any part of any Borrower's property; the granting of any trust mortgage or
execution of an assignment for the benefit of the creditors of any Borrower, or
the occurrence of any other voluntary or involuntary liquidation or extension of
debt agreement for any Borrower; the offering by or entering into by any
Borrower of any composition, extension, or any other arrangement seeking relief
from or extension of the debts of any Borrower; or the initiation of any
judicial or non-judicial proceeding or agreement by, against, or including any
Borrower which seeks or intends to accomplish a reorganization or arrangement
with creditors; and/or the initiation by or on behalf of any Borrower of the
liquidation or winding up of all or any part of any Borrower's business or
operations.

A.             Bankruptcy.  The failure by any Borrower to generally pay the
debts that Borrower as they mature; adjudication of bankruptcy or insolvency
relative to any Borrower; the entry of an order for relief or similar order with
respect to any
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World of Science IBJ Whitehall Retail Finance
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Borrower in any proceeding pursuant to the Bankruptcy Code or any other federal
bankruptcy law; the filing of any complaint, application, or petition by any
Borrower initiating any matter in which any Borrower is or may be granted any
relief from the debts of that Borrower pursuant to the Bankruptcy Code or any
other insolvency statute or procedure; the filing of any complaint, application,
or petition against any Borrower initiating any matter in which that Borrower is
or may be granted any relief from the debts of that Borrower pursuant to the
Bankruptcy Code or any other insolvency statute or procedure, which complaint,
application, or petition is not timely contested in good faith by that Borrower
by appropriate proceedings or, if so contested, is not dismissed within sixty
(60) days of when filed.

A.             Default by Guarantor.  The occurrence of any of the foregoing
Events of Default with respect to any guarantor or endorser of the Liabilities,
or the occurrence of any of the foregoing Events of Default with respect to any
parent, subsidiary, or Affiliate of any Borrower, as if such guarantor,
endorser, parent, or Affiliate were a "Borrower" described therein.

A.             Indictment - Forfeiture.  The indictment of, or institution of
any legal process or proceeding against, any Borrower, under any Applicable Law
where the relief, penalties, or remedies sought or available include the
forfeiture of any property of any Borrower and/or the imposition of any stay or
other order, the effect of which could be to restrain in any material way the
conduct by any Borrower of its business in the ordinary course.

A.             Termination of Guaranty.  The termination or attempted
termination of any guaranty by any guarantor of the Liabilities.

A.             Challenge to Loan Documents.

1.             Any challenge by or on behalf of any Borrower or any guarantor of
the Liabilities to the validity of any Loan Document or the applicability or
enforceability of any Loan Document strictly in accordance with the subject Loan
Document's terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment
made pursuant thereto.

2.             Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by any Loan
Document or any payment made pursuant thereto.

A.             Key Management.  The death, disability, or failure of Fred Klauke
or Charles Callahan at any time to exercise that authority and discharge those
management responsibilities with respect to the Lead Borrower as are exercised
and discharged by such Person at the execution of this Loan Agreement.
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A.             Change in Control.  Any Change in Control.

I.        .    Rights and Remedies Upon Default:

A.             Acceleration.  Upon the occurrence of any Event of Default
described in Section and, at the Agent's option (or on the instruction of the
SuperMajority Lenders) upon the occurrence of any other Event of Default, and at
all times thereafter, the Agent may declare all indebtedness of the Borrower to
the Agent to be immediately due and payable and exercise all of the Agents
Rights and Remedies as the Agent from time to time thereafter determines as
appropriate.

A.             Rights and Remedies.   The rights, remedies, powers, privileges,
and discretions of the Agent hereunder (herein, the Agent's Rights and
Remedies") shall be cumulative and not exclusive of any rights or remedies which
it would otherwise have. No delay or omission by the Agent in exercising or
enforcing any of the Agent's Rights and Remedies shall operate as, or
constitute, a waiver thereof. No waiver by the Agent of any Event of Default or
of any default under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise of
any of the Agent's Rights or Remedies, and no express or implied agreement or
transaction of whatever nature entered into between the Agent and any person, at
any time, shall preclude the other or further exercise of the Agent's Rights and
Remedies. No waiver by the Agent of any of the Agent's Rights and Remedies on
any one occasion shall be deemed a waiver on any subsequent occasion, nor shall
it be deemed a continuing waiver. The Agent's Rights and Remedies may be
exercised at such time or times and in such order of preference as the Agent may
determine. The Agent's Rights and Remedies may be exercised without resort or
regard to any other source of satisfaction of the Liabilities.

I.        .    Revolving Credit Fundings and Distributions:

A.             Revolving Credit Funding Procedures. Subject to Section :

1.             The Agent shall advise each Revolving Credit Lender, no later
than 2:00PM (Boston Time) on a date on which any Revolving Credit Loan (other
than a SwingLine Loan) is to be made on that date. Such advice, in each
instance, may be by telephone or facsimile transmission, provided that if such
advice is by telephone, it shall be confirmed in writing.  Advice of a Revolving
Credit Loan shall include the amount of and interest rate applicable to the
subject Revolving Credit Loan.

2.             Subject to that Revolving Credit Lender's Revolving Credit Dollar
Commitment, each Revolving Credit Lender, by no later than the end of business
on the day on which the subject Revolving Credit Loan is to be made, shall
Transfer that Revolving Credit Lender's Revolving Credit Percentage Commitment
of the subject Revolving Credit Loan to the Agent.
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World of Science IBJ Whitehall Retail Finance
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A.             SwingLine Loans.

1.             In the event that, when a Revolving Credit Loan is requested, the
aggregate unpaid balance of the SwingLine Loan is less than the SwingLine Loan
Ceiling, then the SwingLine Lender may advise the Agent that the SwingLine
Lender has determined to include up to the amount of the requested Revolving
Credit Loan as part of the SwingLine Loan.  In such event, the SwingLine Lender
shall Transfer the amount of the requested Revolving Credit Loan to the Agent.

2.             The SwingLine Loan shall be converted to a Revolving Credit Loan
in which all Revolving Credit Lenders participate as follows:

a)                  At any time and from time to time, the SwingLine Lender may
advise the Agent that all, or any part of the SwingLine Loan is to be converted
to a Revolving Credit Loan in which all Revolving Credit Lenders participate.

b)                  At the initiation of a Liquidation, the then entire unpaid
principal balance of the SwingLine Loan shall be converted to a Revolving Credit
Loan in which all Revolving Credit Lenders participate.

In either such event, the Agent shall advise each Revolving Credit Lender of
such conversion as if, and with the same effect as if such conversion were the
making of a Revolving Credit Loan as provided in Section.

1.             The SwingLine Lender, in separate capacities, may also be the
Agent and a Revolving Credit Lender.

2.             The SwingLine Lender, in its capacity as SwingLine Lender, is not
a "Revolving Credit Lender" for any of the following purposes:

a)                  Except as otherwise specifically provided in the relevant
Section, any distribution pursuant to Section.

b)                  Determination of whether the requisite Loan Commitments have
Consented to action requiring such Consent.

A.             Agent's Covering of Fundings:

1.             Each Revolving Credit Lender shall make available to the Agent,
as provided herein, that Revolving Credit Lender's Revolving Credit Percentage
Commitment of the following:

a)                  Each Revolving Credit Loan, up to the maximum amount of that
Revolving Credit Lender's Revolving Credit Dollar Commitment of the Revolving
Credit Loans.

b)                  Up to the maximum amount of that Revolving Credit Lender's
Revolving Credit Dollar Commitment of each L/C Drawing (to the extent that such
L/C Drawing is not "covered" by a Revolving Credit Loan as provided herein).

2.             In all circumstances, the Agent may:

a)                  Assume that each Revolving Credit Lender, subject to
Section, timely shall make available to the Agent that Revolving Credit Lender's
Revolving Credit Percentage Commitment of each Revolving Credit Loan, notice of
which is provided pursuant to Section.
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World of Science IBJ Whitehall Retail Finance
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b)                  In reliance upon such assumption, make available the
corresponding amount to the Borrowers.

c)                  Assume that each Revolving Credit Lender timely shall pay,
and shall make available, to the Agent all other amounts which that Revolving
Credit Lender is obligated to so pay and/or make available hereunder or under
any of the Loan Documents.

3.             In the event that, in reliance upon any of such assumptions, the
Agent makes available, a Revolving Credit Lender's Revolving Credit Percentage
Commitment of one or more Revolving Credit Loans, or any other amount to be made
available hereunder or under any of the Loan Documents, which amount a Revolving
Credit Lender (a "Delinquent Revolving Credit Lender") fails to provide to the
Agent within One (1) Business Day of written notice of such failure, then:

a)                  The amount which had been made available by the Agent is an
" Agent's Cover" (and is so referred to herein).

b)                  All interest paid by the Borrowers on account of the
Revolving Credit Loan or coverage of the subject L/C Drawing which consist of
the Agent's Cover shall be retained by the Agent until the Agent's Cover, with
interest, has been paid.

c)                  The Delinquent Revolving Credit Lender shall pay to the
Agent, on demand, interest at a rate equal to the prevailing federal funds rate
on any Agent's Cover in respect of that Delinquent Revolving Credit Lender

d)                  The Agent shall have succeeded to all rights to payment to
which the Delinquent Revolving Credit Lender otherwise would have been entitled
hereunder in respect of those amounts paid by or in respect of the Borrowers on
account of the Agent's Cover together with interest until it is repaid. Such
payments shall be deemed made first towards the amounts in respect of which the
Agent's Cover was provided and only then towards amounts in which the Delinquent
Revolving Credit Lender is then participating. For purposes of distributions to
be made pursuant to Section (which relates to ordinary course distributions) or
Section (which relates to distributions of proceeds of a Liquidation) below,
amounts shall be deemed distributable to a Delinquent Revolving Credit Lender
(and consequently, to the Agent to the extent to which the Agent is then
entitled) at the highest level of distribution (if applicable) at which the
Delinquent Revolving Credit Lender would otherwise have been entitled to a
distribution.

e)                  Subject to Subsection, the Delinquent Revolving Credit
Lender shall be entitled to receive any payments from the Borrowers to which the
Delinquent Revolving Credit Lender is then entitled, provided however there
shall be deducted from such amount and retained by the Agent any interest to
which the Agent is then entitled on account of Section, above.

4.             A Delinquent Revolving Credit Lender shall not be relieved of any
obligation of such Delinquent Revolving Credit Lender hereunder (all and each of
which shall constitute continuing obligations on the part of any Delinquent
Revolving Credit Lender).
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World of Science IBJ Whitehall Retail Finance
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5.             A Delinquent Revolving Credit Lender may cure its status as a
Delinquent Revolving Credit Lender by paying the Agent the aggregate of the
following:

a)                  The Agent's Cover (to the extent not previously repaid by
the Borrowers and retained by the Agent in accordance with Subsection, above)
with respect to that Delinquent Revolving Credit Lender.

               Plus

a)                  The aggregate of the amount payable under Subsection, above
(which relates to interest to be paid by that Delinquent Revolving Credit
Lender).

               Plus

a)                  All such costs and expenses as may be incurred by the Agent
in the enforcement of the Agent's rights against such Delinquent Revolving
Credit Lender.

A.             Ordinary Course Distributions.  This Section applies unless the
provisions of Section (which relates to distributions in the event of a
Liquidation) becomes operative.

1.             Weekly, on such day as may be set from time to time by the Agent
(or more frequently at the Agent's option) the Agent and each Revolving Credit
Lender shall settle up on amounts advanced under the Revolving Credit and
collected funds received in the Concentration Account.

2.             The Agent shall distribute to the SwingLine Lender and to each
Revolving Credit Lender, such Person's respective Pro-Rata share of interest
payments on the Revolving Credit Loans when actually received and collected by
the Agent (excluding the settlement delay provided for in Section , which shall
be for the account of the Agent only). For purposes of calculating interest due
to a Revolving Credit Lender, that Revolving Credit Lender shall be entitled to
receive interest on the actual amount contributed by that Revolving Credit
Lender towards the principal balance of the Revolving Credit Loans outstanding
during the applicable period covered by the interest payment made by the
Borrowers. Any net principal reductions to the Revolving Credit Loans received
by the Agent in accordance with the Loan Documents during such period shall not
reduce such actual amount so contributed, for purposes of calculation of
interest due to that Revolving Credit Lender, until the Agent has distributed to
that Revolving Credit Lender its pro-rata share thereof.

3.             The Agent shall distribute fees paid on account of the Revolving
Credit, as provided in EXHIBIT, annexed hereto.

4.             No Revolving Credit Lender shall have any interest in, or right
to receive any part of any interest which reflects "float" as described in the
proviso included in Section. Any such float shall be for the account of the
Agent only.

5.             No Revolving Credit Lender shall have any interest in, or right
to receive any part of, the Agent's Fee to be paid by the Borrowers to the Agent
pursuant to the this Loan Agreement.

6.             Any amount received by the Agent as reimbursement for any cost or
expense (including without limitation, attorneys' reasonable fees) shall be
distributed by the Agent to that Person which is entitled to such reimbursement
as provided in this
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World of Science IBJ Whitehall Retail Finance
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Loan Agreement (and if such Person(s) is (are) the Revolving Credit Lenders,
pro-rata based upon their respective Revolving Credit Commitment Percentages at
the date on which the expense, in respect of which such reimbursement is being
made, was incurred).

7.             Each distribution pursuant to this Section is subject to
Section, above.

I.        .    Acceleration and Liquidation:

A.             Acceleration Notices.

1.             The Agent may give the Revolving Credit Lenders an Acceleration
Notice at any time following the occurrence of an Event of Default.

2.             The SuperMajority Lenders may give the Agent an Acceleration
Notice at any time following the occurrence of an Event of Default. Such notice
may be by multiple counterparts, provided that counterparts executed by the
requisite Revolving Credit Lenders are received by the Agent within a period of
five (5) consecutive Business Days.

A.             Acceleration.  Unless stayed by judicial or statutory process,
the Agent shall Accelerate the Revolving Credit Obligations within a
commercially reasonable time following:

1.             The Agent's giving of an Acceleration Notice to the Revolving
Credit Lenders as provided  in Section.

2.             The Agent's receipt of an Acceleration Notice from the
SuperMajority Lenders, in compliance with Section.

A.             Initiation of Liquidation.  Unless stayed by judicial or
statutory process, a Liquidation shall be initiated by the Agent within a
commercially reasonable time following Acceleration of the Liabilities.

A.             Actions At and  Following Initiation of Liquidation.

1.             At the initiation of a Liquidation:

a)                  The unpaid principal balance of the SwingLine Loan (if any)
shall be converted, pursuant to Section, to a Revolving Credit Loan in which
all Revolving Credit Lenders participate.

b)                  The Agent and the Revolving Credit Lenders shall "net out"
each  Revolving Credit Lender's respective contributions towards the Revolving
Credit Loans, so that each Revolving Credit Lender holds that Revolving Credit
Lender's Revolving Credit Percentage Commitment of the Revolving Credit Loans
and advances.

2.             Following the initiation of a Liquidation, each Revolving Credit
Lender shall contribute, towards any L/C thereafter honored and not immediately
reimbursed by the Borrowers, that Revolving Credit Lender's Revolving Credit
Percentage Commitment of such honoring.
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World of Science IBJ Whitehall Retail Finance
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A.             Agent's Conduct of Liquidation.

1.             Any Liquidation shall be conducted by the Agent, with the advice
and assistance of the Revolving Credit Lenders.

2.             The Agent may establish one or more Nominees to "bid in" or
otherwise acquire ownership to any Post Foreclosure Asset.

3.             The Agent shall manage the Nominee and manage and dispose of any
Post Foreclosure Assets with a view towards the realization of the economic
benefits of the ownership of the Post Foreclosure Assets and in such regard, the
Agent and/or the Nominee may operate, repair, manage, maintain, develop, and
dispose of any Post Foreclosure Asset in such manner as the Agent determines as
appropriate under the circumstances.

4.             The Agent may decline to undertake or to continue taking a course
of action or to execute an action plan (whether proposed by the Agent or any
Revolving Credit Lender) unless indemnified to the Agent's satisfaction by the
Revolving Credit Lenders against any and all liability and expense which may be
incurred by the Agent by reason of taking or continuing to take that course of
action or action plan.

5.             Each Revolving Credit Lender shall execute all such instruments
and documents not inconsistent with the provisions of this Loan Agreement as the
Agent and/or the Nominee reasonably may request with respect to the creation and
governance of any Nominee, the conduct of the Liquidation, and the management
and disposition of any Post Foreclosure Asset.

A.             Distribution of Liquidation Proceeds:

1.             The Agent may establish one or more reasonably funded reserve
accounts into which proceeds of the conduct of any Liquidation may be deposited
in anticipation of future expenses which may be incurred by the Agent in the
exercise of rights as a secured creditor of the Borrowers and prior claims which
the Agent anticipates may need to be paid.

2.             The Agent shall distribute the net proceeds of Liquidation in
accordance with the relative priorities set forth in Section.

3.             Each Revolving Credit Lender, on the written request of the Agent
and/or any Nominee, not more frequently than once each month, shall reimburse
the Agent and/or any Nominee, pro-rata, for any cost or expense reasonably
incurred by the Agent and/or the Nominee in the conduct of a Liquidation, which
amount is not covered out of current proceeds of the Liquidation, which
reimbursement shall be paid over to and distributed by the Agent.

A.             Relative Priorities To Proceeds of Liquidation.  The relative
priorities to the proceeds of a Liquidation are as follows:

1.             To the Agent as reimbursement for all reasonable third party
costs and expenses incurred by the Agent and to Lenders' Special Counsel and to
any funded reserve established pursuant to Section; and then

2.             To the SwingLine Lender, on account of any SwingLine loans not
converted to Revolving Credit Loans pursuant to Section; and then
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World of Science IBJ Whitehall Retail Finance
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3.             To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to the unpaid principal balance of the
Revolving Credit; and then

4.             To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to accrued interest on the Revolving Credit;
and then

5.             To the Revolving Credit Lenders (other than any Delinquent
Revolving Credit Lender), pro-rata, to those fees distributable hereunder to the
Revolving Credit Lenders; and then

6.             To any Delinquent Revolving Credit Lenders, pro-rata to amounts
to which such Revolving Credit Lenders otherwise would have been entitled
pursuant to Sections,, and; and then

7.             To the Revolving Credit Lenders, pro-rata, to the extent of the
Revolving Credit Early Termination Fee; and then

8.             To any other Liabilities.

I.        .    The Agent:

A.             Appointment of the Agent.

1.             Each Revolving Credit Lender appoints and designates IWRF as the
"Agent" hereunder and under the Loan Documents.

2.             Each Revolving Credit Lender authorizes the Agent:

a)                  To execute those of the Loan Documents and all other
instruments relating thereto to which the Agent is a party.

b)                  To take such action on behalf of the Revolving Credit
Lenders and to exercise all such powers as are expressly delegated to the Agent
hereunder and in the Loan Documents and all related documents, together with
such other powers as are reasonably incident thereto.

A.             Responsibilities of Agent.

1.             The Agent shall not have any duties or responsibilities to, or
any fiduciary relationship with, any Revolving Credit Lender except for those
expressly set forth in this Loan Agreement.

2.             Neither the Agent nor any of its Affiliates shall be responsible
to any Revolving Credit Lender for any of the following:

a)                  Any recitals, statements, representations or warranties made
by any Borrower or any other Person (other than the Agent).

b)                  Any appraisals or other assessments of the assets of any
Borrower or of any other Person responsible for or on account of the
Liabilities.

c)                  The value, validity, effectiveness, genuineness,
enforceability, or sufficiency of the Loan Agreement, the Loan Documents or any
other document referred to or provided for therein.

d)                  Any failure by any Borrower or any other Person (other than
the Agent) to perform its obligations under the Loan Documents.

3.             The Agent may employ attorneys, accountants, and other
professionals and agents and attorneys-in-fact and shall not be responsible for
the
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World of Science IBJ Whitehall Retail Finance
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negligence or misconduct of any such attorneys, accountants, and other
professionals or agents or attorneys-in-fact selected by the Agent with
reasonable care. No such attorney, accountant, other professional, agent, or
attorney-in-fact shall be responsible for any action taken or omitted to be
taken by any other such Person.

4.             Neither the Agent, nor any of its directors, officers, or
employees shall be responsible for any action taken or omitted to be taken or
omitted to be taken by any other of them in connection herewith in reliance upon
advice of its counsel nor, in any other event except for any action taken or
omitted to be taken as to which a final judicial determination has been or is
made (in a proceeding in which such Person has had an opportunity to be heard)
that such Person had acted in a grossly negligent manner, in actual bad faith,
or in willful misconduct.

5.             The Agent shall not have any responsibility in any event for more
funds than the Agent actually receives and collects.

6.             The Agent, in its separate capacity as a Revolving Credit Lender,
shall have the same rights and powers hereunder as any other Revolving Credit
Lender.

A.             Concerning Distributions By the Agent.

1.             The Agent in the Agent's reasonable discretion based upon the
Agent's determination of the likelihood that additional payments will be
received, expenses incurred, and/or claims made by third parties to all or a
portion of such proceeds, may delay the distribution of any payment received on
account of the Liabilities.

2.             The Agent may disburse funds prior to determining that the sums
which the Agent expects to receive have been finally and unconditionally paid to
the Agent.  If and to the extent that the Agent does disburse funds and it later
becomes apparent that the Agent did not then receive a payment in an amount
equal to the sum paid out, then any Revolving Credit Lender to whom the Agent
made the funds available, on demand from the Agent, shall refund to the Agent
the sum paid to that person.

3.             If, in the opinion of the Agent, the distribution of any amount
received by the Agent might involve the Agent in liability, or might be
prohibited hereby, or might be questioned by any Person, then the Agent may
refrain from making distribution until the Agent's right to make distribution
has  been adjudicated by a court of competent jurisdiction.

4.             The proceeds of any Revolving Credit Lender's exercise of any
right of, or in the nature of, set-off shall be deemed, First, to the extent
that a Revolving Credit Lender is entitled to any distribution hereunder, to
constitute such distribution and Second, shall be shared with the other
Revolving Credit Lenders as if distributed pursuant to (and shall be deemed as
distributions under) Section.

5.             Each Revolving Credit Lender recognizes that the crediting of the
Borrowers with the "proceeds" of any transaction in which a Post Foreclosure
Asset is acquired is a non-cash transaction and that, in consequence, no
distribution of such "proceeds" will be made by the Agent to any Revolving
Credit Lender.

6.             In the event that (x) a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be repaid or
disgorged or (y)
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World of Science IBJ Whitehall Retail Finance
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the SuperMajority Lenders determine to effect such repayment or disgorgement,
then each Revolving Credit Lender to which any such distribution shall have been
made shall repay, to the Agent which had made such distribution, that Revolving
Credit Lender's pro-rata share of the amount so adjudged or determined to be
repaid or disgorged.

A.             Dispute Resolution.  Any dispute among the Revolving Credit
Lenders and/or the Agent concerning the interpretation, administration, or
enforcement of the financing arrangements contemplated by this or any other Loan
Document or the interpretation or administration of this or any other Loan
Document which cannot be resolved amicably shall be resolved in the United
States District Court for the District of Massachusetts, sitting in Boston or in
the  Superior Court of Suffolk County, Massachusetts, to the jurisdiction of
which courts each Revolving Credit Lender  hereto hereby submits.

A.             Distributions of Notices and of Documents.  The Agent will
forward to each Revolving Credit Lender, promptly after the Agent's receipt
thereof, a copy of each notice or other document furnished to the Agent pursuant
to this Loan Agreement, including monthly, quarterly, and annual financial
statements received from the Lead Borrower pursuant to Article  of this Loan
Agreement, other than any of the following:

1.             Routine communications associated with requests for Revolving
Credit Loans and/or the issuance of L/C's.

2.             Routine or nonmaterial communications.

3.             Any notice or document required by any of the Loan Documents to
be furnished to the Revolving Credit Lenders by the Lead Borrower.

4.             Any notice or document of which the Agent has knowledge that such
notice or document had been forwarded to the Revolving Credit Lenders other than
by the Agent.

A.             Confidential Information.

1.             Each Revolving Credit Lender will maintain, as confidential, all
of the following:

a)                  Proprietary approaches, techniques, and methods of analysis
which are applied by the Agent in the administration of the credit facility
contemplated by this Loan Agreement.

b)                  Proprietary forms and formats utilized by the Agent in
providing reports to the Revolving Credit Lenders pursuant hereto, which forms
or formats are not of general currency.

2.             Nothing included herein shall prohibit the disclosure of any such
information as may be required to be provided by judicial process or by
regulatory authorities having jurisdiction over any party to this Loan
Agreement.
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World of Science IBJ Whitehall Retail Finance
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A.             Reliance by Agent. The Agent shall be entitled to rely upon
any certificate, notice or other document (including any cable, telegram, telex,
or facsimile) reasonably believed by the Agent to be genuine and correct and to
have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of attorneys, accountants and other experts selected
by the Agent with reasonable care.  As to any matters not expressly provided for
in this Loan Agreement, any Loan Document, or in any other document referred to
therein, the Agent shall in all events be fully protected in acting, or in
refraining from acting, in accordance with the applicable Consent required by
this Loan Agreement. Instructions given with the requisite Consent shall be
binding on all Revolving Credit Lenders.

A.             Non-Reliance.

1.             Each Revolving Credit Lender represents to all other Revolving
Credit Lenders and to the Agent that such Revolving Credit Lender:

a)                  Independently and without reliance on any representation or
act by Agent or by any other Revolving Credit Lender, and based on such
documents and information as that Revolving Credit Lender has deemed
appropriate, has made such Revolving Credit Lender's own appraisal of the
financial condition and affairs of the Borrowers and decision to enter into this
Loan Agreement.

b)                  Has relied upon that Revolving Credit Lender's review of the
Loan Documents by that Revolving Credit Lender and by counsel to that Revolving
Credit Lender as that Revolving Credit Lender deemed appropriate under the
circumstances.

2.             Each Revolving Credit Lender agrees that such Revolving Credit
Lender, independently and without reliance upon Agent or any other Revolving
Credit Lender, and based upon such documents and information as such Revolving
Credit Lender shall deem appropriate at the time, will continue to make such
Revolving Credit Lender's own appraisals of the financial condition and affairs
of the Borrowers when determining whether to take or not to take any
discretionary action under this Loan Agreement.

3.             The Agent, in the discharge of that Agent's duties hereunder,
shall not be required to make inquiry of, or to inspect the properties or books
of, any Person.

4.             Except for notices, reports, and other documents and information
expressly required to be furnished to the Revolving Credit Lenders by the Agent
hereunder (as to which, see Section), the Agent shall not have any affirmative
duty or responsibility to provide any Revolving Credit Lender with any credit or
other information concerning any Person, which information may come into the
possession of Agent or any Affiliate of the Agent.

5.             Each Revolving Credit Lender, at such Revolving Credit Lender's
request, shall have reasonable access to all nonprivileged documents in the
possession of the Agent, which documents relate to the Agent's performance of
its duties hereunder.
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World of Science IBJ Whitehall Retail Finance
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A.             Indemnification.  Without limiting the liabilities of the
Borrowers under any this or any of the other Loan Documents, each Revolving
Credit Lender shall indemnify the Agent, Pro-Rata, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including attorneys'
reasonable fees and expenses and other out-of-pocket expenditures) which may at
any time be imposed on, incurred by, or asserted against the Agent and in any
way relating to or arising out of this Loan Agreement or any other Loan Document
or any documents contemplated by or referred to therein or the transactions
contemplated thereby or the enforcement of any of terms hereof or thereof or of
any such other documents, provided, however, no Revolving Credit Lender shall be
liable for any of the foregoing to the extent that any of the foregoing arises
from any action taken or omitted to be taken by the Agent as to which a final
judicial determination has been or is made (in a proceeding in which the Agent
has had an opportunity to be heard) that the Agent had acted in a grossly
negligent manner, in actual bad faith, or in willful misconduct.

A.             Resignation of Agent.

1.             The Agent may resign at any time by giving 60 days prior written
notice thereof to the Revolving Credit Lenders. Upon receipt of any such notice
of resignation, the SuperMajority Lenders shall have the right to appoint a
successor to such Agent (and if no Event of Default has occurred, with the
consent of the Lead Borrower, not to be unreasonably withheld and, in any event,
deemed given by the Lead Borrower if no written objection is provided by the
Lead Borrower to the (resigning) Agent within seven (7) Business Days notice of
such proposed appointment).  If a successor Agent shall have been so appointed
and shall have accepted such appointment within 30 days after the giving of
notice by the resigning Agent, then the resigning Agent  may appoint a successor
Agent, which shall be a financial institution having a combined capital and
surplus in excess of $200 Million.  The consent of the Lead Borrower otherwise
required by this Section  shall not be required if an Event of Default has
occurred.

2.             Upon the acceptance of any appointment as Agent hereunder by a
successor Agent,  such successor shall thereupon succeed to, and become vested
with, all the rights, powers, privileges, and duties of the (resigning) Agent so
replaced, and the (resigning) Agent shall be discharged from the (resigning)
Agent's duties and obligations hereunder, other than on account of any
responsibility for any action taken or omitted to be taken by the (resigning)
Agent as to which a final judicial determination has been or is made (in a
proceeding in which the (resigning) Person has had an opportunity to be heard)
that such Person had acted in a grossly negligent manner or in bad faith.

3.             After any retiring  Agent's resignation, the provisions of this
Loan Agreement and of all other Loan Documents shall continue in effect for the
retiring Person's benefit in respect of any actions taken or omitted to be taken
by it while it was acting as Agent.

I.        .    Action By Agents - Consents - Amendments - Waivers:
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World of Science IBJ Whitehall Retail Finance
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A.             Administration of Credit Facilities.

1.             Except as otherwise specifically provided in this Loan Agreement,
the Agent may take any action with respect to the credit facility contemplated
by the Loan Documents as the Agent determines to be appropriate , provided,
however, the Agent is not under any affirmative obligation to take any action
which it is not required by this Loan Agreement or the Loan Documents
specifically to so take.

2.             Except as specifically provided in the following Sections of this
Loan Agreement, whenever a Loan Document or this Loan Agreement  provides that
action may be taken or omitted to be taken in an Agent's discretion, the Agent
shall have the sole right to take, or refrain from taking, such action without,
and notwithstanding, any vote of the Revolving Credit Lender:

            Actions Described in Section     Type of Consent Required
            ----------------------------------------------------------
                         Majority Lenders
                         SuperMajority Lenders
                         Certain Consent
                         Unanimous Consent
                         Consent of SwingLine Lender
                         Consent of the Agent

1.             The rights granted to the Revolving Credit Lenders in those
sections referenced in Section  shall not otherwise limit or impair the Agent's
exercise of its discretion under the Loan Documents.

A.             Actions Requiring Majority Lenders. Except as otherwise provided
in this Loan Agreement, the Consent or direction of the Majority Lenders is
required for any amendment, waiver, or modification of any Loan Document.

A.             Actions Requiring SuperMajority Lenders.  The Consent or
direction of the SuperMajority Lenders is required as follows:

1.             The Revolving Credit Lenders agree that any loan or advance under
the Revolving Credit which results in a Permissible Overloan may be made by the
Agent in its discretion without the Consent of the Revolving Credit Lenders and
that each Revolving Credit Lender shall be bound thereby, provided, however, the
Consent or direction of the SuperMajority Lenders is required to permit a
Permissible Overloan to be outstanding for more than 45 consecutive Business
Days or more than twice in any twelve month period.

2.             If any Borrower is then InDefault, the SuperMajority  Lenders may
direct the Agent to suspend the Revolving Credit (including the making of any
Permissible Overloans), whereupon, as long as a Borrower is InDefault, the only
Revolving Credit Loans which may be made are either

a)                  Revolving Credit Loans made or undertaken in the Agent's
discretion to protect and preserve the interests of the Revolving Credit
Lenders; or
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World of Science IBJ Whitehall Retail Finance
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b)                  Revolving Credit Loans made with Consent of the
SuperMajority Lenders.

3.             If an Event of Default has occurred and not been duly waived, the
SuperMajority Lenders may:

a)                  Give the Agent an Acceleration Notice in accordance with
Section.

b)                  Direct the Agent to increase the rate of interest to the
default rate of interest as provided in, and to the extent permitted by, this
Loan Agreement.

A.             Action Requiring Certain Consent. The consent of the SwingLine
Lender and Revolving Credit Lenders (other than Delinquent Revolving Credit
Lenders) holding 51% or more of the Loan Commitments of the Revolving Credit
Lenders (other than any Loan Commitments held by Delinquent Revolving Credit
Lenders) shall be required to increase the SwingLine Loan Ceiling.

A.             Actions Requiring Unanimous Consent.   None of the following
may take place except with the Consent of each Revolving Credit Lender adversely
affected thereby or with Unanimous Consent:

1.             Any increase in any Revolving Credit Lender's Revolving Credit
Dollar Commitment or Revolving Credit Percentage Commitment (other than by
reason of the application of Section (which deals with NonConsenting Revolving
Credit Lenders) or Section (which deals with assignments and participations)).

2.             Any decrease in any interest rate or fee payable to the Revolving
Credit Lenders on account of the Revolving Credit Loans.

3.             Any extension of the Maturity Date.

4.             Any forgiveness of all or any portion of any payment Liability.

5.             Any decrease in any interest rate or fee payable under any of the
Loan Documents (other than any Agent's Fee (for which the consent of the Agent
shall also be required)) and of any fee provided for by the Fee Letter (which
may be amended by written agreement between the Lead Borrower on the one hand,
and the Agent  on the other).

6.             Any release of a material portion of the Collateral not otherwise
required or provided for in the Loan Documents or to facilitate a Liquidation.

7.             Any amendment of the definition of the terms "Borrowing Base" or
"Availability" or of any Definition of any component thereof, such that more
credit would be available to the Borrowers, based on the same assets, as would
have been available to the Borrowers immediately prior to such amendment, it
being understood, however, that:

a)                  The foregoing shall not limit the adjustment by the Agent of
any Reserve in the Agent's administration of the Revolving Credit as otherwise
permitted by this Loan Agreement.

b)                  The foregoing shall not prevent the Agent, in its
administration of the Revolving Credit, from restoring any component of
Borrowing Base
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World of Science IBJ Whitehall Retail Finance
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which had been lowered by the Agent back to the value of such component, as
stated in this Loan Agreement or to an intermediate value.

8.             Any release of any Person obligated on account of the
Liabilities.

9.             The making of any Revolving Credit Loan which, when made, exceeds
Availability and is not a Permissible Overloan, provided, however,

a)                  no Consent shall be required in connection with the making
of any Revolving Credit Loan to "cover" any honoring of a drawing under any L/C;
and

b)                  each Revolving Credit Lender recognizes that subsequent to
the making of a Revolving Credit Loan which does not constitute a Permissible
Overloan, the unpaid principal balance of the Loan Account may exceed the
Borrowing Base on account of changed circumstances beyond the control of the
Agent (such as a drop in collateral value).

10.            The waiver of the obligation of the Borrowers to reduce the
unpaid principal balance of loans under the Revolving Credit to an amount which
does not exceed a Permissible Overloan or, subject to the time limits included
in Section  (which places time and frequency limits on Permissible Overloans),
to eliminate an Overloan.

11.            Any amendment of this Article.

12.            Amendment of any of the following Definitions:

                    "Appraised Inventory Liquidation Value"
                    "Majority Lender"
                    "Permissible Overloan"
                    "SuperMajority Lenders
                    "Unanimous Consent"

A.             Actions Requiring SwingLine Lender Consent. No action, amendment,
or waiver of compliance with, any provision of the Loan Documents or of this
Loan Agreement which affects the SwingLine Lender may be undertaken without the
Consent of the SwingLine Lender.

A.             Actions Requiring Agent's Consent.

1.             No action, amendment, or waiver of compliance with, any provision
of the Loan Documents or of this Loan Agreement  which affects the Agent in its
capacity as Agent may be undertaken without the written consent of the Agent.

2.             No action referenced herein which affects the rights, duties,
obligations, or liabilities of the Agent shall be effective without the written
consent of the Agent.

A.             Miscellaneous Actions.

1.             Notwithstanding any other provision of this Loan Agreement, no
single Revolving Credit Lender independently may exercise any right of action or
enforcement against or with respect to any Borrower.

2.             The Agent shall be fully justified in failing or refusing to take
action under this Loan Agreement or any Loan Document on behalf of any Revolving
Credit Lender unless the Agent shall first
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World of Science IBJ Whitehall Retail Finance
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a)                  receive such clear, unambiguous, written instructions as the
Agent deems appropriate; and

b)                  be indemnified to the Agent's satisfaction by the Revolving
Credit Lenders against any and all liability and expense which may be incurred
by the Agent by reason of taking or continuing to take any such action, unless
such action had been grossly negligent, in willful misconduct, or in bad faith.

3.             The Agent may establish reasonable procedures for the providing
of direction and instructions from the Revolving Credit Lenders to the Agent,
including its reliance on multiple counterparts, facsimile transmissions, and
time limits within which such direction and instructions must be received in
order to be included in a determination of whether the requisite Revolving
Credit Lenders have provided their direction, Consent, or instructions.

A.             Actions Requiring Lead Borrower's Consent.  The Lead Borrower's
consent is required for any amendment of this Loan Agreement, except that each
of the following Articles of this Loan Agreement may be amended without the
consent of the Lead Borrower:

     Article          Title of Article
     ---------------------------------
                         Revolving Credit Fundings and Distributions
                         Acceleration and Liquidation
                         The Agent
                         Action By Agents - Consents - Amendments - Waivers
                         Assignments and Participations

A.             NonConsenting Revolving Credit Lender.

1.             In the event that a Revolving Credit Lender (in this Section, a
"NonConsenting Revolving Credit Lender") does not provide its Consent to a
proposal by the Agent to take action which requires consent under this Section,
then one or more Revolving Credit Lenders who provided Consent to such action
may require the assignment, without recourse and in accordance with the
procedures outlined in Section, below, of the NonConsenting Revolving Credit
Lender's commitment hereunder on fifteen (15) days written notice to the Agent
and to the NonConsenting Revolving Credit Lender.

2.             At the end of such fifteen (15) days, and provided that the
NonConsenting Revolving Credit Lender delivers the Revolving Credit Note held by
the NonConsenting Revolving Credit Lender to the Agent, the Revolving Credit
Lenders who have given such written notice shall Transfer the following to the
NonConsenting Revolving Credit Lender:

a)                  Such NonConsenting Revolving Credit Lender's Pro-Rata share
of the principal and interest of the Revolving Credit Loans to the date of such
assignment.

b)                  All fees distributable hereunder to the NonConsenting
Revolving Credit Lender to the date of such assignment.
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World of Science IBJ Whitehall Retail Finance
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c)                  Any out-of-pocket costs and expenses for which the
NonConsenting Revolving Credit Lender is entitled to reimbursement from the
Borrowers.

3.             In the event that the NonConsenting Revolving Credit Lender fails
to deliver to the Agent the Revolving Credit Note held by the NonConsenting
Revolving Credit Lender as provided in Section, then:

a)                  The amount otherwise to be Transferred to the NonConsenting
Revolving Credit Lender shall be Transferred to the Agent and held by the Agent,
without interest, to be turned over to the NonConsenting Revolving Credit Lender
upon delivery of the Revolving Credit Note held by that NonConsenting Revolving
Credit Lender.

b)                  The Revolving Credit Note held by the NonConsenting
Revolving Credit Lender shall have no force or effect whatsoever.

c)                  The NonConsenting Revolving Credit Lender shall cease to be
a "Revolving Credit Lender".

d)                  The Revolving Credit Lender(s) which have Transferred the
amount to the Agent as described above shall have succeeded to all rights and
become subject to all of the obligations of the NonConsenting Revolving Credit
Lender as "Revolving Credit Lender".

4.             In the event that more than One (1) Revolving Credit Lender
wishes to require such assignment, the NonConsenting Revolving Credit Lender's
commitment hereunder shall be divided among such Revolving Credit Lenders, pro-
rata  based upon their respective Revolving Credit Percentage Commitments, with
the Agent coordinating such transaction.

5.             The Agent shall coordinate the retirement of the Revolving Credit
Note held by the NonConsenting Revolving Credit Lender and the issuance of
Revolving Credit Notes to those Revolving Credit Lenders which "take-out" such
NonConsenting Revolving Credit Lender, provided, however, no processing fee
otherwise to be paid as provided in Section  shall be due under such
circumstances.

I.        .    Assignments By Revolving Credit Lenders:

A.             Assignments and Assumptions.

1.             Except as provided herein, each Revolving Credit Lender (in this
Section, an "Assigning Revolving Credit Lender") may assign to one or more
Eligible Assignees (in this Section, each an "Assignee Revolving Credit
Lender") all or a portion of that Revolving Credit Lender's interests, rights
and obligations under this Loan Agreement and the Loan Documents (including all
or a portion of its Commitment) and the same portion of the Revolving Credit
Loans at the time owing to it, and of the Revolving Credit Note held by the
Assigning Revolving Credit Lender, provided that:

a)                  The Agent shall have given its prior written consent to such
assignment, which consent shall not be unreasonably withheld, but need not be
given if the proposed assignment would result in any resulting Revolving Credit
Lender's having
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World of Science IBJ Whitehall Retail Finance
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a Dollar Commitment of less than the "minimum hold" amount specified in Section
or if there would be more than Six (6) Revolving Credit Lenders.

b)                  Each such assignment shall be of a constant, and not a
varying, percentage of all the Assigning Revolving Credit Lender's rights and
obligations under this Loan Agreement.

c)                  Following the effectiveness of such assignment, the
Assigning Revolving Credit Lender's Dollar Commitment (if not an assignment of
all of the Assigning Revolving Credit Lender's Commitment) shall not be less
than $3 Million.

A.             Assignment Procedures.  This Section describes the procedures to
be followed in connection with an assignment effected pursuant to this Article
and permitted by Section.

1.             The parties to such an assignment shall execute and deliver to
the Agent, for recording in the Register, an Assignment and Acceptance
substantially in the form of EXHIBIT, annexed hereto.

2.             The Assigning Revolving Credit Lender shall deliver to the Agent,
with such Assignment and Acceptance, the Revolving Credit Note held by the
subject Assigning Revolving Credit Lender and the Agent's processing fee of
$3,500.00, provided, however, no such processing fee shall be due where the
Assigning Revolving Credit Lender is one of the Revolving Credit Lenders at the
initial execution of this Loan Agreement.

3.             The Agent shall maintain a copy of each Assignment and Acceptance
delivered to it and a register or similar list (the "Register") for the
recordation of the names and addresses of the Revolving Credit Lenders and of
the Revolving Credit Percentage Commitment and Revolving Credit Percentage
Commitment of each Revolving Credit Lender. The Register shall be available for
inspection by the Revolving Credit Lenders at any reasonable time and from time
to time upon reasonable prior notice.  In the absence of manifest error, the
entries in the Register shall be conclusive and binding on all Revolving Credit
Lenders.  The Agent and the Revolving Credit Lenders may treat each Person whose
name is recorded in the Register as a "Revolving Credit Lender" hereunder for
all purposes of this Loan Agreement.

4.             The Assigning Revolving Credit Lender and Assignee Revolving
Credit Lender, directly between themselves, shall make all appropriate
adjustments in payments for periods prior to the effective date of an Assignment
and Assumption.

A.             Effect of Assignment.

1.             From and after the effective date specified in an Assignment and
Acceptance which has been executed, delivered, and recorded (which effective
date the Agent may delay by up to Five (5) Business Days after the delivery of
such Assignment and Acceptance):

a)                  The Assignee Revolving Credit Lender:
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World of Science IBJ Whitehall Retail Finance
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(1)                 Shall be a party to this Loan Agreement and the Loan
Documents (and to any amendments thereof) as fully as if the Assignee Revolving
Credit Lender had executed each.

(2)                 Shall have the rights of a Revolving Credit Lender hereunder
to the extent of the Revolving Credit Percentage Commitment and Revolving Credit
Percentage Commitment assigned by such Assignment and Acceptance.

b)                  The Assigning Revolving Credit Lender shall be released from
the Assigning Revolving Credit Lender's obligations under this Loan Agreement
and the Loan Documents to the extent of the Commitment assigned by such
Assignment and Acceptance.

c)                  The Agent shall undertake to obtain and distribute
replacement Revolving Credit Notes to the subject Assigning Revolving Credit
Lender and Assignee Revolving Credit Lender.

2.             By executing and delivering an Assignment and Acceptance, the
parties thereto confirm to and agree with each other and with all parties to
this Loan Agreement as to those matters which are set forth in the subject
Assignment and Acceptance.

I.        .    Notices:

A.             Notice Addresses.   All notices, demands, and other
communications made in respect of any Loan Document (other than a request for a
loan or advance or other financial accommodation under the Revolving Credit)
shall be made to the following addresses, each of which may be changed upon
seven (7) days written notice to all others given by certified mail, return
receipt requested:

If to the Agent:      IBJ Whitehall Retail Finance, Inc.
                      45 Braintree Hill Office Park - Suite 303
                      Braintree, Massachusetts 02184
                      Attention     :  Francis O'Connor
                      Fax           :  781 849 0140
     With a copy to:
                             Riemer & Braunstein LLP
                             Three Center Plaza
                             Boston, Massachusetts  02108
                             Attention     :  Richard B. Jacobs, Esquire
                             Fax           :  617 880 3456

If to the Lead Borrower
And All Borrowers:
                             World of Science, Inc.
                             900 Jefferson Road, Building 4
                             Rochester, New York 14623
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World of Science IBJ Whitehall Retail Finance
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                             Attention     :  Mr. Charles A. Callahan
                             Fax           : 716 475 1370

          With a copy to:
                             Harris, Beach & Wilcox LLP
                             130 East Main Street
                             Rochester, New York 14604
                             Attention     : Attorney Catherine A. King
                             Fax:          : 716 232 6925

A.             Notice Given.

1.             Except as otherwise specifically provided herein, notices shall
be deemed made and correspondence received, as follows (all times being local to
the place of delivery or receipt):

a)                  By mail: the sooner of when actually received or Three (3)
days following deposit in the United States mail, postage prepaid.

b)                  By recognized overnight express delivery: the Business Day
following the day when sent.

c)                  By Hand: If delivered on a Business Day after 9:00 AM and no
later than Three (3) hours prior to the close of customary business hours of the
recipient, when delivered.  Otherwise, at the opening of the then next Business
Day.

d)                  By Facsimile transmission (which must include a header on
which the party sending such transmission is indicated): If sent on a Business
Day after 9:00 AM and no later than Three (3) hours prior to the close of
customary business hours of the recipient, one (1) hour after being sent.
Otherwise, at the opening of the then next Business Day.

2.             Rejection or refusal to accept delivery and inability to deliver
because of a changed address or facsimile number for which no due notice was
given shall each be deemed receipt of the notice sent.

I.        .    Term:

A.             Termination of Revolving Credit. The Revolving Credit shall
remain in effect (subject to suspension as provided in Section hereof) until the
Termination Date.

A.             Actions On Termination.

1.             On the Termination Date, the Borrowers shall pay the Agent
(whether or not then due), in immediately available funds, all then Liabilities
including, without limitation: the following:

a)                  The entire balance of the Loan Account (including the unpaid
principal balance of the Revolving Credit Loans, and the SwingLine Loan).
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World of Science IBJ Whitehall Retail Finance
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b)                  Any then remaining installments of the Revolving Credit
Commitment Fee.

c)                  Any then remaining installments of the Agent's Fee.

d)                  Any payments due on account of the indemnification
obligations included in Section.

e)                  Any accrued and unpaid Unused Line Fee.

f)                  All unreimbursed costs and expenses of the Agent and of
Lenders' Special Counsel for which each Borrower is responsible.

2.             On the Termination Date, the Borrowers shall also shall make such
arrangements concerning any L/C's then outstanding as are reasonably
satisfactory to the Agent.

3.             Until such payment (Section) and arrangements concerning L/C's
(Section), all provisions of this Loan Agreement, other than those included in
Section   which place any obligation on the Agent or any Revolving Credit Lender
to make any loans or advances or to provide any financial accommodations to any
Borrower  shall remain in full force and effect until all Liabilities shall have
been paid in full.

4.             The release by the Agent of the Collateral Interests granted the
Agent by the Borrowers hereunder may be upon such conditions and
indemnifications as the Agent may require.

I.        .    General:

A.             Publicity.  The Agent may issue a mutually agreeable "tombstone"
notice of the establishment of the credit facility contemplated by this Loan
Agreement and may make reference to each Borrower (and may utilize any logo or
other distinctive symbol associated with each Borrower) in connection with any
mutually agreeable advertising, promotion, or marketing undertaken by the Agent.

A.             Successors and Assigns.  This Loan Agreement shall be binding
upon the Borrowers and their respective successors, and assigns and shall enure
to the benefit of the Agent and each Revolving Credit Lender and their
respective successors and assigns, provided, however, no trustee or other
fiduciary appointed with respect to any Borrower shall have any rights
hereunder.  In the event that the Agent or any Revolving Credit Lender assigns
or transfers its rights under this Loan Agreement, the assignee shall thereupon
succeed to and become vested with all rights, powers, privileges, and duties of
such assignor hereunder and such assignor shall thereupon be discharged and
relieved from its duties and obligations hereunder.

A.             Severability.  Any determination that any provision of this Loan
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in
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World of Science IBJ Whitehall Retail Finance
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any other instance, or the validity, legality, or enforceability of any other
provision of this Loan Agreement.

A.             Amendments. Course of Dealing.

1.             This Loan Agreement and the other Loan Documents incorporate all
discussions and negotiations between each Borrower and the Agent and each
Revolving Credit Lender, either express or implied, concerning the matters
included herein and in such other instruments, any custom, usage, or course of
dealings to the contrary notwithstanding. No such discussions, negotiations,
custom, usage, or course of dealings shall limit, modify, or otherwise affect
the provisions thereof. No failure by the Agent or any Revolving Credit Lender
to give notice to the Lead Borrower of any Borrower's having failed to observe
and comply with any warranty or covenant included in any Loan Document shall
constitute a waiver of such warranty or covenant or the amendment of the subject
Loan Document. No change made by the Agent to the manner by which the Borrowing
Base is determined shall obligate the Agent to continue to determine the
Borrowing Base in that manner.

2.             Each Borrower may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and with
the express prior written consent of the Agent, subject to the Consent
requirements of Article. Subject to Article, no consent, modification,
amendment, or waiver of any provision of any Loan Document shall be effective
unless executed in writing by or on behalf of the party to be charged with such
modification, amendment, or waiver (and if such party is the Agent then by a
duly authorized officer thereof). Any modification, amendment, or waiver
provided by the Agent shall be in reliance upon all representations and
warranties theretofore made to the Agent by or on behalf of the Borrowers (and
any guarantor, endorser, or surety of the Liabilities) and consequently may be
rescinded in the event that any of such representations or warranties was not
true and complete in all material respects when given.

A.             Power of Attorney.  In connection with all powers of attorney
included in this Loan Agreement, each Borrower hereby grants unto the Agent full
power to do any and all things necessary or appropriate in connection with the
exercise of such powers as fully and effectually as that Borrower might or could
do, hereby ratifying all that said attorney shall do or cause to be done by
virtue of this Loan Agreement. No power of attorney set forth in this Loan
Agreement shall be affected by any disability or incapacity suffered by any
Borrower and each shall survive the same. All powers conferred upon the Agent by
this Loan Agreement, being coupled with an interest, shall be irrevocable until
this Loan Agreement is terminated by a written instrument executed by a duly
authorized officer of the Agent.

A.             Application of Proceeds.  The proceeds of any collection, sale,
or disposition of the Collateral, or any other payments received hereunder,
shall be applied towards the Liabilities in such order and manner as the Agent
determines in its sole discretion, consistent, however, with Sections and and
any other applicable
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World of Science IBJ Whitehall Retail Finance
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provisions of this Loan Agreement. The Borrowers shall remain liable for
deficiency remaining following such application.

A.             Increased Costs.  If, as a result of any requirement of law, or
of the interpretation or application thereof by any court or by any governmental
or other authority or entity charged with the administration thereof, whether or
not having the force of law, which:

1.             subjects any Revolving Credit Lender to any taxes or changes the
basis of taxation, or increases any existing taxes, on payments of principal,
interest or other amounts payable by any Borrower to the Agent or any Revolving
Credit Lender under this Loan Agreement (except for taxes on the Agent or any
Revolving Credit Lender based on net income or capital imposed by the
jurisdiction in which the principal or lending offices of the Agent or that
Revolving Credit Lender are located);

2.             imposes, modifies or deems applicable any reserve, cash margin,
special deposit or similar requirements against assets held by, or deposits in
or for the account of or loans by or any other acquisition of funds by the
relevant funding office of any Revolving Credit Lender;

3.             imposes on any Revolving Credit Lender any other condition with
respect to any Loan Document; or

4.             imposes on any Revolving Credit Lender a requirement to maintain
or allocate capital in relation to the Liabilities;

and the result of any of the foregoing, in such Revolving Credit Lender's
reasonable opinion, is to increase the cost to that Revolving Credit Lender of
making or maintaining any loan, advance or financial accommodation or to reduce
the income receivable by that Revolving Credit Lender in respect of any loan,
advance or financial accommodation by an amount which that Revolving Credit
Lender deems to be material, then upon written notice from the Agent, from time
to time, to the Lead Borrower (such notice to set out in reasonable detail the
facts giving rise to and a summary calculation of such increased cost or reduced
income), the Borrowers shall forthwith pay to the Agent, for the benefit of the
subject Revolving Credit Lender, upon receipt of such notice, that amount which
shall compensate the subject Revolving Credit Lender for such additional cost or
reduction in income.

A.             Costs and Expenses of the Agent.

1.             The Borrowers shall pay from time to time on demand all Costs of
Collection and all reasonable costs, expenses, and disbursements (including
attorneys' reasonable fees and expenses) which are incurred by the Agent in
connection with the preparation, negotiation, execution, and delivery of this
Loan Agreement and of any other Loan Documents, and all other reasonable costs,
expenses, and disbursements which may be incurred connection with or in respect
to the credit facility contemplated hereby or which otherwise are incurred with
respect to the Liabilities.

2.             The Borrowers shall pay from time to time on demand all
reasonable costs and expenses (including attorneys' reasonable fees and
expenses)
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World of Science IBJ Whitehall Retail Finance
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incurred, following the occurrence of any Event of Default, by the Revolving
Credit Lenders to Lenders' Special Counsel.

3.             Each Borrower authorizes the Agent to pay all such fees and
expenses and in the Agent's discretion, to add such fees and expenses to the
Loan Account.

4.             The undertaking on the part of each Borrower in this Section
shall survive payment of the Liabilities and/or any termination, release, or
discharge executed by the Agent in favor of any Borrower, other than a
termination, release, or discharge which makes specific reference to this
Section.

A.             Copies and Facsimiles.  Each Loan Document and all documents and
papers which relates thereto which have been or may be hereinafter furnished the
Agent or any Revolving Credit Lender may be reproduced by that Revolving Credit
Lender or by the Agent by any photographic, microfilm, xerographic, digital
imaging, or other process, and such Person making such reproduction may destroy
any document so reproduced. Any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business). Any facsimile which
bears proof of transmission shall be binding on the party which or on whose
behalf such transmission was initiated and likewise shall be so admissible in
evidence as if the original of such facsimile had been delivered to the party
which or on whose behalf such transmission was received.

A.             Massachusetts Law.  This Loan Agreement and all rights and
obligations hereunder, including matters of construction, validity, and
performance, shall be governed by the law of The Commonwealth of Massachusetts.

A.             Consent to Jurisdiction.

1.             Each Borrower agrees that any legal action, proceeding, case, or
controversy against any Borrower with respect to any Loan Document may be
brought in the Superior Court of Suffolk County Massachusetts or in the United
States District Court, District of Massachusetts, sitting in Boston,
Massachusetts, as the Agent may elect in the Agent's sole discretion. By
execution and delivery of this Loan Agreement, each Borrower, for itself and in
respect of its property, accepts, submits, and consents generally and
unconditionally, to the jurisdiction of the aforesaid courts.

2.             Each Borrower WAIVES personal service of any and all process upon
it, and irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the Lead Borrower at the Lead
Borrower's address for notices as specified herein, such service to become
effective five (5) Business Days after such mailing.

3.             Each Borrower WAIVES any objection based on forum non conveniens
and any objection to venue of any action or proceeding instituted under any of
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World of Science IBJ Whitehall Retail Finance
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the Loan Documents and consents to the granting of such legal or equitable
remedy as is deemed appropriate by the Court.

4.             Nothing herein shall affect the right of the Agent to bring legal
actions or proceedings in any other competent jurisdiction.

5.             Each Borrower agrees that any action commenced by any Borrower
asserting any claim arising under or in connection with this Loan Agreement or
any other Loan Document shall be brought solely in the Superior Court of Suffolk
County Massachusetts or in the United States District Court, District of
Massachusetts, sitting in Boston, Massachusetts, and that such Courts shall have
exclusive jurisdiction with respect to any such action.

A.             Indemnification.  Each Borrower shall indemnify, defend, and hold
the Agent and each Revolving Credit Lender and any Participant and any of their
respective employees, officers, or agents (each, an "Indemnified Person")
harmless of and from any claim brought or threatened against any Indemnified
Person by any Borrower, any guarantor or endorser of the Liabilities, or any
other Person (as well as from attorneys' reasonable fees, expenses, and
disbursements in connection therewith) on account of the relationship of the
Borrowers or of any other guarantor or endorser of the Liabilities (each of
claims which may be defended, compromised, settled, or pursued by the
Indemnified Person with counsel of the Revolving Credit Lender's selection, but
at the expense of the Borrowers) other than any claim as to which a final
determination is made in a judicial proceeding (in which the Agent and any other
Indemnified Person has had an opportunity to be heard), which determination (x)
includes a specific finding that the Indemnified Person seeking indemnification
had acted in a grossly negligent manner or in actual bad faith or (y) is in
favor of a Borrower and against an Indemnified Person. This indemnification
shall survive payment of the Liabilities and/or any termination, release, or
discharge executed by the Agent in favor of the Borrowers, other than a
termination, release, or discharge duly executed on behalf of the Agent which
makes specific reference to this Section.

A.             Rules of Construction. The following rules of construction shall
be applied in the interpretation, construction, and enforcement of this Loan
Agreement and of the other Loan Documents:

1.             Unless otherwise specifically provided for herein, interest and
any fee or charge which is stated as a per annum percentage shall be calculated
based on a 360 day year and actual days elapsed.

2.             Words in the singular include the plural and words in the plural
include the singular.

3.             Titles, headings (indicated by being underlined or shown in Small
                                                    ----------
Capitals or in bold) and any Table of Contents are solely for convenience of
reference; do not constitute a part of the instrument in which included; and do
not affect such instrument's meaning, construction, or effect.

4.             The words "includes" and "including" are not limiting.
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World of Science IBJ Whitehall Retail Finance
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5.             Text which follows the words "including, without limitation" (or
similar words) is illustrative and not limitational.

6.             Except where the context otherwise requires or where the relevant
subsections are joined by "or", compliance with any Section or provision of any
Loan Document which constitutes a warranty or covenant requires compliance with
all subsections (if any) of that Section or provision.  Except where the context
otherwise requires, compliance with any warranty or covenant of any Loan
Document which includes subsections which are joined by "or" may be accomplished
by compliance with any of such subsections.

7.             Text which is shown in italics, shown in bold (other than
headings), shown IN ALL CAPITAL LETTERS, or in any combination of the foregoing,
shall be deemed to be conspicuous.

8.             The words "may not" are prohibitive and not permissive.

9.             The word "or" is not exclusive.

10.            Any reference to a Person's "knowledge" (or words of similar
import) are to such Person's knowledge assuming that such Person has undertaken
reasonable and diligent investigation with respect to the subject of such
"knowledge" (whether or not such investigation has actually been undertaken).

11.            Terms which are defined in one section of any Loan Document are
used with such definition throughout the instrument in which so defined.

12.            The symbol "$" refers to United States Dollars.

13.            Unless limited by reference to a particular Section or provision,
any reference to "herein", "hereof", or "within" is to the entire Loan Document
in which such reference is made.

14.            References to "this Loan Agreement" or to any other Loan Document
is to the subject instrument as amended to the date on which application of such
reference is being made.

15.            Except as otherwise specifically provided, all references to time
are to Boston time.

16.            In the determination of any notice, grace, or other period of
time prescribed or allowed hereunder:

a)                  Unless otherwise provided (I) the day of the act, event, or
default from which the designated period of time begins to run shall not be
included and the last day of the period so computed shall be included unless
such last day is not a Business Day, in which event the last day of the relevant
period shall be the then next Business Day and (II) the period so computed shall
end at 5:00 PM on the relevant Business Day.

b)                  The word "from" means "from and including".

c)                  The words "to" and "until" each mean "to, but excluding".

d)                  The word "through" means "to and including".

17.            The Loan Documents shall be construed and interpreted in a
harmonious manner and in keeping with the intentions set forth in Section
hereof, provided, however, in the event of any inconsistency between the
provisions of this Loan
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World of Science IBJ Whitehall Retail Finance
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Agreement and any other Loan Document, the provisions of this Loan Agreement
shall govern and control.

A.             Intent.  It is intended that:

1.             This Loan Agreement take effect as a sealed instrument.

2.             All reasonable costs, expenses, and disbursements incurred by the
Agent and, to the extent provide in Section each Revolving Credit Lender, in
connection with such Person's relationship(s) with any Borrower shall be borne
by the Borrowers.

3.             Unless otherwise explicitly provided herein, the Agent's consent
to any action of any Borrower which is prohibited unless such consent is given
may be given or refused by the Agent in its sole discretion and without
reference to Section hereof.

A.             Participations. Each Revolving Credit Lender may sell
participations to one or more financial institutions (each, a "Participant") in
that Revolving Credit Lender's interests herein provided that no such
participation shall include any provision which accords that Participant with
any rights, vis a vis the Agent, with respect to any requirement herein for
approval by a requisite number or proportion of the Revolving Credit Lenders. No
such sale of a participation shall relieve a Revolving Credit Lender from that
Revolving Credit Lender's obligations hereunder nor obligate the Agent to any
Person other than a Revolving Credit Lender.

A.             Right of Set-Off.  Any and all deposits or other sums at
any time credited by or due to any Borrower from the Agent or any Revolving
Credit Lender or any Participant or from any Affiliate of any of the foregoing,
and any cash, securities, instruments or other property of any Borrower in the
possession of any of the foregoing, whether for safekeeping or otherwise
(regardless of the reason such Person had received the same) shall at all times
constitute security for all Liabilities and for any and all obligations of each
Borrower to the Agent and such Revolving Credit Lender or any Participant or
such Affiliate and may be applied or set off against the Liabilities and against
such obligations at any time, whether or not such are then due and whether or
not other collateral is then available to the Agent or that Revolving Credit
Lender.

A.             Pledges To Federal Reserve Banks:  Nothing included in this
Loan Agreement shall prevent or limit any Revolving Credit Lender, to the extent
that such Revolving Credit Lender is subject to any of the twelve Federal
Reserve Banks organized under (S)4 of the Federal Reserve Act (12 U.S.C. (S)341)
from pledging all or any portion of that Revolving Credit Lender's interest and
rights under this Loan Agreement, provided, however, neither such pledge nor the
enforcement thereof shall release the pledging Revolving Credit Lender from any
of its obligations hereunder or under any of the Loan Documents.

A.             Maximum Interest Rate. Regardless of any provision of any
Loan Document, neither the Agent nor any Revolving Credit Lender shall be
entitled to
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 81

contract for, charge, receive, collect, or apply as interest on any Liability,
any amount in excess of the maximum rate imposed by applicable law. Any payment
which is made which, if treated as interest on a Liability would result in such
interest's exceeding such maximum rate shall be held, to the extent of such
excess, as additional collateral for the Liabilities as if such excess were
"Collateral."

A.             Waivers.

1.             Each Borrower (and all guarantors, endorsers, and sureties of the
Liabilities) make each of the waivers included in Section, below, knowingly,
voluntarily, and intentionally, and understands that Agent and each Revolving
Credit Lender, in establishing the facilities contemplated hereby and in
providing loans and other financial accommodations to or for the account of the
Borrowers as provided herein, whether not or in the future, is relying on such
waivers.

2.             EACH BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY
RESPECTIVELY WAIVES THE FOLLOWING:

a)                  Except as otherwise specifically required hereby, notice of
non-payment, demand, presentment, protest and all forms of demand and notice,
both with respect to the Liabilities and the Collateral.

b)                  Except as otherwise specifically required hereby, the right
to notice and/or hearing prior to the Agent's exercising of the Agent's rights
upon default.

c)                  THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY
IN WHICH THE AGENT OR ANY REVOLVING CREDIT LENDER IS OR BECOMES A PARTY (WHETHER
SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE AGENT OR ANY REVOLVING
CREDIT LENDER OR IN WHICH THE AGENT OR ANY REVOLVING CREDIT LENDER IS JOINED AS
A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF,
ANY RELATIONSHIP AMONGST OR BETWEEN ANY BORROWER OR ANY OTHER PERSON AND THE
AGENT AND EACH REVOLVING CREDIT LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN
ANY TRIAL OF ANY SUCH CASE OR CONTROVERSY).

d)                  Any defense, counterclaim, set-off, recoupment, or other
basis on which the amount of any Liability, as stated on the books and records
of the Agent, could be reduced or claimed to be paid otherwise than in
accordance  with the tenor of and written terms of such Liability.

e)                  Any claim to consequential, special, or punitive damages.

[SPACE INTENTIONALLY LEFT BLANK]
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 82

                                                          WORLD OF SCIENCE, INC.
                                               ("Lead Borrower and a Borrower")

                                             By ________________________________

                                     Print Name:________________________________

                                          Title:________________________________

                                                           WOSI ON THE WEB, INC.
                                                                  (A "Borrower")

                                             By ________________________________

                                     Print Name:________________________________

                                          Title:________________________________

                                                    IBJ WHITEHALL RETAIL FINANCE
                                  (Division of IBJ Whitehall Credit Corporation)
                                        ("Agent" and a Revolving Credit Lender")

                                             By ________________________________

                                     Print Name:________________________________

                                          Title:________________________________
                                    Notice Address as a Revolving Credit Lender:
                                              IBJ Whitehall Retail Finance, Inc.
                                       45 Braintree Hill Office Park - Suite 303
                                                  Braintree, Massachusetts 02184
                                                  Attention:  Francis O'Connor
                                                       Fax: 781 849 0140
                                             ABA Number:........................
<PAGE>

World of Science IBJ Whitehall Retail Finance
Page 83

                                          NATIONAL CITY COMMERCIAL FINANCE, INC.
                                                    (a Revolving Credit Lender")

                                             By ________________________________

                                     Print Name:________________________________

                                          Title:________________________________
                                                                 Notice Address:
                                                        ........................
                                                        ........................
                                                             ...................
                                                     Fax:.......................
                                         ABA Number:............................

EXHIBITS
     (a)       :    Advance Rate Grid
     (b)       :    State Tax Refunds
               :    Swingline Note
               :    Revolving Credit Note
               :    Revolving Credit Lenders' Commitments
               :    Affiliates
               :    Trade Names
               :    Indebtedness
               :    Leases
               :    Taxes
               :    Litigation
               :    Business Plan
               :    Financial Performance Covenants
               :    Fee Distribution
               :    Assignment/Assumption<PAGE>

                                                                     EXHIBIT 4.1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                             IKON RECEIVABLES, LLC,
                                     Issuer

                        [HARRIS TRUST AND SAVINGS BANK],
                                    Trustee

                                      and

                               IOS CAPITAL, INC.,
                                    Servicer

                             ______________________

                                   INDENTURE

                            Dated as of ______, 2000

                             ______________________

                   $__________ in aggregate principal amount
                     of Lease-Backed Notes, consisting of:

             $__________ of ______% Class [A-1] Lease-Backed
                         Notes

             $__________ of ______% Class [A-2] Lease-Backed
                         Notes

             $__________ of ______% Class [A-3a] Lease-Backed
                         Notes

             $__________ of Class [A-3b] Lease-Backed Notes

             $__________ of ______ Class [A-4] Lease-Backed Notes

<PAGE>

                              IKON RECEIVABLES LLC

                  Reconciliation and Tie between the Indenture
                       dated as of ________, 2000 and the
                    Trust Indenture Act of 1939, as amended

               Trust Indenture Act Section     Indenture Section
               ---------------------------     -----------------

                   310  (a)(1)............        8.07
                        (a)(2)............        8.07
                        (a)(3)............        Not Applicable
                        (a)(4)............        Not Applicable
                        (b)...............        8.07; 8.08; 7.07; 1.05; 1.06
                        (c)...............        Not Applicable
                   311  (a)...............        8.13
                        (b)...............        8.13
                   312  (a)...............        2.11
                        (b)...............        12.02
                        (c)...............        12.02
                   313  (a)...............        8.14
                        (b)(1)............        Not Applicable
                        (b)(2)............        8.14
                        (c)...............        8.14; 1.06
                        (d)...............        8.14
                   314  (a)...............        9.12; 9.09; 1.06
                        (b)...............        Not Applicable
                        (c)(1)............        12.04
                        (c)(2)............        12.04
                        (c)(3)............        12.01
                        (d)...............        12.01
                        (e)...............        12.05
                        (f)...............        Not Applicable
                   315  (a)...............        8.01(a)
                        (b)...............        8.02; 1.06
                        (c)...............        8.01(b)
                        (d)...............        8.01(c)
                        (e)...............        7.13
                   316  (a) (last sentence)       2.12
                        (a)(1)(A).........        7.12
                        (a)(1)(b).........        7.11
                        (a)(2)............        Not Applicable
                   317  (a)(1)............        7.03(c)
                        (a)(2)............        7.04
                        (b)...............        9.03(c)
                   318  (a)...............        12.01, 12.02
                        (c)...............        12.01

                                      ii
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                       <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........................   3

  SECTION 1.01. General Definitions......................................................   3
  SECTION 1.02. Compliance Certificates and Opinions.....................................  20
  SECTION 1.03. Form of Documents Delivered to Trustee and Insurer.......................  20
  SECTION 1.04. Acts of Noteholders, etc.................................................  22
  SECTION 1.05. Notices, etc., to Trustee, Servicer, Issuer, Insurer and Rating Agencies.  23
  SECTION 1.06. Notice to Noteholders; Waiver............................................  23
  SECTION 1.07. Effect of Headings and Table of Contents.................................  24
  SECTION 1.08. Successors and Assigns...................................................  24
  SECTION 1.09. Benefits of Indenture....................................................  24
  SECTION 1.10. Recording of Indenture...................................................  24
  SECTION 1.11. GOVERNING LAW............................................................  25
  SECTION 1.12. Legal Holidays...........................................................  25
  SECTION 1.13. Execution in Counterparts................................................  25
  SECTION 1.14. Inspection...............................................................  25
  SECTION 1.15. Survival of Representations and Warranties...............................  26

ARTICLE II THE NOTES.....................................................................  26

  SECTION 2.01. General Provisions; Optional Redemption by Issuer........................  26
  SECTION 2.02. Execution, Authentication, Delivery, and Dating..........................  28
  SECTION 2.03. Transfer and Exchange....................................................  28
  SECTION 2.04. Mutilated, Destroyed, Lost and Stolen Notes..............................  29
  SECTION 2.05. Book-Entry Registration..................................................  30
  SECTION 2.06. Notice to Clearing Agency Noteholders....................................  31
  SECTION 2.07. Definitive Notes.........................................................  31
  SECTION 2.08. Payment of Interest and Principal; Rights Preserved......................  32
  SECTION 2.09. Persons Deemed Owners....................................................  32
  SECTION 2.10. Cancellation.............................................................  32
  SECTION 2.11. Noteholder Lists.........................................................  33
  SECTION 2.12. Treasury Notes...........................................................  33
  SECTION 2.13. CUSIP Numbers............................................................  33

ARTICLE III ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION AND APPLICATION
     OF MONEYS; REPORTS..................................................................  33

  SECTION 3.01. Transaction Accounts; Investments by Trustee.............................  33
  SECTION 3.02. Collection of Moneys.....................................................  36
  SECTION 3.03. Collection Account; Payments.............................................  36
  SECTION 3.04. The Reserve Account......................................................  38
  SECTION 3.05. Reports by Trustee; Notices of Certain Payments..........................  39
</TABLE>
                                       i
<PAGE>

<TABLE>
<S>                                                                                       <C>
  SECTION 3.06. Trustee May Rely on Certain Information from Servicer....................  40
  SECTION 3.07. Optional Deposits by the Insurer; Notice of Waivers......................  40
  SECTION 3.08. The Security Deposit Account.............................................  40

ARTICLE IV THE POLICY....................................................................  41

  SECTION 4.01. Claims Under Policy......................................................  41
  SECTION 4.02. Preference Claims........................................................  42
  SECTION 4.03. Surrender of Policy......................................................  43

ARTICLE V RELEASE OF LEASES AND INTERESTS IN EQUIPMENT...................................  43

  SECTION 5.01. Release of Equipment.....................................................  43
  SECTION 5.02. Release of Leases Upon Final Lease Payment...............................  43
  SECTION 5.03. Execution of Documents...................................................  43
  SECTION 5.04. Further Release of Collateral............................................  44

ARTICLE VI SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER...............................  44

  SECTION 6.01. Servicer Events of Default...............................................  44
  SECTION 6.02. Substitute Servicer......................................................  44

ARTICLE VII EVENTS OF DEFAULT; REMEDIES..................................................  45

  SECTION 7.01. Events of Default........................................................  45
  SECTION 7.02. Acceleration of Maturity; Rescission and Annulment.......................  46
  SECTION 7.03. Remedies.................................................................  47
  SECTION 7.04. Trustee Shall File Proofs of Claim.......................................  48
  SECTION 7.05. Trustee May Enforce Claims Without Possession of Notes...................  49
  SECTION 7.06. Application of Money Collected...........................................  49
  SECTION 7.07. Limitation on Suits......................................................  50
  SECTION 7.08. Unconditional Right of Noteholders to Receive Principal and Interest.....  51
  SECTION 7.09. Restoration of Rights and Remedies.......................................  51
  SECTION 7.10. Rights and Remedies Cumulative...........................................  51
  SECTION 7.11. Delay or Omission Not Waiver.............................................  52
  SECTION 7.12. Control by Noteholders...................................................  52
  SECTION 7.13. Undertaking for Costs....................................................  52
  SECTION 7.14. Waiver of Stay or Extension Laws.........................................  53
  SECTION 7.15. Sale of Asset Pool.......................................................  53

ARTICLE VIII THE TRUSTEE.................................................................  54

  SECTION 8.01. Certain Duties and Responsibilities......................................  54
  SECTION 8.02. Notice of Defaults or Events of Default..................................  55
  SECTION 8.03. Certain Rights of Trustee................................................  56
  SECTION 8.04. May Hold Notes...........................................................  57
  SECTION 8.05. Money Held in Trust......................................................  57
  SECTION 8.06. Compensation, Reimbursement, etc.........................................  57
  SECTION 8.07. Corporate Trustee Required; Eligibility..................................  58
  SECTION 8.08. Resignation and Removal; Appointment of Successor........................  58
</TABLE>
                                      ii
<PAGE>

<TABLE>
<S>                                                                                       <C>
  SECTION 8.09. Acceptance of Appointment by Successor...................................  59
  SECTION 8.10. Merger, Conversion, Consolidation or Succession to Business..............  60
  SECTION 8.11. Co-Trustees and Separate Trustees........................................  60
  SECTION 8.12. Acceptance by Trustee....................................................  61
  SECTION 8.13. Preferential Collection of Claims Against the Issuer.....................  62
  SECTION 8.14. Reports by Trustee to Noteholders........................................  62
  SECTION 8.15. No Proceedings...........................................................  62
  SECTION 8.16. Appointment and Powers...................................................  62
  SECTION 8.17. Performance of Duties....................................................  63
  SECTION 8.18. Control by the Insurer...................................................  63

ARTICLE IX COVENANTS.....................................................................  63

  SECTION 9.01. Payment of Principal and Interest........................................  63
  SECTION 9.02. Maintenance of Office or Agency; Chief Executive Office..................  63
  SECTION 9.03. Money for Payments to Noteholders to be Held in Trust....................  64
  SECTION 9.04. Corporate Existence; Merger; Consolidation, etc..........................  65
  SECTION 9.05. Protection of Asset Pool; Further Assurances.............................  65
  SECTION 9.06. [Reserved]...............................................................  66
  SECTION 9.07. Performance of Obligations; Assignment and Servicing Agreement...........  66
  SECTION 9.08. Negative Covenants.......................................................  66
  SECTION 9.09. Information as to Issuer.................................................  67
  SECTION 9.10. Taxes....................................................................  67
  SECTION 9.11. Indemnification..........................................................  68
  SECTION 9.12. Commission Reports; Reports to Trustee; Reports to Noteholders...........  68

ARTICLE X SUPPLEMENTAL INDENTURES........................................................  69

  SECTION 10.01. Supplemental Indentures Without Consent of Noteholders...................  69
  SECTION 10.02. Supplemental Indentures with Consent of Noteholders......................  70
  SECTION 10.03. Execution of Supplemental Indentures.....................................  71
  SECTION 10.04. Effect of Supplemental Indentures........................................  71
  SECTION 10.05. Reference in Notes to Supplemental Indentures............................  71
  SECTION 10.06. Compliance with Trust Indenture Act......................................  71

ARTICLE XI SATISFACTION AND DISCHARGE.....................................................  71

  SECTION 11.01. Satisfaction and Discharge of Indenture..................................  71
  SECTION 11.02. Application of Trust Money...............................................  72

ARTICLE XII MISCELLANEOUS.................................................................  73

  SECTION 12.01. Trust Indenture Act Controls.............................................  73
  SECTION 12.02. Communication by Noteholders with Other Noteholders......................  73
  SECTION 12.03. Location of Leases.......................................................  73
</TABLE>
                                      iii
<PAGE>

<TABLE>
<S>                                                                                       <C>
  SECTION 12.04. Officers' Certificate and Opinion of Counsel as to Conditions Precedent..  73
  SECTION 12.05. Statements Required in Certificate or Opinion............................  73
  SECTION 12.06. Nonpetition..............................................................  74
</TABLE>
SCHEDULES
  SCHEDULE 1     Leases

EXHIBITS

  EXHIBIT A      Forms of Notes and Trustee's Certificate of Authentication

                                      iv
<PAGE>

                                   INDENTURE

          This INDENTURE dated as of ________, 2000, is among IKON RECEIVABLES,
LLC, a Delaware limited liability company (herein called the "Issuer"), [HARRIS
TRUST AND SAVINGS BANK], an Illinois banking corporation, as trustee (herein
called the "Trustee"), and IOS CAPITAL, INC., as servicer (herein called the
"Servicer").

                                    RECITALS

          The Issuer has duly authorized the issuance of $_____________ in
aggregate principal amount of its Lease-Backed Notes, consisting of $__________
aggregate principal amount of ______% Class [A-1] Lease-Backed Notes (the "Class
[A-1] Notes"), $__________ aggregate principal amount of ______% Class [A-2]
Lease-Backed Notes (the "Class [A-2] Notes"), $__________ aggregate principal
amount of ______% Class [A-3a] Lease-Backed Notes (the "Class [A-3a] Notes"),
$__________ aggregate principal amount of Class [A-3b] Lease-Backed Notes (the
"Class [A-3b] Notes") and $__________ aggregate principal amount of ______%
Class [A-4] Lease-Backed Notes (the "Class [A-4] Notes", together with the Class
[A-1] Notes, Class [A-2] Notes, and Class [A-3a] Notes, Class [A-3b], the
"Notes"), and to provide therefor the Issuer has duly authorized the execution
and delivery of this Indenture.  The Notes shall be entitled to payments of
interest and principal as set forth herein.

          [Ambac Assurance Corporation, a Wisconsin stock insurance company (the
"Insurer"), has issued and delivered a financial guaranty insurance policy,
dated the Issuance Date (with endorsements, the "Policy"), pursuant to which the
Insurer guarantees Insured Payments, as defined in the Policy.]  [The Insurer
has also issued and delivered the Swap Insurance Policy (as defined herein)].

          [As an inducement to the Insurer to issue and deliver the Policy [and
the Swap Insurance Policy], the Issuer and the Insurer have executed and
delivered the Insurance and Indemnity Agreement, dated as of ______, 2000 (as
amended from time to time, the "Insurance Agreement") among IOS Capital, Inc.,
IKON Receivables-1, LLC, the Issuer and the Insurer.]

          [As an additional inducement to the Insurer to issue the Policy [and
the Swap Insurance Policy], and as security for the performance by the Issuer of
the Insurer Secured Obligations (as defined below) and as security for the
performance by the Issuer of the Trustee Secured Obligations, the Issuer has
agreed to assign the Asset Pool (as defined below) to the Trustee for the
benefit of the Issuer Secured Parties, as their respective interests may
appear.]
<PAGE>

          All things necessary to make the Notes, when executed by the Issuer
and authenticated and delivered hereunder, the valid obligations of the Issuer,
and to make this Indenture a valid agreement of the Issuer, in accordance with
its terms, have been done.

          NOW, THEREFORE, THIS INDENTURE WITNESSETH:

          For and in consideration of the premises and the purchase of the Notes
by the holders thereof, it is mutually covenanted and agreed, for the benefit of
all Noteholders, as follows:

                                GRANTING CLAUSE

          The Issuer hereby Grants to the Trustee on the Issuance Date, for the
benefit and security of the Issuer Secured Parties, all of the Issuer's right,
title and interest in and to (a) the Leases and all Lease Payments, Casualty
Payments, Retainable Deposits, Lease Purchase Amounts, Termination Payments,
Servicer Advances and other amounts now due or becoming due with respect thereto
since the Cut-Off Date (other than any prepayments of rent required pursuant to
the terms of any Lease at or before the commencement of the Lease and any
payments due before the Cut-Off Date) and all Additional Leases and Substitute
Leases and all Lease Payments, Casualty Payments, Retainable Deposits, Lease
Purchase Amounts, Termination Payments, Servicer Advances and other amounts due
or becoming due with respect thereto since the effective date of their
respective addition or substitution (other than any prepayments of rent required
by the terms of any Lease at or before the commencement of the Lease and any
payments due before the effective date of such addition or substitution), (b)
all rights to payment or performance under any Lease Guaranty, (c) all rights
and interests of the Issuer in any collateral with respect to any Lease,
including any security deposit (whether or not they shall have become Retainable
Deposits) and any security interest in any Equipment securing the obligations of
the related Lessees under the Leases, (d) all interests of the Issuer in the
Equipment (which, however, excludes any ownership interests therein) at any time
subject to any Lease, including the security interest granted by the Seller to
the Issuer pursuant to the Assignment and Servicing Agreement in the Equipment,
(e) all rights, remedies, claims, powers and privileges of the Issuer under or
with respect to the [Swap] and the [Swap Documents], (f) all moneys from time to
time on deposit in any of the Transaction Accounts, including all investments
and income from the investment of such moneys, (g) all rights of the Issuer
under the Assignment and Servicing Agreement, and (h) all proceeds of any of the
foregoing, whether in cash or other property (collectively, the "Asset Pool").

          Such Grant is made in trust to the Trustee, for the benefit of the
Issuer Secured Parties.

          The Grant of the Asset Pool effected by this Indenture shall include
all rights, powers, and options (but none of the obligations) of the Issuer with
respect thereto, including, without limitation, the immediate and continuing
right to claim for, collect, receive, and give receipts for Lease Payments in
respect of the Leases and all other moneys constituting part of the Asset Pool,
to give and receive notices and other

                                       2
<PAGE>

communications, to make waivers or other agreements, to exercise all rights and
options, to bring judicial proceedings in the name of the Issuer or otherwise,
and generally to do and receive anything that the Issuer is or may be entitled
to do or receive under the Leases or with respect to any part of the Asset Pool.

          In addition, the Insurer shall cause the Policy to be issued to the
Trustee for the benefit of the Noteholders and shall cause the [Swap Insurance
Policy] to be issued.

          The Trustee acknowledges such Grant, accepts the trusts hereunder in
accordance with the provisions hereof, and agrees to perform the duties herein
required to the best of its ability and to the end that the interests of the
Noteholders and the Insurer may be adequately and effectively protected as
hereinafter provided.

                                   ARTICLE I

                        DEFINITIONS AND OTHER PROVISIONS

                             OF GENERAL APPLICATION

          SECTION 1.01.    General Definitions.
                           -------------------

          Except as otherwise specified or as the context may otherwise require,
the following terms have the meanings set forth below for all purposes of this
Indenture, and the definitions of such terms are applicable to the singular as
well as to the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.

          Acceleration Event:  if:  (i) a Servicer Event of Default has occurred
          ------------------
(regardless of whether the rights and obligations of the Servicer have been
terminated pursuant to Section 6.01); (ii) with respect to any Payment Date, the
Overcollateralization Balance is  less  than or equal to the
Overcollateralization Floor; (iii) for any three consecutive Due Periods, the
average of the Annualized Default Rates for those Due Periods is greater than
_____%,;  or (iv) for any three consecutive Due Periods, the average of the
Delinquency Rates for  those Due Periods is greater than ______%.

          Act:  with respect to any Noteholder, as defined in Section 1.04.
          ---

          Additional Lease:  as defined in Section 14 of the Assignment and
          ----------------
Servicing Agreement.

          Additional Principal:  with respect to each Payment Date equals the
          --------------------
excess, if any, of (i)(A) the Outstanding Principal Amount of the Notes plus the
Overcollateralization Balance as of the immediately preceding Payment Date after
giving effect to payments on such Payment Date minus (B) the Discounted Present
Value of the Performing Leases as of the related Determination Date, over (ii)
the Class A Principal Payment to be paid on such Payment Date.

          Affiliate:  with respect to any specified Person, any other Person
          ---------
which directly or indirectly controls, or is controlled by, or is under common
control with, such

                                       3
<PAGE>

specified Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.

          Annualized Default Rate: for any Due Period, the sum as of the related
          -----------------------
Determination Date of the Discounted Present Value of the Leases that became
Non-Performing Leases during such Due Period minus the sum of the recoveries on
Non-Performing Leases received during such Due Period, divided by the Discounted
Present Value of the Leases on the Determination Date immediately preceding that
Determination Date, multiplied by twelve

          Assignment and Servicing Agreement:  the Assignment and Servicing
          ----------------------------------
Agreement dated as of ________, 2000 among the Issuer, the Seller and IOS
Capital, as the same may be amended or modified from time to time in accordance
with the provisions hereof and thereof.

          Authorized Officer:  with respect to any matter, any officer of or
          ------------------
other Person representing the Issuer, IOS Capital or the Servicer, as the case
may be, who is authorized to act for the Issuer, IOS Capital or the Servicer, as
the case may be.

          Available Funds:  with respect to any Payment Date, the following
          ---------------
amounts on deposit in the Collection Account on the related Determination Date:
(a) Lease Payments due during the immediately preceding or any prior Due Period,
(b) recoveries from Non-Performing Leases (including amounts received from the
Seller pursuant to Section 5.05 of the Assignment and Servicing Agreement) to
the extent IOS Capital has not substituted Substitute Leases for such Non-
Performing Leases; (c) late charges received on delinquent Lease Payments not
advanced by the Servicer; (d) proceeds from purchases by IOS Capital of Leases
as a result of breaches of representations and warranties to the extent IOS
Capital has not substituted Substitute Leases for such Leases; (e) proceeds from
the investment of funds in the Collection Account, the Reserve Account and the
Security Deposit Account; (f) Casualty Payments; (g) Retainable Deposits; (h)
Servicer Advances, if any, in respect of the related Due Period; (i) any amounts
paid by the [Counterparty] to the Issuer pursuant to the [Swap Documents]; (j)
Termination Payments to the extent the Issuer does not reinvest such Termination
Payments in Additional Leases; (k) proceeds received for redemption of the Notes
pursuant to Section 2.01(b); (l) payments received from the Insurer pursuant to
Section 3.07; and (m) to the extent there occurs an Available Funds Shortfall,
funds, if any, on deposit in the Reserve Account after making any distribution
in respect of such Payment Date from the Reserve Account to the Collection
Account on account of investment earnings pursuant to the first sentence of
Section 3.04(b).

          Available Funds Shortfall:  as defined in Section 3.04(b).
          -------------------------

          Available Reserve Amount:  with respect to any Payment Date, the
          ------------------------
amount on deposit in the Reserve Account after making any distribution in
respect of such Payment Date from the Reserve Account to the Collection Account
on account of investment earnings pursuant to the first sentence of Section
3.04(b).

                                       4
<PAGE>

          Benefit Plan:  as defined in Section 2.03(a).
          ------------

          Book-Entry Class [A-1] Notes:  the Class [A-1] Notes, evidenced by one
          ----------------------------
or more global notes registered in the name of DTC or its nominee, the ownership
and transfers of which shall be made through book entries by DTC as described in
Section 2.05.

          Book-Entry Class [A-2] Notes:  the Class [A-2] Notes, evidenced by one
          ----------------------------
or more global notes registered in the name of DTC or its nominee, the ownership
and transfers of which shall be made through book entries by DTC as described in
Section 2.05.

          Book-Entry Class [A-3a] Notes:  the Class [A-3a] Notes, evidenced by
          -----------------------------
one or more global notes registered in the name of DTC or its nominee, the
ownership and transfers of which shall be made through book entries by DTC as
described in Section 2.05.

          Book-Entry Class [A-3b] Notes:  the Class [A-3b] Notes, evidenced by
          -----------------------------
one or more global notes registered in the name of DTC or its nominee, the
ownership and transfers of which shall be made through book entries by DTC as
described in Section 2.05.

          Book-Entry Class [A-4] Notes:  the Class [A-4] Notes, evidenced by one
          ----------------------------
or more global notes registered in the name of DTC or its nominee, the ownership
and transfers of which shall be made through book entries by DTC as described in
Section 2.05.

          Book-Entry Note:  any Book-Entry Class [A-1] Note, Book-Entry Class
          ---------------
[A-2] Note, Book-Entry Class [A-3a], Book-Entry Class A-3b Note or Book-Entry
Class [A-4] Note.

          Business Day:  any day that is not a Saturday, Sunday or other day on
          ------------
which commercial banking institutions in the cities in which the Corporate Trust
Office and the principal offices of the Insurer and the Servicer are located are
authorized or obligated by law or executive order to remain closed.

          Casualty Payment:  any payment pursuant to a Lease on account of the
          ----------------
loss, theft, condemnation, governmental taking, destruction, or damage beyond
repair of any item of Equipment subject thereto which results, in accordance
with the terms of the Lease, in a reduction in the number or amount of any
future Lease Payments due thereunder or in the termination of the Lessee's
obligation to make future Lease Payments thereunder.

          Cede & Co.:  the initial registered holder of the Class A Notes,
          ----------
acting as nominee of The Depository Trust Company.

          Class A Notes:  as defined in the Recitals hereto.
          -------------

          Class A Percentage:  ______%.
          ------------------

                                       5
<PAGE>

          Class A Principal Payment:  (a) while the Class [A-1] Notes are
          -------------------------
outstanding, (i) on all Payment Dates prior to the Payment Date in October 2002,
the lesser of (1) the amount necessary to reduce the Outstanding Principal
Amount on the Class [A-1] Notes to zero and (2) the difference between (A) the
Discounted Present Value of the Performing Leases as of the Determination Date
for the preceding Payment Date and (B) the Discounted Present Value of the
Performing Leases as of the related Determination Date, and (ii) on and after
the Payment Date in October 2000, the entire Outstanding Principal Amount of the
Class [A-1] Notes, and (b) after the Class [A-1] Notes have been paid in full,
the amount necessary to reduce the aggregate Outstanding Principal Amount on the
Class A Notes to the Class A Target Investor Principal Amount.

          Class A Target Investor Principal Amount:  with respect to each
          ----------------------------------------
Payment Date, an amount equal to the product of (a) the Class A Percentage and
(b) the Discounted Present Value of the Performing Leases as of the related
Determination Date.

          Class [A-1] Initial Principal Amount:  $__________.
          ------------------------------------

          Class [A-1] Note Interest Rate:  the rate at which interest accrues on
          ------------------------------
the Class [A-1] Notes, which rate shall be equal to ______% per annum.

          Class [A-1] Note Owner:  with respect to a Book-Entry Class [A-1]
          ----------------------
Note, the Person who is the beneficial owner of such Book-Entry Class [A-1]
Note, as reflected on the books of DTC, or on the books of a Person maintaining
an account with DTC (directly or as an indirect participant, in accordance with
the rules of DTC).

          Class [A-1] Noteholder:  Cede & Co. or a holder of a Definitive Class
          ----------------------
[A-1] Note.

          Class [A-1] Notes:  as defined in the Recitals hereto.
          -----------------

          Class [A-2] Initial Principal Amount:  $__________.
          ------------------------------------

          Class [A-2] Note Interest Rate:  the rate at which interest accrues on
          ------------------------------
the Class [A-2] Notes, which rate shall be equal to ______% per annum.

          Class [A-2] Note Owner:  with respect to a Book-Entry Class [A-2]
          ----------------------
Note, the Person who is the beneficial owner of such Book-Entry Class [A-2]
Note, as reflected on the books of DTC, or on the books of a Person maintaining
an account with DTC (directly or as an indirect participant, in accordance with
the rules of DTC).

          Class [A-2] Noteholder:  Cede & Co. or a holder of a Definitive Class
          ----------------------
[A-2] Note.

          Class [A-2] Notes:  as defined in the Recitals hereto.
          -----------------

          Class [A-3a] Initial Principal Amount:  $__________.
          -------------------------------------

          Class [A-3b] Initial Principal Amount:  $__________.
          -------------------------------------
                                       6
<PAGE>

          Class [A-3a] Note Interest Rate:  the rate at which interest accrues
          -------------------------------
on the Class [A-3a] Notes, which rate shall be equal to ______% per annum.

          Class [A-3b] Note Interest Rate:  the rate at which interest accrues
          -------------------------------
on the Class [A-3b] Notes, which rate shall be equal to LIBOR plus ______%.

          Class [A-3a] Note Owner:  with respect to a Book-Entry Class [A-3a]
          -----------------------
Note, the Person who is the beneficial owner of such Book-Entry Class [A-3a]
Note, as reflected on the books of DTC, or on the books of a Person maintaining
an account with DTC (directly or as an indirect participant, in accordance with
the rules of DTC).

          Class [A-3b] Note Owner:  with respect to a Book-Entry Class [A-3b]
          -----------------------
Note, the Person who is the beneficial owner of such Book-Entry Class [A-3b]
Note, as reflected on the books of DTC, or on the books of a Person maintaining
an account with DTC (directly or as an indirect participant, in accordance with
the rules of DTC).

          Class [A-3a] Noteholder:  Cede & Co. or a holder of a Definitive Class
          -----------------------
[A-3a] Note.

          Class [A-3b] Noteholder:  Cede & Co. or a holder of a Definitive Class
          -----------------------
[A-3b] Note.

          Class [A-3a] Notes:  as defined in the Recitals hereto.
          ------------------

          Class [A-3b] Notes:  as defined in the Recitals hereto.
          ------------------

          Class [A-4] Initial Principal Amount:  $__________.
          ------------------------------------

          Class [A-4] Note Interest Rate:  the rate at which interest accrues on
          ------------------------------
the Class [A-4] Notes, which rate shall be equal to ______% per annum.

          Class [A-4] Note Owner:  with respect to a Book-Entry Class [A-4]
          ----------------------
Note, the Person who is the beneficial owner of such Book-Entry Class [A-4]
Note, as reflected on the books of DTC, or on the books of a Person maintaining
an account with DTC (directly or as an indirect participant, in accordance with
the rules of DTC).

          Class [A-4] Noteholder:  Cede & Co. or a holder of a Definitive Class
          ----------------------
[A-4] Note.

          Class [A-4] Notes:  as defined in the Recitals hereto.
          -----------------

          Clearstream:  Clearstream Banking, societe anonyme.
          -----------

          Clearing Agency:  an organization registered as a "clearing agency"
          ---------------
pursuant to Section 17A of the Exchange Act, or any successor provision thereof.
The initial Clearing Agency shall be DTC.

                                       7
<PAGE>

          Clearing Agency Participant:  a broker, dealer, bank, other financial
          ---------------------------
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.

          Code:  as defined in Section 2.03(a).
          ----

          Collection Account:  the account or accounts by that name established
          ------------------
and maintained by the Trustee pursuant to Section 3.01(a).

          Commission:  the Securities and Exchange Commission.
          ----------

          Corporate Trust Office:  the principal corporate trust office of the
          ----------------------
Trustee located at ____________________, Attention:  Indenture Trust
Administration, or at such other address as the Trustee may designate from time
to time by notice to the Noteholders, the Insurer, the Issuer and the Servicer.

          [Counterparty]:  [_______________, or its permitted successors or
          --------------
assigns under the [Swap Documents].

          Cumulative Loss Amount: with respect to each Payment Date, an amount
          ----------------------
equal to the excess, if any, of (a) the total of (i) the Outstanding Principal
Amount of the Notes as of the immediately preceding Payment Date after giving
effect to all principal payments made on that day, plus (ii) the
Overcollateralization Balance as of the immediately preceding Payment Date,
minus (iii) the lesser of (A) the Discounted Present Value of the Performing
Leases as of the Determination Date relating to the immediately preceding
Payment Date minus the Discounted Present Value of the Performing Leases as of
the related Determination Date and (B) Available Funds remaining after the
payment of the Insurer Premium, amounts owing the Servicer, Interest Payments
and Reimbursement Amounts on such Payment Date, over (b) the Discounted Present
Value of the Performing Leases as of the related Determination Date.

          Cut-Off Date:  the [opening] of business on ________, 2000.
          ------------

          Default:  any occurrence that is, or with notice or the lapse of time
          -------
or both would become, an Event of Default.

          Deficiency Amount:  (a) for any Payment Date, any shortfall in the sum
          -----------------
of Available Funds (excluding amounts in the Reserve Account) plus amounts on
deposit in the Reserve Account to pay the related Interest Payments due on such
Payment Date, (b) on the Payment Date in October, 2000, any shortfall in the sum
of Available Funds (excluding amounts in the Reserve Account) plus amounts on
deposit in the Reserve Account to pay the Outstanding Principal Amount of Class
[A-1] Notes, (c) on the Payment Date in ____, 2001, any shortfall in the sum of
Available Funds (excluding amounts in the Reserve Account) plus amounts on
deposit in the Reserve Account to pay the Outstanding Principal Amount of the
Class [A-2] Notes, (d) on the Payment Date in August, 2003, any shortfall in the
sum of Available

                                       8
<PAGE>

Funds (excluding amounts in the Reserve Account) plus amounts on deposit in the
Reserve Account to pay, on a prorata basis, the Outstanding Principal Amount of
the Class [A-3a] Notes and the Class [A-3b] Notes and (e) on the Payment Date in
______, 2005, any shortfall in the sum of Available Funds (excluding amounts in
the Reserve Account) plus amounts on deposit in the Reserve Account to pay the
Outstanding Principal Amount of the Class [A-4] Notes (in each case after taking
into account all payments to be made on such Payment Date, including payments
resulting from the application of funds in accordance with Section 3.07).

          Definitive Note:  a definitive, fully registered Note issued pursuant
          ---------------
to Section 2.07.

          Delinquency Rate: for any Due Period, the sum as of the related
          ----------------
Determination Date of the Discounted Present Value of the Leases that are 61 or
more days delinquent, as of such Determination Date, divided by the Discounted
Present Value of the Leases on that Determination Date.

          Delinquent Lease:  as of any Determination Date, any Lease (other than
          ----------------
a Lease which became a Non-Performing Lease prior to such Determination Date)
with respect to which the Lessee has not paid all Lease Payments then due.

          Depository Agreement:  the letter of representations, between the
          --------------------
Issuer and the Depository Trust Company, as Clearing Agency.

          Determination Date:  with respect to any Payment Date, the fifth
          ------------------
Business Day immediately preceding such Payment Date.

          Discount Rate:  with respect to any Determination Date, ______%.
          -------------

          Discounted Present Value:  with respect to any Lease as of any date,
          ------------------------
an amount equal to the net present value of all remaining scheduled Lease
Payments, determined by discounting each such Lease Payment on a monthly basis
(assuming a calendar year consisting of twelve 30-day months), at a rate equal
to the Discount Rate, to the last day of the Due Period prior to the relevant
calculation date.  In determining the Discounted Present Value of any Lease on
any date, it will be assumed that Lease Payments are due on the last day of the
calendar month immediately preceding the relevant calculation date and the
future remaining Lease Payments will be calculated after giving effect to any
payments received prior to the date of calculation to the extent such payments
relate to Lease Payments due and payable by the Lessee with respect to the
related Due Period and any prior Due Period.

          Discounted Present Value of the Delinquent Leases: with respect to any
          -------------------------------------------------
Payment Date or Determination Date, the Discounted Present Value of the Leases
that are Delinquent Leases and as to which a Lease Payment, or any portion
thereof, was 61 or more  days overdue as of the last day of the Due Period
immediately preceding such Payment Date or Determination Date.

          Discounted Present Value of the Performing Leases: the Discounted
          -------------------------------------------------
Present Value of the Leases, reduced by the discounted present value of all
future remaining scheduled Lease Payments on the Non-Performing Leases,
discounted at the Discount Rate and otherwise determined in accordance  with the
definition of "Discounted  Present Value".

                                       9
<PAGE>

          DTC:  the Depository Trust Company.
          ---

          Due Period:  with respect to any Payment Date and the Determination
          ----------
Date with respect thereto, the period beginning on the first day and ending on
the last day of the calendar month prior to the month in which such Payment Date
and such Determination Date occur.

          Eligible Account:  either (a) an account maintained with a depository
          ----------------
institution or trust company acceptable to each of the Rating Agencies and (so
long as no Insurer Default has occurred and is continuing) the Insurer or (b) a
trust account or similar account acceptable to each of the Rating Agencies
maintained with a federal or state chartered depository institution, which may
be an account maintained with the Trustee.

          Eligible Investments:  any one or more of the following obligations or
          --------------------
securities:

          (a) direct non-callable obligations of, and non-callable obligations
     fully guaranteed by, the United States of America, or any agency or
     instrumentality of the United States of America the obligations of which
     are backed by the full faith and credit of the United States of America;

          (b) demand and time deposits in, certificates of deposits of, and
     bankers' acceptances issued by, any depository institution or company
     (including the Trustee acting in its commercial capacity) incorporated
     under the laws of the United States of America or any state thereof, having
     a combined capital and surplus of at least $__________, and subject to
     supervision and examination by federal and/or state banking authorities, so
     long as at the time of such investment or contractual commitment providing
     for such investment the commercial paper or other short-term debt
     obligations of such depository institution or company (or, in the case of a
     depository institution that is the principal subsidiary of a holding
     company, the commercial paper or other short-term debt obligations of such
     holding company) have the highest short-term credit ratings available from
     Moody's and S&P;

          (c) purchase obligations with respect to and collateralized by (i) any
     security described in clause (a) above or (ii) any other security issued or
     guaranteed by an agency or instrumentality of the United States of America,
     in each case entered into with a depository institution or company (acting
     as principal) of the type described in clause (b) above; provided that the
                                                              --------
     Trustee has taken delivery of such security;

          (d) commercial paper (including both non-interest bearing discount
     obligations and interest-bearing obligations) payable on demand or on a
     specified date not more than 270 days after the date of issuance thereof
     having the highest short-term credit ratings from Moody's and S&P at the
     time of such investment;

          (e) money market funds that redeem their shares on demand, invest only
     in other Eligible Investments, and are rated Aaa by Moody's and AAAm or

                                      10
<PAGE>

     AAAm-G by S&P (including funds for which the Trustee or any of its
     affiliates is investment manager or advisor);

          (f) demand notes payable on demand issued by an institution rated A2
     by Moody's and A-1+ by S&P at the time of such investment;

          (g) funding agreements or guaranteed investment contracts provided by
     issuers rated Aaa or P-1 by Moody's and A-1+ by S&P which provide, by their
     terms, for receipt by the Trustee on or prior to the next Payment Date of a
     predetermined fixed dollar amount which cannot vary or change; and

          (h) such other investments as may be approved by the Rating Agencies
     and, so long as no Insurer Default has occurred and is continuing, the
     Insurer.

          Equipment:  each item of personal property, together with any
          ---------
replacement parts, additions, and repairs thereto, any replacements thereof, and
any accessories incorporated therein and/or affixed thereto, subject to a Lease
or, following expiration or termination of the Lease to which the same was
previously subject, remaining subject to the security interest granted by the
Seller to the Issuer pursuant to Section 1.02(b) of the Assignment and Servicing
Agreement.

          ERISA:  the Employee Retirement Income Security Act of 1974, as
          -----
amended.

          Euroclear:  the Euroclear System.
          ---------

          Event of Default:  as defined in Section 7.01.
          ----------------

          Exchange Act:  the Securities Exchange Act of 1934, as amended.
          ------------

          Excess Copy Charge:  with respect to any Lease, means the amount owing
          ------------------
by such Lessee under such Lease reflecting usage of the related Equipment in
excess of a specified copy amount per month.

          Financing Statement:  as defined in Section 14 of the Assignment and
          -------------------
Servicing Agreement.

          Governmental Authority: Any court or federal or state regulatory body,
          ----------------------
administrative agency or other tribunal or other governmental instrumentality.

          Grant:  grant, bargain, sell, convey, assign, transfer, mortgage,
          -----
pledge, create and grant a security interest in and right of set-off against,
deposit, set over and confirm.

          Holder:  a holder of a Note.
          ------

          Indemnified Party:  as defined in Section 9.11.
          -----------------

                                      11
<PAGE>

          Indenture:  this instrument as originally executed and as from time to
          ---------
time supplemented or amended pursuant to the applicable provisions hereof.

          Initial Payment Date:  ________, 2000.
          --------------------

          [Insurance Agreement:  as defined in the Recitals hereto.]
          --------------------

          Insured Payments:  as defined in the Policy and any payments made by
          ----------------
the Insurer under the [Swap Insurance Policy].

          [Insurer:  as defined in the Recitals hereto.]
          --------

          [Insurer Default:  the failure by the Insurer to make a payment
          ----------------
required under the Policy in accordance with the terms thereof.]

          [Insurer Premium:  any monthly premium fees due and payable to the
          ----------------
Insurer pursuant to the Insurance Agreement.]

          [Insurer Secured Obligations: all amounts and obligations which may at
          ----------------------------
any time be owed to or on behalf of the Insurer (or any agents, accountants or
attorneys for the Insurer) under this Indenture, the Insurance Agreement or any
other Transaction Document.]

          Interest Accrual Period:  means, with respect to the Class [A-3b]
          -----------------------
Notes, the period beginning on, and including, ________, 2000 and ending on, but
excluding, the first Payment Date and each subsequent period beginning on, and
including, the last day of the Preceding Interest Accrual Period and ending on,
but excluding, the next following Interest Accrual Period.

          Interest Payments:  as defined in Section 2.01(c).
          -----------------

          IOS Capital:  IOS Capital, Inc., a Delaware corporation.
          -----------

          Issuance Date:  ________, 2000.
          -------------

          Issuer:  the Person named as the "Issuer" in the first paragraph of
          ------
this instrument.

          Issuer Order or Issuer Request:  a written order or request delivered
          ------------------------------
to the Trustee and signed in the name of the Issuer by an Authorized Officer.

          Issuer Secured Parties:  each of the Trustee, in respect of the
          ----------------------
Trustee Secured Obligations, [and the Insurer, in respect of the Insurer Secured
Obligations.]

          Late Payment Rate:  as defined in the Policy.
          -----------------

          Lease:  collectively, (i) each lease agreement, conditional sale
          -----
contract and other agreement creating a contractual obligations to which the
Originator is a party, to the extent that such lease agreement, conditional sale
contract or other agreement is described in Exhibit A to the Assignment and
Servicing Agreement (as such Exhibit A

                                      12
<PAGE>

may be amended from time to time in accordance with the Assignment and Servicing
Agreement), including, without limitations, each Additional Lease and Substitute
Lease; (ii) each schedule or supplement to each such lease agreement,
conditional sale contract or other agreement (and each master lease agreement
insofar as it relates to any such schedule or supplement); and (iii) any and all
amendments or modifications from time to time to each such lease agreement,
conditional sale contract or other agreement, or to any schedule or supplement,
in accordance with the Assignment and Servicing Agreement.

          Lease Delinquency Payment:  any payment made with respect to a Lease
          -------------------------
in an amount equal to all or part of any specific Lease Payment due with respect
to such Lease (a) by the Servicer pursuant to Section 5.01 of the Assignment and
Servicing Agreement, (b) by a transfer from the Reserve Account pursuant to
Section 3.04, or (c) by the Issuer in its sole discretion.

          Lease Guaranty:  with respect to any Lease, any guaranty of payment or
          --------------
performance of the whole or any part of the liabilities or obligations of the
Lessee under such Lease.

          Lease Payment:  the equipment financing portion of each fixed
          -------------
periodic rental payment payable by a Lessee under a Lease.  Casualty Payments,
Retainable Deposits, Termination Payments, prepayments of rent required pursuant
to the terms of a Lease, payments becoming due before the Cut-Off Date and
supplemental or additional payments required by the terms of a Lease with
respect to taxes, insurance, maintenance (including, without limitation, any
Maintenance Charges), security deposits or other specific charges (including,
without limitation, any Excess Copy Charges) shall not be Lease Payments
hereunder and, in calculating the Discounted Present Value of the Leases and the
Discounted Present Value of the Performing Leases, the amount thereof shall not
be included.

          Lease Purchase Amount:  at any date of determination with respect to
          ---------------------
any Lease, means the sum of (i) the Discounted Present Value of the Lease as of
the beginning of the Due Period relating to such date of determination (plus any
amounts previously due and unpaid) and (ii) the product of (x) the amount
described in the foregoing clause (i) and (y) one-twelfth of the Discount Rate.

          Lessee:  with respect to any Lease, the lessee thereunder.
          ------

          LIBOR:  the London interbank offered rate for one-month Eurodollar
          -----
deposits appearing on the Telerate Screen Page 3750.

          LIBOR Business Day: any day other than (i) a Saturday or a Sunday or
          ------------------
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.

          Lien:  as defined in Section 14 of the Assignment and Servicing
          ----
Agreement.

                                      13
<PAGE>

          Maintenance Charges:  with respect to any Lease, the amount owing by
          -------------------
the Lessee under the terms of the related Lease in respect of maintenance
services being provided in connection therewith.

          Maturity:  with respect to any installment of principal of or interest
          --------
on any Note, the date on which such installment is due and payable as therein or
herein provided, whether at the Stated Maturity, by declaration of acceleration,
or otherwise.

          Moody's:  Moody's Investors Service, Inc. and any successors thereto.
          -------

          Non-Performing Lease:  as of any Determination Date, any Lease with
          --------------------
respect to which at any time following the Cut-Off Date or related Transfer
Date, as the case may be, either (a) a Lease Payment, or any portion thereof,
was 121 or more days overdue as of the last day of the Due Period with respect
to such Determination Date, unless on or before such Determination Date such
Lease Payment (or portion thereof) has been paid or (b) the Servicer has
accelerated the remaining payments or (c) the Servicer has determined such Lease
to be uncollectible in accordance with the Servicer's customary practices prior
to the last day of the Due Period with respect to such Determination Date.

          Noteholder:  at any time, any Person in whose name a Note is
          ----------
registered in the Note Register.

          Note Interest Rate:  the Class [A-1] Note Interest Rate, the Class [A-
          ------------------
2] Note Interest Rate, the Class [A-3a] Note Interest Rate, the Class [A-3b]
Note Interest Rate or the Class [A-4] Note Interest Rate, as the case may be.

          Note Owner:  the beneficial owner of a Note issued hereunder.
          ----------

          Note Register:  as defined in Section 2.03(a).
          -------------

          Note Registrar:  as defined in Section 2.03(a)
          --------------

          Notes:  any notes authorized by, and authenticated and delivered
          -----
under, this Indenture.

          [Notice of Claim:  as defined in the Policy.]
          ----------------

          Officers' Certificate:  with respect to the Issuer, the Seller or the
          ---------------------
Servicer, a certificate signed by the Chairman, the President or a Vice
President of the Issuer, the Seller or the Servicer, as the case may be, and by
another Vice President, the Treasurer, and Assistant Treasurer, the Secretary,
or an Assistant Secretary of the Issuer, the Seller or the Servicer, as the case
may be, who is not the same Person as the other officer signing such
certificate.

          Opinion of Counsel:  a written opinion, which shall be satisfactory in
          ------------------
form and substance to the Trustee and the Insurer, of counsel who may, except as
otherwise expressly provided in this Indenture, be inside or outside counsel for
the Issuer and who shall be satisfactory to the Trustee and the Insurer.

                                      14
<PAGE>

          Other Lease Payments:  all payments on or in respect of Leases which
          --------------------
are not Lease Payments, Lease Delinquency Payments, Casualty Payments,
Retainable Deposits or Termination Payments, including Maintenance Charges and
Excess Copy Charges.

          Outstanding:  with respect to the Notes, as of any date of
          -----------
determination, all Notes theretofore authenticated and delivered under this
Indenture except:

          (a) Notes theretofore cancelled by the Trustee or delivered to the
     Trustee for cancellation;

          (b) Notes or portions thereof for whose payment money in the necessary
     amount has been theretofore irrevocably deposited with the Trustee in trust
     for the holders of such Notes; and

          (c) Notes in exchange for or in lieu of which other Notes have been
     authenticated and delivered pursuant to this Indenture unless proof
     satisfactory to the Trustee is presented that any such Notes are held by a
     Person in whose hands the Note is a valid obligation;

provided, however, that Notes which have been paid with proceeds of the Policy
--------  -------
shall continue to remain Outstanding for purposes of this Indenture until the
Insurer has been paid as subrogee hereunder or reimbursed as to such payment
pursuant to the Insurance Agreement as evidenced by a written notice from the
Insurer delivered to the Trustee, and the Insurer shall be deemed to be the
Holder thereof to the extent of any payments thereon made by the Insurer and,

provided further, that in determining whether the holders of the requisite
-------- -------
percentage of the Outstanding Principal Amount of the Notes have given any
request, demand, authorization, direction, notice, consent, or waiver hereunder,
Notes owned by the Issuer or any Affiliate of the Issuer shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes that a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Notes so owned by the Issuer or any Affiliate of the Issuer that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Notes and that the pledgee is not the Issuer, any other
obligor upon the Notes, IOS Capital, the Seller or any Affiliate of any of the
foregoing Persons.

          Outstanding Class A Principal Amount:  The aggregate principal amount
          ------------------------------------
of the Class A Notes Outstanding at any time.

          Outstanding Class [A-1] Principal Amount:  the aggregate principal
          ----------------------------------------
amount of the Class [A-1] Notes Outstanding at any time.

          Outstanding Class [A-2] Principal Amount:  the aggregate principal
          ----------------------------------------
amount of the Class [A-2] Notes Outstanding at any time.

          Outstanding Class [A-3a] Principal Amount:  the aggregate principal
          -----------------------------------------
amount of the Class [A-3a] Notes Outstanding at any time.

                                      15
<PAGE>

          Outstanding Class [A-3b] Principal Amount:  the aggregate principal
          -----------------------------------------
amount of the Class [A-3b] Notes Outstanding at any time.

          Outstanding Class [A-4] Principal Amount:  the aggregate principal
          ----------------------------------------
amount of the Class [A-4] Notes Outstanding at any time.

          Outstanding Principal Amount:  the aggregate unpaid principal amount
          ----------------------------
of the Notes Outstanding at any time.

          Overcollateralization Balance:  with respect to each Payment Date is
          -----------------------------
an amount equal to the excess, if any, of (a) the Discounted Present Value of
Performing Leases as of the related Determination Date over (b) the Outstanding
Principal Amount of the Notes as of such Payment Date after giving effect to all
principal payments made on that day.

          Overcollateralization Floor:  with respect to any Payment Date, (a)
          ---------------------------
___% of the Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative  Loss Amount with respect to such Payment Date, minus (c) the
amount on deposit in the Reserve Account (after giving effect to withdrawals to
be made on account of such Payment Date).

          Paying Agent:  each agent of the Issuer appointed for the purpose of
          ------------
making payments on the Notes, including the Trustee.

          Payment Date:  the 15th day of each month (or the next Business Day
          ------------
thereafter if such day is not a Business Day), commencing on the Initial Payment
Date, and ending on the latest Stated Maturity.

          Person:  any individual, corporation, partnership, joint venture,
          ------
association, limited liability company, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.

          [Policy:  the financial guaranty insurance policy No. ________ with
          -------
respect to the Notes, dated ________, 2000, including any endorsements thereto,
issued by the Insurer to the Trustee for the benefit of the Noteholders.]

          [Preference Amounts:  as defined in the Policy.]
          -------------------

          Principal Payments:  as defined in Section 2.01(b).
          ------------------

          Preference Claim:  as defined in Section 4.02(b).
          ----------------

          Rating Agency:  each of S&P and Moody's.
          -------------

          Record Date:  with respect to any Payment Date, the last day of the
          -----------
calendar month immediately preceding such Payment Date.  The Record Date will be
the Issuance Date with respect to the first Payment Date.

                                      16
<PAGE>

          [Reference Bank Rate:  will be determined on the basis of the rates at
          --------------------
which deposits in U.S. Dollars are offered by the reference banks (which shall
be three major banks that are engaged in transactions in the London interbank
market, selected by the Trustee) as of 11:00 A.M., London time, on the day that
is two LIBOR Business Days prior to the immediately preceding Payment Date to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the principal amount of the Class [A-3b] Notes then
outstanding.  The Trustee will request the principal London office of each of
the reference banks to provide a quotation of its rate.  If at least two such
quotations are provided, the rate will be the arithmetic mean of the quotations.
If on such date fewer than two quotations are provided as requested, the rate
will be the arithmetic mean of the rates quoted by one or more major banks in
New York City, selected by the Trustee, as of 11:00 A.M., New York City time, on
such date for loans in U.S. Dollars to leading European banks for a period of
one month in amounts approximately equal to the principal amount of the Class
[A-3b] Notes then outstanding.  If no such quotations can be obtained, the rate
will be LIBOR for the prior Payment Date.]

          Reimbursement Amount:  shall mean, as of any date, the sum of (x) (i)
          --------------------
all Insured Payments paid by the Insurer, but for which the Insurer has not been
reimbursed prior to such date pursuant to Section 3.03(b) or 7.06 hereof, plus
                                                                          ----
(ii) interest accrued thereon, calculated at the Late Payment Rate from the date
the Trustee received the related Insured Payments, or the date such Insured
Payments were made, in the case of Insured Payments consisting of Preference
Amounts not made to the Trustee or in the case of Insured Payments made under
the [Swap Insurance Policy], and (y) without duplication (i) any amounts then
due and owing to the Insurer under the Insurance Agreement plus (ii) interest on
                                                           ----
such amounts at the Late Payment Rate from the date such amounts were due.

          Required Deposit Date:  as defined in Section 3.03(a).
          ---------------------

          Required Payments:  as defined in Section 3.04(b).
          -----------------

          Required Reserve Amount: as of any time, the lesser of (a) ______% of
          -----------------------
the initial Discounted Present Value of the Leases as of the Cut-Off Date and
(b) the then Outstanding Principal Amount of the Notes.

          Reserve Account:  the account by that name established and maintained
          ---------------
by the Trustee pursuant to Section 3.01.

          Responsible Officer:  with respect to the Trustee, any officer
          -------------------
assigned to the Corporate Trust Office of the Trustee, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Indenture, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.

                                      17
<PAGE>

          Retainable Deposits:  any security or other similar deposit which the
          -------------------
Servicer has determined in accordance with its customary servicing practices is
not refundable to the related Lessee.

          S&P:  Standard & Poor's Rating Services, a division of The McGraw-Hill
          ---
Companies Inc. and any successor thereto.

          Securities Act:  the Securities Act of 1933, as amended.
          --------------

          Security Deposit Account:  the account by that name established and
          ------------------------
maintained by the Trustee pursuant to Section 3.01.

          Seller:  IKON Receivables-1, LLC, a Delaware limited liability
          ------
company.

          Servicer:  IOS Capital and any successor Servicer appointed pursuant
          --------
to the terms hereof and of the Assignment and Servicing Agreement and, to the
extent that it at any time is performing the functions of the Servicer, the
Trustee, subject to the terms of Section 5.01 hereof.

          Servicer Advance:  as defined in Section 5.01 of the Assignment and
          ----------------
Servicing Agreement.

          Servicer Event of Default:  as defined in Section 10.01 of the
          -------------------------
Assignment and Servicing Agreement.

          Servicer Order:  a written order or request delivered to the Trustee
          --------------
and signed in the name of the Servicer by an Authorized Officer.

          Servicing Fee:  the Servicing Fee payable pursuant to the Assignment
          -------------
and Servicing Agreement.

          Servicing Report:  as defined in Section 6.01(b) of the Assignment and
          ----------------
Servicing Agreement.

          Stated Maturity: The stated maturity date with respect to the Class
          ---------------
[A-1] Notes is the Payment Date in _____ ______ (the "Class [A-1] Stated
Maturity Date"), the stated maturity date with respect to the Class [A-2] Notes
is the Payment Date in ______ ______ (the "Class [A-2] Stated Maturity Date"),
the stated maturity date with respect to the Class [A-3a] Notes is the Payment
Date in _______ ______ (the "Class [A-3a] Stated Maturity Date"), the stated
maturity date with respect to the Class [A-3b] Notes is the Payment Date in
_____ _______ (the "Class [A-3b] Stated Maturity Date")and the stated maturity
date with respect to the Class [A-4] Notes is the Payment Date in _______ _____
(the "Class [A-4] Stated Maturity Date" and, together with the Class [A-1]
Stated Maturity Date, the Class [A-2] Stated Maturity Date, the Class [A-3a]
Stated Maturity Date, the Class [A-3b] Stated Maturity Date, the "Stated
Maturity Dates").

          Substitute Lease:  as defined in Section 11.01(a) of the Assignment
          ----------------
and Servicing Agreement.

                                      18
<PAGE>

          [Swap]:  [that certain interest rate swap transaction governed by the
          ------
Swap Documents].

          [Swap Documents]:  [The ISDA Master Agreement dated as of ________,
          ----------------
2000 between the Issuer and the [Swap Counterparty], including the schedule
thereto and confirmations thereunder, as the same may be amended from time to
time as permitted therein and herein, in each case to the extent relating to the
Swap].

          [Swap Insurance Policy]:  [the financial guaranty insurance policy No.
          -----------------------
________ dated ________, 2000 with respect to the Issuer's obligations under the
Swap Documents, including any endorsements thereto, issued by the Insurer to the
[Counterparty].

          Telerate Screen Page 3750: means the display designated as page 3750
          -------------------------
on the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks).

          Termination Payment:  a payment payable by a Lessee under a Lease upon
          -------------------
the early termination of such Lease (but not on account of a casualty or a Lease
default) which may be agreed upon by the Servicer, acting in the name of the
Issuer, and the Lessee in accordance with the provisions of Section 5.02 of the
Assignment and Servicing Agreement.

          Transaction Accounts:  the Collection Account, the Reserve Account and
          --------------------
the Security Deposit Account.

          Transaction Documents:  this Indenture, the Assignment and Servicing
          ---------------------
Agreement and the Insurance Agreement.

          Transaction Payment Amount:  for each Required Deposit Date, the
          --------------------------
amount of all Lease Payments, Lease Delinquency Payments, Lease Purchase
Amounts, recoveries relating to Non-Performing Leases, Casualty Payments,
Retainable Deposits, Termination Payments and other payments on or in respect of
a Lease received by the Servicer required to be deposited in the Collection
Account pursuant to Section 3.03(a) and required to be reported by the Servicer
for such Required Deposit Date in accordance with Section 6.01(c) of the
Assignment and Servicing Agreement.

          Transfer Date:  With respect to any Substitute Lease or Additional
          -------------
Lease, the date of transfer thereof to the Issuer pursuant to the Assignment and
Servicing Agreement.

          Trustee:  the Person named as the "Trustee" in the first paragraph of
          -------
this instrument until a successor Person shall have become the Trustee pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Person; provided, that the provisions of Section 8.07 and
                            --------
Section 8.10, as applicable to any Person at any time serving as Trustee
hereunder, shall survive the termination of such Person's status as Trustee
hereunder and the succession of any other Person to such status.

                                      19
<PAGE>

          Trustee Secured Obligations:  all amounts and obligations which the
          ---------------------------
Issuer or the Servicer, as the case may be, may at any time owe to or on behalf
of itself or of the Trustee for the benefit of the Noteholders under this
Indenture or the Notes.

          Trust Indenture Act:  the Trust Indenture Act of 1939 as in effect on
          -------------------
the date on which this Indenture is qualified under the Trust Indenture Act,
except as provided in Section 10.06 or 12.01 hereof.

          Underwriting Agreement:  the Underwriting Agreement, among the Issuer,
          ----------------------
IOS Capital and the several underwriters named therein relating to the issuance
of the Notes.

          Uniform Commercial Code:  with respect to a particular jurisdiction,
          -----------------------
the Uniform Commercial Code, as in effect from time to time in such
jurisdiction, or any successor statute thereto.

          Warranty Lease:  a Lease subject to purchase by IOS Capital as a
          --------------
result of a breach of a representation or warranty in accordance with the
provisions of Section 5.04 of the Assignment and Servicing Agreement.

          SECTION 1.02.  Compliance Certificates and Opinions.
                         ------------------------------------

          Upon any written application or request (or oral application with
prompt written or telecopied confirmation) by the Issuer to the Trustee to take
any action under any provision of this Indenture, other than any request that
(a) the Trustee authenticate the Notes specified in such request, (b) the
Trustee invest moneys in any of the Transaction Accounts pursuant to the written
directions specified in such request, or (c) the Trustee pay moneys due and
payable to the Issuer hereunder to the Issuer's assignee specified in such
request, the Trustee shall require the Issuer to furnish to the Trustee and, so
long as no Insurer Default has occurred and is continuing, the Insurer, an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and that the request otherwise is in accordance with the terms of the Indenture,
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such requested action as to which other evidence of satisfaction of the
conditions precedent thereto is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.

          SECTION 1.03.  Form of Documents Delivered to Trustee and Insurer.
                         --------------------------------------------------

          In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

                                      20
<PAGE>

          Any certificate or opinion of an officer of the Issuer delivered to
the Trustee or the Insurer may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous.  Any such Officer's
Certificate or opinion and any Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Issuer as to such factual matters unless such
officer or counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous.  Any Opinion of Counsel may be based on the written opinion of
other counsel, in which event such Opinion of Counsel shall be accompanied by a
copy of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee and the Insurer may
reasonably rely upon the opinion of such other counsel.

          Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

          Wherever in this Indenture, in connection with any application or
certificate or report to the Trustee or the Insurer, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report.  The foregoing shall not, however, be
construed to affect the Trustee's or the Insurer's right to rely upon the truth
and accuracy of any statement or opinion contained in any such document as
provided in Section 8.01(a)(ii).

          Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default or Servicer Event
of Default is a condition precedent to the taking of any action by the Trustee
or the Insurer at the request or direction of the Issuer, then, notwithstanding
that the satisfaction of such condition is a condition precedent to the Issuer's
right to make such request or direction, the Trustee and the Insurer shall be
protected in acting in accordance with such request or direction if it does not
have knowledge of the occurrence and continuation of such Default or Event of
Default or Servicer Event of Default.  For all purposes of this Indenture,
neither the Trustee nor the Insurer shall be deemed to have knowledge of any
Insurer Default, Servicer Event of Default, Default or Event of Default nor
shall the Trustee or the Insurer have any duty to monitor or investigate to
determine whether such default has occurred (other than an Event of Default of
the kind described in Section 7.01(a) or 7.01(b)) unless, in the case of the
Trustee, a Responsible Officer of the Trustee shall have actual knowledge
thereof or shall have been notified in writing thereof by the Issuer, the
Servicer, the Insurer or any Noteholder.

                                      21
<PAGE>

          SECTION 1.04.  Acts of Noteholders, etc.
                         ------------------------
          (a)   Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Issuer and/or the Insurer. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 8.01)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section 1.04.

          (b)   The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.

          (c)   Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the holder of any Note shall bind every future holder of
the same Note and the holder of every Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Issuer in
reliance thereon, whether or not notation of such action is made upon such Note.

          (d)   By accepting the Notes issued pursuant to this Indenture, each
Noteholder irrevocably appoints the Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of such
Noteholder to effect and enforce the rights of such Noteholder and the revisions
pursuant hereto for the benefit of such Noteholder; provided that nothing
                                                    --------
contained in this Section 1.04(d) shall be deemed to confer upon the Trustee any
duty or power to vote on behalf of the Noteholders with respect to any matter on
which the Noteholders have a right to vote pursuant to the terms of this
Indenture.

          SECTION 1.05.  Notices, etc., to Trustee, Servicer, Issuer, Insurer
                         ----------------------------------------------------
and Rating Agencies.
-------------------

          Any request, demand, authorization, direction, notice, consent,
waiver, Act of Noteholders, or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with, the Trustee,
the Issuer, the Insurer or the Servicer shall be sufficient for every purpose
hereunder (unless otherwise herein

                                      22
<PAGE>

expressly provided) if in writing and mailed, first-class postage prepaid or
certified mail return receipt requested, or sent by private courier or confirmed
telecopy. Unless otherwise specifically provided herein, no such request,
demand, authorization, direction, notice, consent, waiver, Act of Noteholders or
other document shall be effective until received and any provision hereof
requiring the making, giving, furnishing, or filing of the same on any date
shall be interpreted as requiring the same to be sent or delivered in such
fashion that it will be received on such date. Any such request, demand,
authorization, direction, notice, consent, waiver, Act of Noteholders, or other
document shall be sent or delivered to the following addresses:

          (a)   if to the Trustee, at the Corporate Trust Office (Number for
telecopy (___) ___-____), or at any other address previously furnished in
writing to the Issuer, the Insurer and the Servicer by the Trustee; or

          (b)   if to the Issuer, at IKON Receivables, LLC, 1738 Bass Road, P.O.
Box 9115, Macon, Georgia 31208, Attention: Robert McLain (Number for telecopy:
(912) 471-2375), with a copy to, General Counsel, IKON Office Solutions, Inc.,
70 Valley Stream Parkway, Malvern, PA 19355, or at any other address previously
furnished in writing to the Trustee, the Insurer and the Servicer by the Issuer;
or

          (c)   if to the Servicer, at IOS Capital, Inc., 1738 Bass Road, P.O.
Box 9115, Macon, Georgia, 31208, Attention: Harry G. Kozee, Vice President -
Finance, with a copy to the General Counsel, (Number for telecopy: (912) 471-
2375), with a copy to, General Counsel, IKON Office Solutions, Inc., 70 Valley
Stream Parkway, Malvern, PA 19355, or at any other address previously furnished
in writing to the Trustee, the Insurer and the Servicer; or

          (d)   if to the Rating Agencies: to Standard and Poor's, 55 Water
Street, New York, New York 10041, Attention: Structured Finance Ratings, and to
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: ABS Monitoring Department; or

          (e)   if to the Insurer: to [Ambac Assurance Corporation, One State
Street Plaza, New York, New York 10004, Attention: Structured Asset Backed
Securities Department Head (Number for telecopy: (212) 208-3547)].

          SECTION 1.06.  Notice to Noteholders; Waiver.
                         -----------------------------
          (a)   Where this Indenture provides for notice to Noteholders of any
event, or the mailing of any report to Noteholders, such notice or report shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid or certified mail return receipt
requested, or sent by private courier or confirmed telecopy to each Noteholder
affected by such event or to whom such report is required to be mailed, at its
address as it appears in the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice or
the mailing of such report. In any case where a notice or report to Noteholders
is mailed, neither the failure to mail such notice or report, nor any defect in
any notice or report so mailed, to any particular Noteholder shall affect the
sufficiency of such notice

                                      23
<PAGE>

or report with respect to other Noteholders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Noteholders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.

          (b)   In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to mail or send notice to
Noteholders, in accordance with Section 1.06(a), of any event or any report to
Noteholders when such notice or report is required to be delivered pursuant to
any provision of this Indenture, then such notification or delivery as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.

          SECTION 1.07.  Effect of Headings and Table of Contents.
                         ----------------------------------------
          The Article and Section headings herein and in the Table of Contents
are for convenience only and shall not affect the construction hereof.

          SECTION 1.08.  Successors and Assigns.
                         ----------------------
          All covenants and agreements in this Indenture by the Issuer or the
Trustee shall bind its respective successors and permitted assigns, whether so
expressed or not.

          SECTION 1.09.  Benefits of Indenture.
                         ----------------------

          The Insurer and its successors and assigns shall be a third-party
beneficiary to the provisions of this Indenture, and shall be entitled to rely
upon and directly to enforce the provisions of this Indenture so long as no
Insurer Default has occurred and is continuing.  Nothing in this Indenture or in
the Notes, express or implied, shall give to any other Person, other than the
parties hereto and their successors hereunder and the Noteholders, and any other
party secured hereunder, and any other Person with an ownership interest in any
part of the Asset Pool, any benefit or any legal or equitable right, remedy or
claim under this Indenture.  The Insurer may disclaim any of its rights and
powers under this Indenture, but not its duties and obligations under the Policy
or the [Swap Insurance Policy], upon delivery of a written notice to the
Trustee.

          SECTION 1.10.  Recording of Indenture.
                         -----------------------

          If this Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by the Issuer and at its
expense accompanied by an Opinion of Counsel (which may be counsel to the
Trustee or any other counsel reasonably acceptable to the Trustee and the
Insurer) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee under this Indenture.

                                      24
<PAGE>

          SECTION 1.11.  GOVERNING LAW.
                         -------------

          THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  THIS INDENTURE IS SUBJECT
TO THE TRUST INDENTURE ACT OF 1939, AS AMENDED, AND SHALL BE GOVERNED THEREBY
AND CONSTRUED IN ACCORDANCE THEREWITH.

          SECTION 1.12. Legal Holidays.
                        --------------

          In any case where any Payment Date or the Stated Maturity or any other
date on which principal of or interest on any Note is proposed to be paid shall
not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) such payment need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on such Payment Date, Stated Maturity, or other date on which principal of
or interest on any Note is proposed to be paid; provided that no interest shall
                                                --------
accrue for the period from and after such Payment Date, Stated Maturity, or any
other date on which principal of or interest on any Note is proposed to be paid,
as the case may be, until such next succeeding Business Day.

          SECTION 1.13.  Execution in Counterparts.
                         -------------------------

          This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

          SECTION 1.14.  Inspection.
                         ----------

          The Issuer agrees that, on reasonable prior notice, it will permit the
representatives of the Trustee or the Insurer or any Noteholder holding Notes,
or a beneficial interest therein, evidencing at least 25% of the Outstanding
Principal Amount of the Notes, during the Issuer's normal business hours, to
examine all of the books of account, records, reports and other papers of the
Issuer, to make copies thereof and extracts therefrom, to cause such books to be
audited by independent accountants selected by the Issuer and reasonably
acceptable to the Trustee and the Insurer or such Noteholder, as the case may
be, and to discuss the Issuer's affairs, finances and accounts with its
officers, employees and independent accountants (and by this provision the
Issuer hereby authorizes its accountants to discuss with such representatives
such affairs, finances and accounts), all at such reasonable times and as often
as may be reasonably requested for the purpose of reviewing or evaluating the
financial condition or affairs of the Issuer or the performance of and
compliance with the covenants and undertakings of the Issuer in this Indenture,
the Assignment and Servicing Agreement or any of the other documents referred to
herein or therein.  Any expense incident to the exercise by the Trustee or the
Insurer at any time or any Noteholder during the continuance of any Default or
Event of Default, of any right under this Section 1.14 shall be borne by the
Issuer.

                                      25
<PAGE>

          SECTION 1.15.  Survival of Representations and Warranties.
                         ------------------------------------------

          The representations, warranties and certifications of the Issuer made
in this Indenture or in any certificate or other writing delivered by the Issuer
pursuant hereto shall survive the authentication and delivery of the Notes
hereunder.

                                  ARTICLE II

                                   THE NOTES

          SECTION 2.01.  General Provisions; Optional Redemption by Issuer.
                         -------------------------------------------------
          (a)   The Notes shall consist of $__________ principal amount of Class
[A-1] Notes, $__________ principal amount of Class [A-2] Notes, $__________
principal amount of Class [A-3a] Notes, $__________ principal amount of Class
[A-3b] Notes, $__________ principal amount of Class [A-4] Notes and the forms
thereof and of the Trustee's certificate of authentication shall be in
substantially the forms set forth in Exhibit A hereto, with such appropriate
insertions, omissions, substitutions, and other variations as are required or
permitted by this Indenture.

          The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $__________ of Notes, except for
Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Section 2.03, 2.04, or
10.05.  The Notes shall be issuable only in registered form and only in minimum
denominations of at least $1,000; provided that the foregoing shall not restrict
                                  --------
or prevent the transfer in accordance with Section 2.03 of any Note having a
remaining Outstanding Principal Amount of other than an integral multiple of
$1,000, or the issuance of a single Note of each Class, with a denomination less
than $1,000.

          (b)   For each Payment Date, payments of principal (the "Principal
Payments") on the Notes will be made in accordance with Sections 3.03(b), or
7.06, as applicable. Except as otherwise provided in Section 7.02, no part of
the principal of any Note shall be paid prior to the Payment Date on which such
principal is due in accordance with the preceding provisions of this Section
2.01(b), except that the Issuer may redeem the Notes in their entirety
(including any unpaid interest due), without premium, as of any Payment Date on
which the Discounted Present Value of the Performing Leases is less than or
equal to ten percent (10%) of the aggregate Discounted Present Value of the
Leases as of the Cut-Off Date (after giving effect to all Principal Payments on
such Payment Date). The Issuer will give written notice of any such redemption
to the Trustee and the Trustee shall give written notice to the Noteholders at
least 30 days before the Payment Date fixed for such prepayment by certified
mail return receipt requested, hand delivery or overnight courier. Notice of
such prepayment having been so given, the remaining unpaid principal as of the
Payment Date fixed for prepayment together with all interest accrued and unpaid
to such Payment Date, shall become due and payable on such Payment Date.

                                      26
<PAGE>

          (c)   For each Payment Date, the interest due and payable (the
"Interest Payments") with respect to the Class [A-1] Notes, Class [A-2] Notes,
Class [A-3a] Notes, Class [A-3b] Notes and Class [A-4] Notes will be the
interest that has accrued on the respective Notes since the last Payment Date
or, in the case of the first Payment Date, since the Issuance Date, at the Class
[A-1] Note Interest Rate, Class [A-2] Note Interest Rate, Class [A-3a] Note
Interest Rate, Class [A-3b] Note Interest Rate and Class [A-4] Note Interest
Rate, respectively, applied to the then Outstanding Principal Amounts of the
Class [A-1] Notes, Class [A-2] Notes, Class [A-3a] Notes, Class [A-3b] Notes and
Class [A-4] Notes, respectively, on the preceding Payment Date. With respect to
the Class [A-1] Notes and the Class [A-3b] Notes, the interest will be
calculated on the basis of a year of 360 days and the actual number of days in
the related interest accrual period. With respect to all other Notes, the
interest will be calculated on the basis of a year of 360 days comprised of
twelve 30-day months. Interest Payments will be made in accordance with Sections
3.03(b), 3.04(b) and 7.06, as applicable.

          (d)   All payments made with respect to any Note shall be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts and shall be applied first
to the interest then due and payable on such Notes, then to the principal
thereof, and finally to premium, if any.

          (e)   All Class [A-1] Notes issued under this Indenture shall be in
all respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture. Payments of principal and interest on the Class [A-1] Notes
shall be made pro rata among all Outstanding Class [A-1] Notes, without
preference or priority of any kind.

          (f)   All Class [A-2] Notes issued under this Indenture shall be in
all respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture. Payments of principal and interest on the Class [A-2] Notes
shall be made pro rata among all Outstanding Class [A-2] Notes, without
preference or priority of any kind.

          (g)   All Class [A-3a] Notes and all Class [A-3b] Notes issued under
this Indenture shall be in all respects equally and ratably entitled to the
benefits hereof without preference, priority or distinction on account of the
actual time or times of authentication and delivery, all in accordance with the
terms and provisions of this Indenture. Payments of principal and interest on
the Class [A-3a] Notes and Class [A-3b] Notes shall be made pro rata among all
Outstanding Class [A-3a] Notes and Class [A-3b] Notes, without preference or
priority of any kind.

          (h)   All Class [A-4] Notes issued under this Indenture shall be in
all respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Indenture. Payments of principal and interest on the Class [A-4] Notes
shall be made pro rata among all Outstanding Class [A-4] Notes, without
preference or priority of any kind.

                                      27
<PAGE>

          SECTION 2.02.  Execution, Authentication, Delivery, and Dating.
                         -----------------------------------------------
          (a)   The Notes shall be manually executed by the Issuer.

          (b)   Any Note bearing the signature of an individual who was at the
time of execution thereof a proper officer of the Issuer shall bind the Issuer,
notwithstanding that such individual ceases to hold such office prior to the
authentication and delivery of such Note or did not hold such office at the date
of such Note.

          (c)   No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Each Note shall be dated the date of
its authentication.

          (d)   The Notes may from time to time be executed by the Issuer and
delivered to the Trustee for authentication together with a Issuer Request to
the Trustee directing the authentication and delivery of such Notes and
thereupon the same shall be authenticated and delivered by the Trustee in
accordance with such Issuer Request.

          SECTION 2.03.  Transfer and Exchange.
                         ---------------------
          (a)   The Trustee is hereby appointed "Note Registrar" for the purpose
of registering Notes and transfers of Notes as herein provided. The Note
Registrar shall cause to be kept at the Corporate Trust Office a register (the
"Note Register") in which, subject to such reasonable regulations as the Trustee
may prescribe, the Issuer shall provide for the registration of Notes and of
transfers of Notes.

          The Trustee shall not register the transfer of any Note (other than
the transfer of a Note to the nominee of the Clearing Agency) unless the
transferee has executed and delivered to the Trustee a certification to the
effect that either (i) the transferee is not (A) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA or (b) a plan (as defined in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended (the "Code")) that is subject to Section 4975 of the
Code (each of the foregoing, a "Benefit Plan"), and is not acting on behalf of
or investing the assets of a benefit Plan, or (ii) the transferee's acquisition
and continued holding of the Note will be covered by a U.S. Department of Labor
Prohibited Transaction Class Exemption.  Each transferee of a Book-Entry Note
shall be deemed to make one of the foregoing representations.

          (b)   Subject to Section 2.03(a), upon surrender for registration of
transfer of any Note at the office designated pursuant to Section 9.02 for such
purpose, the Issuer shall execute and the Trustee upon request shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a like
aggregate original principal amount. The Trustee shall make a notation on any
such new Note of the amount of principal, if any, that has been paid on such
Note.

                                      28
<PAGE>

          (c)   All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

          (d)   Every Note presented or surrendered for registration of transfer
or for exchange shall (if so required by the Issuer or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Trustee duly executed, by the holder thereof
or his attorney duly authorized in writing.

          (e)   No service charge shall be made for any registration of transfer
or exchange of Notes, but the Issuer or the Trustee may require payment by the
transferor of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or exchange
of Notes, other than exchanges pursuant to Section 10.05 not involving any
transfer.

          SECTION 2.04.  Mutilated, Destroyed, Lost and Stolen Notes.
                         -------------------------------------------
          (a)   If any mutilated Note is surrendered to the Trustee, the Issuer
shall execute and the Trustee shall authenticate and deliver in exchange
therefore a replacement Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding.

          (b)   If (i) there shall be delivered to the Issuer and the Trustee
evidence to their satisfaction of the destruction, loss or theft of any Note and
(ii) there is delivered to the Issuer, the Trustee and (unless an Insurer
Default has occurred and is continuing) the Insurer such security or indemnity
as may be required by them to save each of them and any agent of either of them
harmless, then, in the absence of actual notice to the Issuer or the Trustee
that such Note has been acquired by a bona fide purchaser, the Issuer shall
execute and upon its written request the Trustee shall authenticate and deliver,
in lieu of any such destroyed, lost or stolen Note, a replacement Note of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.

          (c)   In case the final installment of principal on any such
mutilated, destroyed, lost or stolen Note has become or will at the next Payment
Date become due and payable, the Issuer in its discretion may, instead of
issuing a replacement Note, pay such Note.

          (d)   Upon the issuance of any replacement Note under this Section,
the Issuer or the Trustee may require the payment by the Noteholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed as
a result of the issuance of such replacement Note.

          (e)   Every replacement Note issued pursuant to this Section 2.04 in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
<PAGE>

          (f)   The provisions of this Section 2.04 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.

          SECTION 2.05.   Book-Entry Registration.
                          -----------------------

          Each of the Class [A-1] Notes, Class [A-2] Notes, Class [A-3a] Notes,
Class [A-3b] Notes and Class [A-4] Notes, upon original issuance, shall be
issued in the form attached as Exhibit A and delivered to The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, the Issuer.  Each of
the Class [A-1] Notes, Class [A-2] Notes, Class [A-3a] Notes, Class [A-3b] Notes
and  Class [A-4] Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of The Depository Trust Company, as the initial
Clearing Agency, and no Class [A-1] Note Owner, Class [A-2] Note Owner, Class
[A-3a] Note Owner, Class [A-3b] Note Owner or Class [A-4] Note Owner will
receive a definitive note representing such Note Owner's interest, except as
provided in Section 2.07.  Unless and until Definitive Class [A-1] Notes,
Definitive Class [A-2] Notes, Definitive Class [A-3a] Notes, Definitive Class
[A-3b] Notes and/or Definitive Class [A-4] Notes ("Definitive Notes") have been
issued to the applicable Note Owners pursuant to Section 2.07:

          (a)   the provisions of this Section 2.05 shall be in full force and
effect with respect to the Class [A-1] Notes, Class [A-2] Notes, Class [A-3a]
Notes, Class [A-3b] Notes or the Class [A-4] Notes, as the case may be;

          (b)   the Issuer, the Servicer and the Trustee, and their officers,
directors, employees and agents, may deal with the Clearing Agency and the
Clearing Agency Participants for all purposes with respect to the Class [A-1]
Notes, Class [A-2] Notes, Class [A-3a] Notes, Class [A-3b] Notes or Class [A-4]
Notes, as the case may be (including the making of distributions on the Class
[A-1] Notes, Class [A-2] Notes, Class [A-3a] Notes, Class [A-3b] Notes and
Class [A-4] Notes, as the case may be), as the authorized representatives of the
respective Note Owners;

          (c)   to the extent that the provisions of this Section 2.05 conflict
with any other provisions of this Indenture, the provisions of this Section 2.05
shall control; and

          (d)   the rights of the respective Note Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such respective Note
Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Depository Agreement, unless and until Definitive Notes, are issued
pursuant to Section 2.07, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal and interest on the related Class [A-1] Notes, Class
[A-2] Notes, Class [A-3a] Notes, Class [A-3b] Notes and Class [A-4] Notes, as
the case may be, to such Clearing Agency Participants.

          For purposes of any provision of this Indenture requiring or
permitting actions with the consent of, or at the direction of, holders of Class
[A-1] Notes, Class [A-

                                      30
<PAGE>

2] Notes, Class [A-3a] Notes, Class [A-3b] Notes or Class [A-4] Notes, as the
case may be, evidencing a specified percentage of the Outstanding Principal
Amount of the Class [A-1] Notes, Class [A-2] Notes, Class [A-3a] Notes, Class
[A-3b] Notes or the Class [A-4] Notes, respectively, such direction or consent
maybe given by Note Owners (acting through the Clearing Agency and the Clearing
Agency Participants) owning Class [A-1] Notes, Class [A-2] Notes, Class [A-3a]
Notes, Class [A-3b] Notes or Class [A-4] Notes evidencing the requisite
percentage of the Outstanding Principal Amount of such Notes, respectively.

          SECTION 2.06.  Notice to Clearing Agency Noteholders.
                         -------------------------------------

          Whenever notice or other communication to the Class [A-1] Noteholders,
Class [A-2] Noteholders, Class [A-3a] Noteholders, Class [A-3b] Noteholders or
Class [A-4] Noteholders is required under this Agreement, unless and until
Definitive Notes shall have been issued to the related Note Owners pursuant to
Section 2.07, the Trustee shall give all such notices and communications
specified herein to be given to such Noteholders to the applicable Clearing
Agency which shall give such notices and communications to the related Class [A-
1] Note Owners, Class [A-2] Note Owners, Class [A-3a] Note Owners, Class [A-3b]
Note Owners or Class [A-4] Note Owners in accordance with its applicable rules,
regulations and procedures.

          SECTION 2.07.  Definitive Notes.
                         ----------------
          (a)   If (a) (i) the Servicer advises the Issuer in writing that DTC
is no longer willing or able to properly discharge its responsibilities under
the Depository Agreement with respect to the Notes and (ii) the Issuer is unable
to locate a qualified successor, (b) the Servicer, at its option, advises the
Issuer in writing that it elects to terminate the book-entry system with respect
to the Notes or (c) after the occurrence of an "Event of Default" under this
Indenture or a default by the Servicer under the Assignment and Servicing
Agreement, Noteholders evidencing not less than a majority of the aggregate
unpaid Outstanding Principal Amount of the Notes advise the Issuer in writing
that the continuation of a book-entry system with respect to the Notes is no
longer in the best interests of the Note Owners, then the Issuer shall notify
the Trustee and all Note Owners through the Clearing Agency, of the occurrence
of any such event and of the availability of Definitive Notes. Upon surrender by
DTC of the Notes, accompanied by registration and transfer instructions from DTC
for registration, the Issuer shall reissue such Notes as Definitive Notes to the
Noteholders. The Issuer shall not be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes, as the case may be,
all references herein to obligations imposed upon or to be performed by DTC
shall be deemed to be imposed upon and performed by the Issuer, to the extent
applicable with respect to such Definitive Notes, and the Issuer shall recognize
the holders of the relevant Definitive Notes as Noteholders hereunder.

          (b)  Definitive Notes will not be eligible for clearing or settlement
through DTC, Euroclear or Clearstream.

                                      31
<PAGE>

          SECTION 2.08.  Payment of Interest and Principal; Rights Preserved.
                         ---------------------------------------------------
          (a)   Any installment of interest or principal, payable on any Note
that is punctually paid or duly provided for by the Issuer on the applicable
Payment Date shall be paid to the Person in whose name such Note was registered
at the close of business on the Record Date for such Payment Date by wire
transfer of federal funds to the account and number specified in the Note
Register on such Record Date for such Person or, if no such account or number is
so specified, then by check mailed to such Person's address as it appears in the
Note Register on such Record Date.

          (b)   All reductions in the principal amount of a Note effected by
payments of installments of principal made on any Payment Date shall be binding
upon all holders of such Note and of any Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof, whether or not
such payment is noted on such Note. All payments on the Notes shall be paid
without any requirement of presentment but each holder of any Note shall be
deemed to agree, by its acceptance of the same, to surrender such Note at the
Corporate Trust Office against payment of the final installment of principal of
such Note.

          SECTION 2.09.  Persons Deemed Owners.
                         ---------------------

          Prior to due presentment of a Note for registration of transfer, the
Issuer, the Trustee, the Insurer, and any agent of the Issuer, the Trustee or
the Insurer may treat the registered Noteholder as the owner of such Note for
the purpose of receiving payment of principal of and interest on such Note and
for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Trustee, the Insurer nor any agent of the Issuer, the
Trustee or the Insurer shall be affected by notice to the contrary.

          SECTION 2.10.  Cancellation.
                         ------------

          All Notes surrendered for registration of transfer or exchange or
following final payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it.  The
Issuer may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Trustee.  No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture.  Subject to the next sentence, all
cancelled Notes held by the Trustee may be disposed of in the normal course of
its business or as directed by an Issuer Order.  Promptly following the date on
which all principal of and interest on the Notes has been paid in full and the
Notes have been surrendered to the Trustee, the Trustee shall, if the Insurer
has paid any amount in respect of the Notes under the Policy or otherwise which
has not been reimbursed to it, deliver such surrendered Notes to the Insurer.

          SECTION 2.11.  Noteholder Lists.
                         ----------------

          The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders and shall

                                      32
<PAGE>

otherwise comply with Section 312(a) of the Trust Indenture Act. In the event
the Trustee no longer serves as the Note Registrar, the Issuer (or any other
obligor upon the Notes) shall furnish to the Trustee at least five Business Days
before each interest payment date (and in all events in intervals of not more
than 6 months) and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Noteholders, and the Issuer shall otherwise comply
with Section 312(a) of the Trust Indenture Act.

          SECTION 2.12.  Treasury Notes.
                         --------------

          In determining whether the Noteholders of the required Outstanding
Principal Amount of the Notes have concurred in any direction, waiver or
consent, Notes owned by the Issuer, any other obligor upon the Notes or an
Affiliate of the Issuer shall be considered as though not Outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes which a Responsible
Officer actually knows are so owned shall be so disregarded.

          SECTION 2.13.  CUSIP Numbers.
                         -------------

          The Issuer in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall indicate the "CUSIP" numbers of
the Notes in notices of redemption and related materials as a convenience to
Noteholders; provided that any such notice may state that no representation is
             --------
made as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of redemption and related materials.

                                  ARTICLE III

                   ACCOUNTS; INVESTMENT OF MONEYS; COLLECTION

                       AND APPLICATION OF MONEYS; REPORTS

          SECTION 3.01.  Transaction Accounts; Investments by Trustee.
                         --------------------------------------------
          (a)   On or before the Issuance Date, the Trustee shall establish in
the name of the Trustee for the benefit of the Noteholders and the Insurer to
the extent of their interests therein as provided in this Indenture the
following accounts, which accounts shall be Eligible Accounts maintained at the
Corporate Trust Office:

          (i)    Collection Account;

          (ii)   Reserve Account; and

          (iii)  Security Deposit Account.

Subject to the further provisions of this Section 3.01(a), the Trustee shall,
upon receipt or upon transfer from another account, as the case may be, deposit
into such accounts all amounts received by it which are required to be deposited
therein in accordance with the provisions of this Indenture.  All such amounts
and all investments made with such

                                      33
<PAGE>

amounts, including all income and other gain from such investments, shall be
held by the Trustee in such accounts as part of the Asset Pool as herein
provided, subject to withdrawal by the Trustee in accordance with, and for the
purposes specified in the provisions of, this Indenture.

          (b)    The Trustee shall hold in trust but shall not be required to
deposit in any account specified in Section 3.01(a) any payment received by it
until such time as the Trustee shall have identified to its reasonable
satisfaction the nature of such payment and, on the basis thereof, the proper
account or accounts into which such payment is to be deposited. In determining
into which of the accounts, if any, referred to above any amount received by the
Trustee is to be deposited, the Trustee may conclusively rely (in the absence of
bad faith on the part of the Trustee) on the advice of the Servicer. Unless the
Trustee is advised differently in writing by the Lessee making the payment or by
the Servicer in writing (with the Servicer's instruction controlling), the
Trustee shall assume that any amount remitted to it by such Lessee is to be
deposited into the Collection Account pursuant to Section 3.03. The Trustee may
establish from time to time such deadline or deadlines as it shall determine are
reasonable or necessary in the administration of the Asset Pool after which all
amounts received or collected by the Trustee on any day shall not be deemed to
have been received or collected until the next succeeding Business Day.

          (c)   Neither the Servicer nor the Trustee shall have any right of
set-off with respect to the Collection Account, the Reserve Account or the
Security Deposit Account or any investment therein.

          (d)   So long as no Event of Default has occurred and is continuing,
all or a portion of the amounts in the Transaction Accounts, shall be invested
and reinvested by the Trustee pursuant to a Servicer Order in one or more
Eligible Investments. Subject to the restrictions on the maturity of investments
set forth in Section 3.01(f), each such Servicer Order may authorize the Trustee
to make the specific Eligible Investments set forth therein, to make Eligible
Investments from time to time consistent with the general instructions set forth
therein, or to make specific Eligible Investments pursuant to instructions
received in writing or by telegraph or facsimile transmission from the employees
or agents of the Servicer, identified therein, in each case in such amounts as
such Servicer Order shall specify. The Issuer agrees to report as income for
financial reporting and tax purposes (to the extent reportable) all investment
earnings on amounts in the Collection Account, the Reserve Account or the
Security Deposit Account. The Servicer agrees to give appropriate and timely
investment directions to the Trustee so that there will not be more than two
Business Days in any one calendar year at the end of which funds in the
Transaction Accounts are not invested, directly or indirectly, pursuant to a
Servicer Order in Eligible Investments that mature on or after the opening of
business on the next Business Day.

          (e)   In the event that either (i) the Servicer, shall have failed to
give investment directions to the Trustee by 9:30 A.M., New York City time on
any Business Day on which there may be uninvested cash or (ii) an Event of
Default shall be continuing, the Trustee shall promptly invest and reinvest the
funds then in the Collection Account, the Reserve Account or the Security
Deposit Account, as the case may be, to

                                      34
<PAGE>

the fullest extent practicable in Eligible Investments specified in clause (e)
of the definition thereof. All investments made by the Trustee shall mature no
later than the maturity date therefore permitted by Section 3.01(f) unless the
Trustee shall have received written confirmation from each Rating Agency, that
the liquidation of such Eligible Investments prior to their respective maturity
dates, will not result in the reduction or withdrawal of such Rating Agency's
then-current rating of the Notes.

          (f)   Unless payable on demand, no investment of any amount held in
the Transaction Accounts shall mature later than the Business Day immediately
preceding the Payment Date which is scheduled to occur immediately following the
date of investment. All income or other gains (net of losses) from the
investment of moneys deposited in the Transaction Accounts shall be deposited by
the Trustee in such account immediately upon receipt.

          (g)   Any investment of any funds in the Transaction Accounts and any
sale of any investment held in such accounts, shall be made under the following
terms and conditions:

          (i)   each such investment shall be made in the name of the Trustee or
in the name of a nominee of the Trustee, in each case in such manner as shall be
necessary to maintain the identity of such investments as assets of the Asset
Pool;

          (ii)  any certificate or other instrument evidencing such investment
shall be delivered directly to the Trustee or its agent and the Trustee shall
have sole possession of such instrument, and all income on such investment; and

          (iii) the proceeds of any sale of an investment shall be remitted by
the purchaser thereof directly to the Trustee for deposit in the account in
which such investment was held.

          (h)   If any amounts are needed for disbursement from the Transaction
Accounts and sufficient uninvested funds are not collected and available therein
to make such disbursement, in the absence of a Servicer Order for the
liquidation of investments held therein in an amount sufficient to provide the
required funds, the Trustee shall select and cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such accounts.

          (i)   The Trustee shall not in any way be held liable by reason of any
insufficiency in the Transaction Accounts resulting from losses on investments
made in accordance with the provisions of this Section 3.01 (but the institution
serving as Trustee shall at all times remain liable for its own debt
obligations, if any, constituting part of such investments) or losses incurred
in respect of the liquidation of any Eligible Investment prior to its stated
maturity. The Trustee shall not be liable for the selection of any Eligible
Investment or any investment made by it in accordance with this Section 3.01 on
the grounds that it could have made a more favorable investment or a more
favorable selection for sale of an investment.

                                      35
<PAGE>

          SECTION 3.02.  Collection of Moneys.
                         --------------------
          (a)  On or before the Issuance Date, the Servicer shall designate a
lockbox for the receipt directly from Lessees of all payments under the Leases
and for the receipt from IOS Capital or the Lessees of security deposits in
respect of any of the Leases. Amounts so received shall be deposited in the
Collection Account in accordance with the provisions of Section 3.03(a) or, in
the case of security deposits, the Security Deposit Account in accordance with
Section 3.08(a).

          (b)  The Trustee shall from time to time, in accordance with
instructions of the Servicer, withdraw from the Collection Account and pay to
the Servicer for appropriate application by the Servicer any amounts in the
Collection Account which the Servicer advises the Trustee in writing are Other
Lease Payments. Prior to such payment, the Trustee shall have rights to and an
interest in such amounts to the extent (but only to the extent) it is determined
that such amounts actually constitute Transaction Payment Amounts.

          (c)   If at any time the Issuer shall receive any amount referred to
in Section 3.03(a), it shall hold such payment in trust for the benefit of the
Trustee, the holders of the Notes and the Insurer, shall segregate such payment
from the other property of the Issuer, and shall, promptly (but in no event
later than the next following Business Day) upon receipt, deliver such payment
in the form received to the Trustee.

          SECTION 3.03.  Collection Account; Payments.
                         ----------------------------
          (a)   The Servicer shall within two Business Days of receipt (a
"Required Deposit Date") deposit the following funds, as received, into the
Collection Account:

          (i)   Lease Payments;

          (ii)  recoveries from Non-Performing Leases to the extent IOS Capital
has not substituted Substitute Leases for such Non-Performing Leases;

          (iii) late charges received on delinquent Lease Payments not advanced
by the Servicer;

          (iv)  proceeds from purchases by IOS Capital of Leases as a result of
breaches of representations and warranties of IOS Capital pursuant to Section
5.04 of the Assignment and Servicing Agreement to the extent IOS Capital has not
substituted Substitute Leases for such Leases;

          (v)   Casualty Payments;

          (vi)   Servicer Advances, if any;

          (vii)  any amounts paid by the [Counterparty] to the Issuer pursuant
to the [Swap Documents];

                                      36
<PAGE>

          (viii) Retainable Deposits;

          (ix)   Termination Payments to the extent the Issuer does not reinvest
such Termination Payments in Additional Leases; and

          (x)    proceeds for redemption of the Notes in the event the Issuer
exercises its right to redeem the Notes in accordance with Section 2.01(b).

          (b)    Unless the Notes have been declared due and payable pursuant to
Section 7.02 and moneys collected by the Trustee are being applied in accordance
with Section 7.06, Available Funds on deposit in the Collection Account
(including the amounts, if any, deposited into the Collection Account from the
Reserve Account and the Security Deposit Account in accordance with the
provisions of Sections 3.04 and 3.08) shall be withdrawn by the Trustee as
directed by the Servicer in the related Servicing Report on or before each
Payment Date from the Collection Account, in the amounts required, for
application in the following order of priority, to make the following Required
Payments (all in accordance with the applicable Servicing Report):

          (i)   [to pay the Insurer the amounts then due and owing in respect of
the Insurer Premium];

          (ii)  to pay the [Counterparty] any amount due pursuant to the [Swap
Documents];

          (iii) to pay  the Servicing Fee;

          (iv)  to reimburse unreimbursed Servicer Advances in respect of a
prior Payment Date;

          (v)   concurrently and pro rata: (a) to make Interest Payments on the
Class [A-1] Notes; (b) to make Interest Payments on the Class [A-2] Notes; (c)
to make Interest Payments on the Class [A-3a] Notes; (d) to make Interest
Payments on the Class [A-3b] Notes; and (e) to make Interest Payments on the
Class [A-4] Notes;

          (vi)  [to pay the Insurer any Reimbursement Amounts due under the
terms of the Insurance Agreement];

          (vii) to make the Class A Principal Payment (i) to the Class [A-1]
Noteholders only, until the Outstanding Principal Amount on the Class [A-1]
Notes is reduced to zero, then (ii) to the Class [A-2] Noteholders only, until
the Outstanding Principal Amount on the Class [A-2] Notes is reduced to zero,
then (iii) pro rata, to the Class [A-3a] Noteholders and the Class [A-3b]
Noteholders only, until the Outstanding Principal Amount on the Class [A-3a]
Notes and the Outstanding Principal Amount on the Class [A-3b] Notes has been
reduced to zero, and finally, (iv) to the Class [A-4] Noteholders until the
Outstanding Principal Amount on the Class [A-4] Notes is reduced to zero;

          (viii) if an Acceleration Event has occurred, to pay the Additional
Principal, if any, as an additional reduction of principal, to the Class A
Noteholders then

                                      37
<PAGE>

receiving the Class A Principal Payment, in the order established in clause
(vii) above, until the Outstanding Principal Amount on all of the Class A Notes
has been reduced to zero;

          (ix)  to make a deposit to the Reserve Account in an amount equal to
the excess of the Required Reserve Amount over the Available Reserve Amount; and

          (x)   to pay the Issuer, the balance, if any.

          (c)   Notwithstanding the foregoing, on any Payment Date the Servicer
shall instruct the Trustee to retain, and the Trustee shall retain, in the
Collection Account an amount equal to all Lease Payments received that were due
after the prior Due Period, and all Casualty Payments, and Termination Payments
received or realized after the Determination Date for such Payment Date and
shall not distribute any such amounts on such Payment Date. If at any time any
amount or portion thereof previously distributed pursuant to this Section
3.03(c) shall have been recovered, or shall be subject to recovery, in any
proceeding with respect to the Issuer or otherwise, then for purposes of
determining future distributions pursuant to this Section 3.03(c) such amount or
portion thereof shall be deemed to have not been previously so distributed.

          (d)   The Servicer shall submit with the Servicing Report a
certificate (i) setting forth any amounts to be withdrawn (on an item-by-item
basis) from the Collection Account other than as provided in Section 3.03(b),
(ii) stating that none of such amounts are all or part of any amounts required
to be retained in the Collection Account pursuant to this Section 3.03 and (iii)
identifying the Lease or Leases to which such amounts relate.

          SECTION 3.04.  The Reserve Account.
                         -------------------
          (a)   On the Issuance Date, the Issuer has made an initial deposit of
$___________ into the Reserve Account. On each Payment Date, the Trustee shall
transfer to the Collection Account from the Reserve Account such amounts as
shall be required by Section 3.04(b).

          (b)   Prior to each Payment Date the Trustee shall transfer from the
Reserve Account to the Collection Account the amount specified by the Servicer
in the related Servicing Report representing investment earnings on amounts held
in the Reserve Account as of the related Determination Date. If by 12:00 noon,
New York City time, on the Business Day preceding any Payment Date, Available
Funds are insufficient to permit on such Payment Date all distributions required
by Section 3.03(b)(i) through 3.03(b)(vii) (such payments, the "Required
Payments" and such shortfall, an "Available Funds Shortfall"), then, to the
extent of the Available Reserve Amount, the Trustee shall transfer, not later
than the end of such Business Day, from the Reserve Account to the Collection
Account such amount to the extent available as shall be necessary to make on
such Payment Date all Required Payments.

          (c)   In the event that after giving effect to all the disbursements
required to be made on any Payment Date, the Available Reserve Amount exceeds
the

                                      38
<PAGE>

Required Reserve Amount, the Trustee shall transfer, not later than the end
of business on such Payment Date, an amount equal to such excess to the Issuer.

          (d)   Upon the satisfaction and discharge of this Indenture, any
balance remaining in the Reserve Account, after all obligations to the
Noteholders hereunder have been fully satisfied, shall be paid to reimburse the
Trustee for any amounts owing to it arising from the performance of its
obligations under this Indenture and, then, to the Issuer.

          SECTION 3.05.  Reports by Trustee; Notices of Certain Payments.
                         -----------------------------------------------

          (a)   The Trustee shall within two Business Days after the request of
the Issuer, the Servicer, the Insurer or any Noteholder, deliver to the
requesting Person a written report setting forth the amounts on deposit in the
Collection Account, the Reserve Account and the Security Deposit Account and
identifying the investments included therein.

          (b)   On or prior to each Payment Date, the Servicer shall provide to
the Trustee and the Trustee shall forward to the Insurer, each Rating Agency and
each Noteholder of record a statement setting forth at least the following
information as to the Notes to the extent applicable:

          (i)   the amount of Interest Payments and payments in reduction of
principal paid on such Payment Date with respect to all Class [A-1] Notes, Class
[A-2] Notes, Class [A-3a] Notes, Class [A-3b] and Class [A-4] Notes,
respectively;

          (ii)  the aggregate Outstanding Principal Amount of all Outstanding
Class [A-1] Notes, Class [A-2] Notes, Class [A-3a] Notes, Class [A-3b] Notes and
Class [A-4] Notes, respectively and the Pool Factor for each such Class after
giving effect to all payments reported under (i) above;

          (iii) the amount of the Servicing Fee and unreimbursed Servicer
Advances paid on such Payment Date pursuant to Section 3.03(b)(ii) and Section
3.03(b)(iii);

          (iv)  the amount on deposit in the Collection Account, the Reserve
Account and the Security Deposit Account, in each case after giving effect to
all of the withdrawals and applications or transfers required on or before such
Payment Date pursuant to Sections 3.02, 3.03, 3.04 and 3.08;

          (v)   the Discounted Present Value of Performing Leases and the
Discounted Present Value of Non-Performing Leases as of the last day of the
related Due Period; and

          (vi)  the aggregate Lease Purchase Amounts for Leases purchased by the
Originator pursuant to Section 5.04 of the Assignment and Servicing Agreement
during the related Due Period.

                                      39
<PAGE>

          (c)   With each report of the Trustee furnished pursuant to this
Section 3.05 following any Payment Date, the Trustee shall enclose a copy of the
relevant Servicing Report.

          (d)   Upon request of a Noteholder, the Trustee will provide
information as to the Outstanding Principal Amount of each Class of Notes to
such Noteholder.

          SECTION 3.06.  Trustee May Rely on Certain Information from Servicer.
                         -----------------------------------------------------

          Pursuant to Sections 5.01, 6.01 and 6.02 of the Assignment and
Servicing Agreement and Sections 3.02 through 3.05 hereof, the Servicer is
required to furnish to the Trustee and/or the Insurer from time to time certain
information and make various calculations which are relevant to the performance
of the Trustee's duties in this Article III and in Article IV of this Indenture.
The Trustee and the Insurer shall be entitled to rely in good faith on such
information or calculations unless and until the Insurer or a Responsible
Officer of the Trustee, as the case may be, has actual knowledge, or is advised
by any Noteholder or the Insurer (either in writing or orally with prompt
written or telecopied confirmation), that such information or calculations is or
are incorrect.

          SECTION 3.07.  Optional Deposits by the Insurer; Notice of Waivers.
                         ----------------------------------------------------
          (a)   The Insurer shall at any time, and from time to time, with
respect to a Payment Date, have the option (but shall not be required, except as
provided in Article IV) to deliver amounts to the Trustee for deposit into the
Collection Account for any of the following purposes: (i) to provide funds in
respect of the payment of fees or expenses of any provider of services to the
Issuer with respect to such Payment Date, or (ii) to include such amount as part
of the Available Funds for such Payment Date to the extent that without such
amount a draw would be required to be made on the Policy. Any amounts so
delivered by the Insurer shall be included in Reimbursement Amounts.

          (b)   If the Insurer waives any event that might trigger an event of
default under the Insurance Agreement and so notifies the Trustee in writing,
the Trustee shall notify the Rating Agencies of such waiver.

          SECTION 3.08.  The Security Deposit Account
                         ----------------------------
          (a)   On the Issuance Date, the Issuer has made an initial deposit
into the Security Deposit Account of $___________ representing security deposits
in respect of the Leases as of the Issuance Date. The Servicer on behalf of the
Issuer shall within two Business Days of receipt thereof deposit into the
Security Deposit Account all additional security deposits received in respect of
the Leases from time to time in the Asset Pool.

          (b)   Prior to each Payment Date, the Trustee shall transfer from the
Security Deposit Account to the Collection Account the amounts specified by the
Servicer in the related Servicing Report representing (a) investment earnings on
amounts held in the Security Deposit Account as of the related Determination
Date and (b) Retainable Deposits.
                                      40
<PAGE>

          (c)   The Servicer shall be responsible for the payment of all amounts
held from time to time in the Security Deposit Account not required to be
transferred to the Collection Account in accordance with Section 3.08(b) to the
Lessees or other Persons entitled thereto in accordance with the related Lease
documentation. From time to time, upon written request of the Servicer, the
Trustee shall release from the Security Deposit Account and from the Lien of
this Indenture such amounts as the Servicer shall determine to be necessary for
application as provided in the immediately preceding sentence.

                                  ARTICLE IV

                                   THE POLICY

          SECTION 4.01.  [Claims Under Policy.
                         --------------------
          (a)   On each Determination Date, the Trustee shall determine from the
related Servicer Report with respect to the immediately following Payment Date
the Deficiency Amount, if any. If the Trustee determines that a Deficiency
Amount would exist, the Trustee shall complete a Notice in the form of Exhibit A
to the Policy and submit such Notice to the Insurer no later than 12:00 noon New
York City time on the third Business Day preceding such Payment Date as a claim
for payment in an amount equal to the Deficiency Amount. Amounts paid by the
Insurer pursuant to a claim submitted under this Section 4.01, shall be
deposited by the Trustee into the Collection Account for payment to Noteholders
on the related Payment Date pursuant to Section 3.03(b).

          (b)   Any notice delivered by the Trustee to the Insurer pursuant to
Section 4.01(a) shall specify the Deficiency Amount claimed under the Policy and
shall constitute a "Notice" (as defined in the Policy) under the Policy. In
accordance with the provisions of the Policy, the Insurer is required to pay to
the Trustee the Deficiency Amount properly claimed thereunder by 12:00 noon, New
York City time, on the later of (i) the third Business Day (as defined in the
Policy) following receipt on a Business Day of the Notice of Claim, and (ii) the
applicable Payment Date. Any payment made under the Policy by the Insurer shall
be applied solely to the payment of the Notes as set forth in the Policy, and
for no other purpose.

          (c)   The Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Deficiency Amount from the Insurer and (ii) deposit the same in
the Collection Account for payment to Noteholders as provided in Section
3.03(b). For the purposes of clause (d) below, any Deficiency Amount disbursed
by the Trustee from claims made under the Policy shall not be considered payment
by the Issuer with respect to such Notes, and shall not discharge the
obligations of the Issuer with respect thereto. The Insurer shall be entitled to
receive the related Reimbursement Amount pursuant to Section 3.03(b) with
respect to each Insured Payment made by the Insurer.

          (d)   The Insurer shall, to the extent it makes any payment with
respect to the Notes, become subrogated to the rights of the recipients of such
payments to the extent of such payments. Subject to and conditioned upon any
payment with respect to

                                      41
<PAGE>

the Notes by or on behalf of the Insurer, the Trustee and the Noteholders shall
assign to the Insurer all rights to the payment of interest or principal with
respect to the Notes which are then due for payment to the extent of all
payments made by the Insurer, and the Insurer may exercise any option, vote,
right, power or the like with respect to the Notes to the extent that it has
made payment pursuant to the Policy. To evidence such subrogation, the Note
Registrar (as defined in this Indenture) shall note the Insurer's rights as
subrogee upon the register of Noteholders upon receipt from the Insurer of proof
of payment by the Insurer of any Insured Payment (as defined in the Policy). The
foregoing subrogation shall in all cases be subject to the rights of the
Noteholders to receive all Insured Payments (as defined in the Policy) in
respect of the Notes.

          (e)   The Trustee shall keep a complete and accurate record of all
Policy proceeds deposited into the Collection Account and the allocation of such
funds to payment of interest on and principal paid in respect of any Note. The
Insurer shall have the right to inspect such records at reasonable times upon
one Business Day's prior notice to the Trustee.

          (f)   The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Insurer under the Policy. Notwithstanding any
other provision of this Indenture or any Transaction Documents, the Noteholders
are not entitled to make any claims under the Policy or institute proceedings
directly against the Insurer.

          SECTION 4.02.  Preference Claims.
                         -----------------
          (a)   In the event that the Trustee has received a certified copy of
an order of the appropriate court that any amount previously distributed to a
Noteholder in respect of any Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall so notify
the Insurer, shall comply with the provisions of the Policy to obtain payment by
the Insurer of such avoided payment, and shall, at the time it provides notice
to the Insurer, notify Holders of the Notes by mail that, in the event that any
Noteholder's payment is so recoverable, such Noteholder will be entitled to
payment pursuant to the terms of the Policy. The Trustee shall furnish to the
Insurer its records evidencing the payments of principal of and interest on the
Notes, if any, which have been made by the Trustee and subsequently recovered
from Noteholders, and the dates on which such payments were made. Pursuant to
the terms of the Policy, the Insurer will make such payment on behalf of the
Noteholder to the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Noteholder and not to any
Noteholder directly (unless a Noteholder has returned principal or interest on
the Notes to such receiver or trustee in bankruptcy, in which case the Insurer
will make such payment to the Trustee for payment to such Noteholder upon proof
of such payment reasonably satisfactory to the Insurer).

          (b)   The Trustee shall promptly notify the Insurer of any proceeding
or the institution of any action (of which the Trustee has actual knowledge)
seeking the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (a "Preference Claim")
of any payment made with respect to the Notes. Each Holder, by its purchase of
Notes, and the Trustee hereby

                                      42
<PAGE>

agrees that so long as an Insurer Default shall not have occurred and be
continuing, the Insurer may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including, without limitation, (i) the direction of any appeal
of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition,
and without limitation of the foregoing, as set forth in Section 4.01(d), the
Insurer shall be subrogated to, and each Noteholder and the Trustee hereby
delegate and assign, to the fullest extent permitted by law, the rights of the
Trustee and each Noteholder in the conduct of any proceeding with respect to a
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Preference Claim.

          SECTION 4.03.  Surrender of Policy.
                         --------------------
          The Trustee shall surrender the Policy to the Insurer for cancellation
upon the expiration of the Policy in accordance with the terms thereof.]

                                   ARTICLE V

                 RELEASE OF LEASES AND INTERESTS IN EQUIPMENT

          SECTION 5.01.  Release of Equipment.
                         --------------------

          Subject to the satisfaction of the provisions of Section 5.02, the
Trustee shall release the Trustee's security interest in the Issuer's interest
in the Equipment from the Lien of the Indenture upon receipt from the Servicer
of written certification of the occurrence of: (a) the sale of such Equipment
pursuant to Section 4.03(b) of the Assignment and Servicing Agreement, or (b)
the release of the related Lease from the Lien of this Indenture.

          SECTION 5.02.  Release of Leases Upon Final Lease Payment.
                         ------------------------------------------

          In the event that the Trustee shall have received notice (either in
writing or orally with prompt written or telecopied confirmation) from the
Servicer that the Trustee has received with respect  to any Lease (i) the final
Lease Payment due and payable under such Lease, (ii) a Termination Payment in
respect of such Lease, (iii) a Lease Purchase Amount in respect of such Lease,
(iv) a Casualty Payment under such Lease (and, following such final Lease
Payment, Casualty Payment, Lease Purchase Amount or Termination Payment, no
further payments (other than Other Lease Payments) on or in respect of such
Lease are or will be due and payable), or (iv) the full amount of any recoveries
with respect to any such Lease that is a Non-Performing Lease, such Lease shall
be released from the lien of this Indenture and returned to the Issuer.

          SECTION 5.03.  Execution of Documents.
                         ----------------------

          The Trustee shall promptly execute and deliver such documents,
including without limitation partial releases and termination statements (which
shall be furnished to the Trustee by the Issuer), and take such other actions as
the Issuer, by Issuer Request, may reasonably request (including the return of
any Lease which has been released) to

                                      43
<PAGE>

fully effectuate the release from this Indenture of any Lease and interests in
the related Equipment required to be so released pursuant to Sections 5.01 or
5.02.

          SECTION 5.04.  Further Release of Collateral.
                         -----------------------------

          Notwithstanding any provision of this Indenture to the contrary, any
amounts properly retained by the Servicer pursuant to Section 4.03, 4.04 and
4.05 of the Assignment and Servicing Agreement are, without further action by
the Trustee released from the Lien of this Indenture.

                                  ARTICLE VI

                SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER

          SECTION 6.01.  Servicer Events of Default.
                         --------------------------

          If a Servicer Event of Default has occurred and is continuing, the
Trustee shall, upon the written request of the Insurer (so long as no Insurer
Default has occurred and is continuing ) or the holders of 66-2/3% of the then
Outstanding Principal Amount of the Notes (if an Insurer Default has occurred
and is continuing), give notice in writing to the Servicer of the termination of
all of the rights and obligations of the Servicer under the Assignment and
Servicing Agreement (but none of IOS Capital's obligations pursuant to Section 5
of the Assignment and Servicing Agreement, which shall survive such
termination).  On and after the giving of such written notice, all rights and
obligations of the Servicer under the Assignment and Servicing Agreement,
including, without limitation, the Servicer's right thereunder to receive the
Servicing Fee, but none of the Servicer obligations pursuant to Section 4
thereof, shall pass to, be vested in, and be assumed by the Trustee, and the
Trustee shall be authorized to, and shall, execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such termination and of such passing,
vesting, and assumption; provided that in performing the duties of the Servicer
                         --------
under the Assignment and Servicing Agreement the Trustee shall at all times be
deemed to be acting as the Trustee hereunder and shall be entitled to the full
benefit of all the protections, benefits, immunities and indemnities provided in
this Indenture for or with respect to the Trustee, including without limitation
those set forth in Article VIII hereof.

          SECTION 6.02.  Substitute Servicer.
                         -------------------

          Notwithstanding the provisions of Section 6.01, the Trustee may, if it
shall be unwilling to continue to act as the successor to the Servicer in
accordance with Section 6.01, or shall, if it is unable to continue to so act or
is so instructed in writing by the Insurer (if no Insurer Default has occurred
and is continuing) or the holders of 66-2/3% of the then Outstanding Principal
Amount of the Notes (if an Insurer Default has occurred and is continuing),
appoint a successor to the Servicer in accordance with the provisions of Section
10.03 of the Assignment and Servicing Agreement.

                                      44
<PAGE>

                                  ARTICLE VII

                          EVENTS OF DEFAULT; REMEDIES

          SECTION 7.01.  Events of Default.
                         -----------------

          "Event of Default," wherever used herein, means any one of the
following (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

          (a)   default in the payment of any Interest Payment on any Note when
the same becomes due and payable; or

          (b)   default in the payment of the principal of the Notes at Stated
Maturity; or

          (c)   default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section specifically dealt with), or any representation or warranty of the
Issuer made in this Indenture proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such default
shall continue or not be cured, or the circumstance or condition in respect of
which such misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days (or for such longer
period, not in excess of 90 days, as may be reasonably necessary to remedy such
default if the Servicer delivers an Officer's Certificate to the Trustee to the
effect that the Issuer has commenced, or will promptly commence and diligently
pursue, all reasonable efforts to remedy such default and such default can be
remedied in 90 days or less) after there shall have been given, by registered or
certified mail, to the Issuer by the Trustee or to the Issuer and the Trustee by
the Holders of at least 25% of the Outstanding Principal Amount of the Notes, a
written notice specifying such default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or

          (d)   the entry by a court having jurisdiction in the premises of (i)
a decree or order for relief in respect of the Issuer in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (ii) a decree or order adjudging the
Issuer a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in respect
of the Issuer under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of the Issuer or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or

                                      45
<PAGE>

          (e)   the commencement by the Issuer of a voluntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization, or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Issuer in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of the Issuer or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the Issuer's failure to pay its debts generally as they become due, or the
taking of corporate action by the Issuer in furtherance of any such action; or

          (f)   the occurrence  and continuance of a Servicer Event of Default.

          The Issuer shall deliver to the Trustee and the Insurer and the Rating
Agencies, within three days after obtaining knowledge of the occurrence thereof,
written notice in the form of an Officer's Certificate of any event which with
the giving of notice and the lapse of time would become an Event of Default
under (c), (d), (e) or (f) above, its status and what action the Issuer is
taking or proposes to take with respect thereto.

          SECTION 7.02.  Acceleration of Maturity; Rescission and Annulment.
                         --------------------------------------------------
          (a)   If an Event of Default occurs and is continuing, then, subject
to the provisions of Section 7.02(c) below, and in every such case, the Trustee
may, and (if so directed by holders of 66-2/3% of the then Outstanding Principal
Amount of the Notes) shall, declare the unpaid principal amount of the Notes to
be immediately due and payable at par together with all accrued and unpaid
interest thereon, without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Issuer.

          (b)   Subject to Section 7.02(c) below, the holders of 66-2/3% of the
then Outstanding Principal Amount of the Notes may direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee or
of exercising any trust or power conferred on it.

          (c)   Subject only to provisions hereof expressly stated to be
applicable notwithstanding this Section 7.02 and notwithstanding any other
contrary provision of this Indenture, so long as the Policy remains in effect
and no Insurer Default has occurred and is continuing, and irrespective of any
contrary instruction from the holders of any Notes but subject to any further
conditions or requirements of this Indenture, the Trustee (i) shall not declare
the Notes to be immediately due and payable or waive any Event of Default or
exercise any remedies upon the occurrence of an Event of Default, except at the
written direction of the Insurer, (ii) shall upon the occurrence of an Event of
Default declare the Notes to be immediately due and payable or waive any such
Event of Default upon the written direction of the Insurer, and (iii) shall upon
the occurrence and

                                      46
<PAGE>

continuance of an Event of Default, exercise or refrain from exercising
available remedies in accordance with the written direction and control of the
Insurer.

          (d)   At any time after such an Event of Default has occurred and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Insurer (if no Insurer
Default has occurred and is continuing) or the holders of Notes evidencing 66-
2/3% of the then Outstanding Principal Amount of the Notes (if an Insurer
Default has occurred and is continuing) by written notice to the Issuer and the
Trustee, may rescind and annul such declaration and its consequences if the
Issuer has paid or deposited with the Trustee a sum sufficient to pay:

                         (i)   all Principal Payments on any Class A Notes which
                have become due otherwise than by such declaration of
                acceleration and interest thereon from the date when the same
                first became due until the date of payment or deposit at the
                appropriate Note Interest Rate,

                         (ii)  all Interest Payments due with respect to any
                Class A Notes and, to the extent that payment of such interest
                is lawful, interest upon overdue interest from the date when the
                same first became due until the date of payment or deposit at a
                rate per annum equal to the appropriate Note Interest Rates, and

                         (iii) all sums paid or advanced by the Trustee
                hereunder and all sums due to the Insurer and the reasonable
                compensation, expenses, disbursements, and advances of the
                Trustee and the Insurer and their respective agents and counsel;

No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.

          SECTION 7.03.  Remedies.
                         --------
          (a)   If an Event of Default occurs and is continuing of which a
Responsible Officer has actual knowledge, the Trustee shall immediately give
notice to each Noteholder and the Rating Agencies as set forth in Section 8.02.

          (b)   Following any acceleration of the Notes, the Trustee shall have
all of the rights, powers and remedies with respect to the Asset Pool as are
available to secured parties under the Uniform Commercial Code or other
applicable law. Such rights, powers and remedies may be exercised by the Trustee
in its own name as trustee of an express trust.

          (c)   If an Event of Default specified in Section 7.01(a) or 7.01(b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Issuer for the whole
amount of principal and interest remaining unpaid.

                                      47
<PAGE>

          (d)   In exercising its rights and obligations under this
Section 7.03, the Trustee may sell the assets in the Asset Pool; provided that,
                                                                 --------
if the Event of Default involves other than non-payment of principal or interest
on the Notes, then such sale must be for an amount greater than or equal to
amounts due under clauses first through fourth in Section 7.06 unless
                          -----         ------
directed otherwise by the Insurer (if no Insurer Default has occurred and is
continuing) or the holders of 66-2/3% of the then Outstanding Principal Amount
of the Notes (if an Insurer Default has occurred and is continuing). None of the
Trustee, the Insurer nor any Noteholder shall have any rights against the Issuer
other than to enforce the Lien of this Indenture and to sell the assets in the
Asset Pool.

          SECTION 7.04.  Trustee Shall File Proofs of Claim.
                         ----------------------------------
          (a)   In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition,
or other judicial proceeding relative to the Issuer, the Seller, IOS Capital,
the Servicer or any other obligor upon the Notes or the other obligations
secured hereby or relating to the property of the Issuer, the Seller, IOS
Capital, the Servicer or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Issuer, the Seller, IOS
Capital or the Servicer for the payment of overdue principal or interest or any
such other obligation) shall by intervention in such proceeding or otherwise,

          (i)   file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and any other obligation
secured hereby and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee, the Insurer (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee and the Insurer and their respective agents and counsel) and the
Noteholders allowed in such judicial proceeding, provided, however, that the
                                                 --------  -------
Trustee shall file such proof of claim on behalf of the Insurer only upon the
Insurer's written direction and on behalf of the Noteholders only at the written
direction of the holders of not less than 66-2/3% of the then Outstanding
Principal Amount of the Notes; and

          (ii)  collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder and the Insurer to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Noteholders to pay to the Trustee and the Insurer any amount due them for
the reasonable compensation, expenses, disbursements and advances of the Trustee
and the Insurer and their respective agents and counsel, and any other amounts
due the Trustee under Section 7.06.

          (b)   Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights

                                      48
<PAGE>

of any holder thereof or to authorize the Trustee to vote in respect of the
claim of any Noteholder in any such proceeding.

          SECTION 7.05.  Trustee May Enforce Claims Without Possession of Notes.
                         ------------------------------------------------------

          All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the holders
of the Notes and the Insurer.

          SECTION 7.06.  Application of Money Collected.
                         ------------------------------

          Any money collected by the Trustee pursuant to this Article following
an Event of Default, and any moneys that may then be held or thereafter received
by the Trustee shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of the entire amount due
on account of principal or interest, upon presentation of the Notes and
surrender thereof:

          first        to the payment of all costs and expenses of collection
          -----
     incurred by the Trustee, the Insurer and the Noteholders (including the
     reasonable fees and expenses of any counsel to the Trustee, the Insurer and
     the Noteholders) and all fees and expenses (including legal fees and
     expenses) owed to the Trustee under this Indenture and the Assignment and
     Servicing Agreement;

          second       to pay the [Counterparty] any amount due pursuant to the
          ------
     [Swap Documents];

          third        if the person then acting as Servicer under the
          -----
     Assignment and Servicing Agreement is not IOS Capital or an Affiliate of
     IOS Capital, to the payment of all Servicing Fees and unreimbursed Servicer
     Advances then due to such Person;

          fourth       first, pro rata to the payment of all accrued and unpaid
          ------
     interest on the Outstanding Class [A-1] Principal Amount, Outstanding Class
     [A-2] Principal Amount, Outstanding Class [A-3a] Principal Amount,
     Outstanding Class [A-3b] Principal Amount and Outstanding Class [A-4]
     Principal Amount, respectively, to the date of payment thereof, including
     (to the extent permitted by applicable law) interest on any overdue
     installment of interest and principal from the maturity of such installment
     to the date of payment thereof at the rate per annum equal to the Class [A-
     1] Note Interest Rate, Class [A-2] Note Interest Rate and Class [A-3a] Note
     Interest Rate, Class [A-3b] Note Interest Rate and Class [A-4] Note
     Interest Rate, respectively, second, to the payment of the Outstanding
     Class [A-1] Principal Amount, third, to the payment of the Outstanding
     Class [A-2] Principal Amount, fourth, to the pro rata payment of the
     Outstanding Class [A-3a] Principal Amount and the Outstanding Class [A-3b]
     Principal Amount and

                                      49
<PAGE>

     fifth, to the payment of the Outstanding Class [A-4] Principal Amount;
     provided, that the Noteholders may allocate such payments for interest,
     --------
     principal and premium at their own discretion, except that no such
     allocation shall affect the allocation of such amounts or future payments
     received by any other Noteholder;

          fifth        to the payment of amounts then due the Insurer under this
          -----
     Indenture, including the Insurer Premium (other than amounts referred to in
     clause sixth below);
            -----

          sixth        to the payment to the Insurer of any Reimbursement
          -----
     Amounts;

          seventh             if the Person then acting as Servicer is IOS
          -------
     Capital or an Affiliate of IOS Capital, to the payment of all Servicing
     Fees and unreimbursed Servicer Advances then due to such Person; and

          eighth       to the payment of the remainder, if any, to the Issuer or
          ------
     any other Person legally entitled thereto.

          SECTION 7.07.  Limitation on Suits.
                         -------------------

          None of the Noteholders nor the Insurer shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:

          (i)   such Noteholder or the Insurer, as the case may be, has
previously given written notice to the Trustee of a continuing Event of Default;

          (ii)  the holders of not less than 66-2/3% of the then Outstanding
Principal Amount of the Notes or the Insurer, as the case may be, shall have
made written request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;

          (iii) such Noteholder or Noteholders or the Insurer, as the
case may be, have offered to the Trustee indemnity satisfactory to it against
the costs, expenses and liabilities to be incurred in compliance with such
request;

          (iv)  the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;

          (v)   so long as any of the Notes remain Outstanding, no direction
inconsistent with such written request has been given to the Trustee during such
30-day period by the holders of 66-2/3% of the then Outstanding Principal Amount
of the Notes or the Insurer, as the case may be; and

          (vi)  in the case of any proceeding instituted by any Noteholder
without the written consent of the Insurer, an Insurer Default has occurred and
is continuing;

                                      50
<PAGE>

it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb, or prejudice the rights of any other
Noteholders, or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Noteholders.  It is further understood and intended that so long as any portion
of the Notes remains Outstanding, IOS Capital shall not have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture
(other than for the enforcement of Sections 3.03(b), 3.04(b), 3.05, 3.06, 4.01
and 4.02 hereof) or for the appointment of a receiver or trustee (including,
without limitation, a proceeding under the Bankruptcy Code), or for any other
remedy hereunder.  Nothing in this Section 7.07 shall be construed as limiting
the rights of otherwise qualified Noteholders to petition a court for the
removal of a Trustee pursuant to Section 8.08(h) hereof.

          SECTION 7.08.  Unconditional Right of Noteholders to Receive Principal
                         -------------------------------------------------------
and Interest.
------------

          Notwithstanding any other provision in this Indenture, other than the
provisions hereof limiting the right to recover amounts due on the Notes to
recoveries from the property of the Asset Pool, the holder of any Note shall
have the absolute and unconditional right to receive payment of the principal of
and interest on such Note on the Maturities for such payments, including the
Stated Maturity, and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Noteholder.

          SECTION 7.09.  Restoration of Rights and Remedies.
                         ----------------------------------

          If the Trustee, the Insurer or any Noteholder has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee, the Insurer or to such Noteholder, then and
in every such case, subject to any determination in such proceeding, the Issuer,
the Trustee, the Insurer and the Noteholders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee, the Insurer and the Noteholders continue as though no
such proceeding had been instituted.

          SECTION 7.10.  Rights and Remedies Cumulative.
                         ------------------------------

          Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost, or stolen Notes in Section 2.04 (f), no
right or remedy herein conferred upon or reserved to the Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise.  The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

                                      51
<PAGE>

          SECTION 7.11.  Delay or Omission Not Waiver.
                         ----------------------------

          No delay or omission of the Trustee, the Insurer or of any holder of
any Note to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein.  Every right and remedy given by this
Article or by law to the Trustee, the Insurer or to the Noteholders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee, the Insurer or by the Noteholders, as the case may be.

          SECTION 7.12.  Control by Noteholders.
                         ----------------------

          Except as may otherwise be provided in this Indenture regarding
control by the Insurer, until such time as the conditions specified in Section
11.01(a)(i) have been satisfied in full, the holders of 66-2/3% of the then
Outstanding Principal Amount of the Notes shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee.
Notwithstanding the foregoing,

          (i)   no such direction shall be in conflict with any rule of law or
with this Indenture;

         (ii)   the Trustee shall not be required to follow any such direction
which the Trustee reasonably believes might result in any personal liability on
the part of the Trustee for which the Trustee is not indemnified to its
satisfaction; and

          (iii) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with any such direction; provided that the
                                                               --------
Trustee shall give notice of any such action to each Noteholder.

          SECTION 7.13.  Undertaking for Costs.
                         ---------------------

          All parties to this Indenture agree (and each holder of any Note by
its acceptance thereof shall be deemed to have agreed) that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the Trustee
or the Insurer, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than 10% of the then Outstanding
Principal Amount of the Notes, or to any suit instituted by any Noteholder for
the enforcement of the payment of the principal of or interest on any Note on or
after the Maturities for such payments, including the Stated Maturity as
applicable.

                                      52
<PAGE>

          SECTION 7.14.  Waiver of Stay or Extension Laws.
                         --------------------------------

          The Issuer covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

          SECTION 7.15.  Sale of Asset Pool.
                         ------------------
          (a)  The power to effect any sale of any portion of the Asset Pool
described pursuant to Section 7.03 shall not be exhausted by any one or more
sales as to any portion of the Asset Pool remaining unsold, but shall continue
unimpaired until the entire Asset Pool shall have been sold or all amounts
referred to in clauses first through fifth in Section 7.06 shall have been paid.
                       -----         -----
The Trustee may from time to time, upon directions in accordance with Section
7.12, postpone any public sale by public announcement made at the time and place
of such sale. For any public sale of the Asset Pool, the Trustee shall have
provided each Noteholder with notice of such sale at least two weeks in advance
of such sale which notice shall specify the date, time and location of such
sale.

          (b)   To the extent permitted by applicable law, the Trustee shall not
in any private sale sell to a third party the Asset Pool, or any portion thereof
unless,

          (i)   until such time as the conditions specified in Section 11.01
have been satisfied in full, the Insurer (if no Insurer Default has occurred and
is continuing) or the holders of not less than 66-2/3% of the then Outstanding
Principal Amount of the Notes (if an Insurer Default has occurred and is
continuing) consent to or direct the Trustee in writing to make such sale; or

          (ii)  the proceeds of such sale would be not less than the sum of all
amounts due to the Trustee hereunder and all amounts referred to in clause first
                                                                           -----
through third of Section 7.06 on the Payment Date next succeeding the date of
        -----
such sale.

The foregoing provisions shall not preclude or limit the ability of the Trustee
to purchase all or any portion of the Asset Pool at a private sale.

          (c)   In connection with a sale of all or any portion of the Asset
Pool:

          (i)   any one or more Noteholders or the Insurer may bid for and
purchase the property offered for sale, and upon compliance with the terms of
sale may hold, retain, and possess and dispose of such property, without further
accountability, and any Noteholder or the Insurer, as the case may be, may, in
paying the purchase money therefore, deliver in lieu of cash any Outstanding
Notes or claims for interest thereon (or, in the case of the Insurer, surrender
the Insurer's subrogation rights with respect to such Outstanding Notes or
claims for interest thereon) for credit in the amount that shall, upon

                                      53
<PAGE>

distribution of the net proceeds of such sale, be payable thereon, and the
Notes, in case the amounts so payable thereon shall be less than the amount due
thereon, shall be returned to the Noteholders after being appropriately stamped
to show such partial payment;

          (ii)  the Trustee shall execute and deliver an appropriate instrument
of conveyance transferring its interest, without representation, warranty or
recourse, in any portion of the Asset Pool in connection with a sale thereof;

          (iii)  the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer to transfer and convey its interest in any
portion of the Asset Pool in connection with a sale thereof, and to take all
action necessary to effect such sale; and

          (iv)   no purchaser or transferee at such a sale shall be bound to
ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.

          (d)    The method, manner, time, place and terms of any sale of all or
any portion of the Asset Pool shall be commercially reasonable.

          (e)    The provisions of this Section 7.15 shall not be construed to
restrict the ability of the Trustee to exercise any rights and powers against
the Issuer or the Asset Pool that are vested in the Trustee by this Indenture,
including, without limitation, the power of the Trustee to proceed against the
collateral subject to the lien of this Indenture and to institute judicial
proceedings for the collection of any deficiency remaining thereafter.

          (f)   The purchase price received by the Trustee in respect of any
sale made in accordance with this Section 7.15 shall be deemed conclusive and
binding on the parties hereto, the Insurer and the Noteholders.

                                 ARTICLE VIII

                                  THE TRUSTEE

          SECTION 8.01.  Certain Duties and Responsibilities.
                         -----------------------------------
          (a)   Except during the continuance of an Event of Default known to
the Trustee:

          (i)   the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and the other Transaction
Documents to which it is a party, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and

          (ii)  in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which

                                      54
<PAGE>

by any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture.

          (b)   In case an Event of Default has occurred and is continuing to
the actual knowledge of a Responsible Officer of the Trustee, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.

          (c)   No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct, except that:

          (i)   this subsection shall not be construed to limit the effect of
subsection (a) of this Section;

          (ii)  the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was grossly negligent in ascertaining the pertinent facts;

          (iii) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Noteholders in accordance with Section 7.12 relating to the time, method,
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture; and

          (iv)  no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or indemnity satisfactory to it, against such risk or
liability is not assured to it.

          (d)   Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.

          SECTION 8.02.  Notice of Defaults or Events of Default.
                         ---------------------------------------

          Within two Business Days after a Responsible Officer obtaining
knowledge of the occurrence of any Default or Event of Default hereunder, the
Trustee shall transmit, by certified mail return receipt requested, hand
delivery or overnight courier, to (a) all Noteholders, as their names and
addresses appear in the Note Register, (b) the Insurer and (c) the Rating
Agencies, notice of such Default or Event of Default hereunder known to the
Trustee, unless such Default or Event of Default shall have been cured or
waived.

                                      55
<PAGE>

     SECTION 8.03. Certain Rights of Trustee.
                   -------------------------

     (a) Subject to the provisions of Section 8.01:

     (i)   the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, note,
debenture, other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the proper party or
parties (and the Trustee need not investigate any fact or matter stated in the
document);

     (ii)  any request or direction or action of the Issuer mentioned herein
shall be sufficiently evidenced by an Issuer Order;

     (iii) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate;

     (iv)  the Trustee may consult with counsel as to legal matters and the
advice of any such counsel selected by the Trustee shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;

     (v)   the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Noteholders or the Insurer pursuant to this Indenture, unless such
Noteholders or the Insurer shall have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;

     (vi)  the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, note, debenture,
other evidence of indebtedness, or other paper or document, unless requested in
writing to do so by the Insurer (so long as no Insurer Default has occurred and
is continuing) and having been indemnified to its satisfaction by the Insurer
against the costs, expenses and liabilities that it may incur in making such
investigation, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Issuer, personally
or by agent or attorney;

     (vii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent, attorney, custodian or
nominee appointed with due care by it hereunder;

                                      56
<PAGE>

     (viii) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers;

     (ix)   the Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder;

     (x)    the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the
part of the Issuer;

     (xi)   the permissive rights of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty and the Trustee shall not be
answerable for other than its gross negligence or willful default; and

     (xii)  in the event that the Trustee is also acting as paying agent or
transfer agent and registrar hereunder, the rights and protections afforded to
the Trustee pursuant to this Article VIII shall also be afforded to such paying
agent or transfer agent or registrar.

     (b) The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Issuer,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Notes, except to the extent provided by the Trustee's certificate of
authentication on the Notes. The Trustee shall not be accountable for the use or
application by the Issuer of the proceeds of the Notes.

     SECTION 8.04. May Hold Notes.
                   --------------

     The Trustee, in its individual or any other capacity, may become the owner
or pledgee of Notes and may otherwise deal with the Issuer with the same rights
it would have if it were not Trustee.

     SECTION 8.05. Money Held in Trust.
                   -------------------

     Money and investments held by the Trustee shall be held in trust in one or
more trust accounts hereunder, but need not be segregated from other funds
except to the extent required by law.

     SECTION 8.06. Compensation, Reimbursement, etc.
                   --------------------------------

     The Servicer agrees:

     (a) to pay to the Trustee from time to time such compensation for all
services rendered by it hereunder as the Issuer and the Trustee may agree in
writing (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust); and

                                      57
<PAGE>

     (b) to reimburse the Trustee upon its request, for all reasonable expenses,
disbursements, and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement, or advance as may be attributable to its negligence or bad faith.

     SECTION 8.07. Corporate Trustee Required; Eligibility.
                   ---------------------------------------

     There shall at all times be a Trustee hereunder which shall (a) be a
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers; (b) have a combined capital and surplus
of at least $50,000,000; (c) be subject to supervision or examination by federal
or state authority; and (d) at the time of appointment, shall have long-term
debt obligations (or, if the Trustee does not have outstanding long-term debt
obligations and is a subsidiary of a holding company, which holding company
shall have long-term obligations) having a credit rating of at least "A-" from
S&P and "Baa3" from Moody's.

     If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.  If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.

     This Indenture shall always have a Trustee who satisfies the
requirements of Section 310(a)(1) of the Trust Indenture Act.  The Trustee is
subject to the provisions of Section 310(b) of the Trust Indenture Act regarding
disqualification of a trustee upon acquiring any conflicting interest.

     SECTION 8.08. Resignation and Removal; Appointment of Successor.
                   -------------------------------------------------

     (a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 8.09.

     (b) The Trustee may resign at any time by giving written notice thereof to
the Issuer, the Insurer (if no Insurer Default has occurred and is continuing)
and, if an Insurer Default has occurred and is continuing, the Noteholders, by
mailing notice of resignation by first-class mail, postage prepaid, to the
Issuer or the Insurer at their respective addresses set forth in the Assignment
and Servicing Agreement and to Noteholders at their addresses appearing on the
Note Register.

     (c) The Trustee may be removed at any time by written notice of the Insurer
(if no Insurer Default has occurred and is continuing) or the holders of not
less than 66-2/3% of the then Outstanding Principal Amount of the Notes (if an
Insurer Default has occurred and is continuing) delivered to the Trustee and the
Issuer.

                                      58
<PAGE>

     (d) If the Trustee shall resign, be removed, or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Issuer,
with the consent of the Insurer (if no Insurer Default has occurred and is
continuing) or the holders of 66-2/3% of the then Outstanding Principal Amount
of the Notes (if an Insurer Default has occurred and is continuing), by an act
of the Issuer, shall promptly appoint a successor Trustee.

     (e) If no successor Trustee shall have been so appointed as hereinbefore
provided and accepted appointment in the manner hereinafter provided within 30
days after any such resignation or removal, existence of incapability, or
occurrence of such vacancy, the Trustee, the Insurer (if no Insurer Default has
occurred and is continuing) or any Noteholder (if an Insurer Default has
occurred and is continuing) may petition any court of competent jurisdiction for
the appointment of a successor Trustee.

     (f) The Issuer shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Insurer at its
address set forth in the Assignment and Servicing Agreement and to all
Noteholders as their names and addresses appear in the Note Register and to each
Rating Agency. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.

     (g) The Issuer may remove the Trustee if the Trustee fails to comply with
Section 8.07 of this Indenture.

     (h) If the Trustee after written request by any Noteholder who has been a
Noteholder for at least six months fails to comply with Section 310(b) of the
Trust Indenture Act, such Noteholder may petition any court of competent
jurisdiction, for the removal of the Trustee and the appointment of a successor
Trustee acceptable to the Insurer.

     (i) The Issuer (with the consent of the Insurer, if no Insurer Default has
occurred and is continuing) may and shall at the direction of the Insurer (if no
Insurer Default has occurred and is continuing) or the Noteholders evidencing
more than 25% of the aggregate Outstanding Principal Amount of the Notes (if an
Insurer Default has occurred and is continuing), remove the Trustee if the
Trustee ceases to be eligible to continue as such under this Indenture and fails
to resign after written request therefor.

     SECTION 8.09. Acceptance of Appointment by Successor.
                   --------------------------------------

     (a) Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Issuer or the
successor Trustee, such retiring Trustee shall, upon payment of its charges and
expenses, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the

                                      59
<PAGE>

retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Issuer shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.

     (b) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.

     SECTION 8.10. Merger, Conversion, Consolidation or Succession to Business.
                   -----------------------------------------------------------

     Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
all or substantially all the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Notes shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion, or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes. The Trustee shall provide prompt written notice to
each Rating Agency of any event referenced in this Section 8.10.

     SECTION 8.11. Co-Trustees and Separate Trustees.
                   ---------------------------------

     (a) At any time or times, if the Issuer, the Trustee or any Noteholder
determines that it is necessary for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Asset Pool may at the time
be located, the Issuer and the Trustee (with the written consent of the Insurer,
if no Insurer Default has occurred and is continuing) shall have power to
appoint, and, upon the written request of the Trustee or the Insurer (if no
Insurer Default has occurred and is continuing) or the holders of a majority of
the then Outstanding Principal Amount of the Notes (if an Insurer Default has
occurred and is continuing), the Issuer shall for such purpose join with the
Trustee in the execution, delivery, and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons either to act as
co-trustee, jointly with the Trustee, of all or any part of such Asset Pool, or
to act as separate trustee of any such property, in either case with such powers
as may be provided in the instrument of appointment, and to vest in such Person
or Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Issuer does not join in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Event of Default has occurred and is
continuing, the Trustee (if no Insurer Default has occurred and is continuing),
or the holders of a majority of the then Outstanding Principal Amount of the
Notes (if an Insurer Default has occurred and is continuing), alone shall have
power to make such appointment.

                                      60
<PAGE>

     (b) Should any written instrument from the Issuer be required by any co-
trustee or separate trustee so appointed for more fully confirming to such co-
trustee or separate trustee such property, title, right, or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Issuer.

     (i)   Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms:

     (ii)  The Notes shall be authenticated and delivered and all rights,
powers, duties, and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised, solely by
the Trustee.

     (iii) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Trustee or
by the Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate trustee,
except to the extent that, under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee.

     (iv)  The Trustee at any time, by an instrument in writing executed by it,
with the concurrence of the Issuer evidenced by an Issuer Order and the written
concurrence of the Insurer (if no Insurer Default has occurred and is
continuing), may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case an Event of Default has
occurred and is continuing, the Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee without the
concurrence of the Issuer (if no Insurer Default has occurred and is
continuing). Upon the written request of the Trustee, the Issuer shall join with
the Trustee in the execution, delivery and performance of all instruments and
agreements necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section.

     (v)   No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee or any other such trustee
hereunder and the Trustee shall not be personally liable by reason of any act or
omission of any co-trustee or other such separate trustee hereunder selected by
the Trustee with due care or appointed in accordance with directions to the
Trustee pursuant to this Section 8.11.

     (vi)  Any Act of Noteholders delivered to the Trustee shall be deemed to
have been delivered to each such co-trustee and separate trustee.

     SECTION 8.12. Acceptance by Trustee.
                   ---------------------

     The Trustee hereby acknowledges the conveyance of the Asset Pool and the
receipt of the Leases and the other assets in the Asset Pool granted by the
Issuer

                                      61
<PAGE>

hereunder and declares that the Trustee, through a custodian, will hold such
Leases and other Asset Pool conveyed by the Issuer in trust, for the use and
benefit of all Noteholders and the Insurer subject to the terms and provisions
hereof.

     SECTION 8.13. Preferential Collection of Claims Against the Issuer.
                   ----------------------------------------------------

     The Trustee is subject to Trust Indenture Act Section 311(a), excluding any
creditor relationship listed in Trust Indenture Act Section 311(b). A Person who
has resigned or been removed as Trustee shall be subject to Trust Indenture Act
Section 311(a) to the extent indicated therein.

     SECTION 8.14. Reports by Trustee to Noteholders.
                   ---------------------------------

     To the extent required by the Trust Indenture Act, within 60 days after
each October 15, following the date of this Indenture, the Trustee shall mail to
the Insurer and to Noteholders a brief report dated as of such reporting date
that complies with Trust Indenture Act Section 313(a), if such a report is
required pursuant to Trust Indenture Act Section 313(a). The Trustee also shall
comply with Trust Indenture Act Section 313(b). The Trustee shall also transmit
by mail all reports as required by Trust Indenture Act Section 313(c).

     A copy of each such report required under Trust Indenture Act Section 313
shall, at the time of such transmission to Noteholders be filed with the
Commission and with each stock exchange or other market system on which the
Notes are listed. The Issuer or any other obligor upon the Notes shall notify
the Trustee in writing if the Notes become listed on any stock exchange or
market trading system.

     SECTION 8.15. No Proceedings.
                   --------------

     The Trustee hereby agrees that it will not, with respect to its fees and
expenses, directly or indirectly institute, or cause to be instituted, against
the Issuer any proceeding of the type referred to in Section 7.01(d) or (e) so
long as there shall not have elapsed one year plus one day since the latest
maturing Notes have been paid in full in cash, provided, however that nothing
herein shall prohibit the Trustee from filing proofs of claim or otherwise
participating in any such proceeding.

     SECTION 8.16. Appointment and Powers.
                   ----------------------

     Subject to the terms and conditions hereof, each of the Issuer Secured
Parties hereby appoints [Harris Trust and Savings Bank] as the Trustee with
respect to the Asset Pool and as initial Paying Agent, and [Harris Trust and
Savings Bank] hereby accepts such appointment and agrees to act as Trustee with
respect to the Asset Pool for the Issuer Secured Parties, to maintain custody
and possession of the assets in the Asset Pool (except as otherwise provided
herein and in the Assignment and Servicing Agreement) and to perform the other
duties of the Trustee in accordance with the provisions of this Indenture and
the Assignment and Servicing Agreement. Each Issuer Secured Party hereby
authorizes the Trustee to take such action on its behalf, and to exercise such
rights, remedies, powers and privileges hereunder, as the Insurer (if no Insurer
Default has occurred and is continuing) or the holders of not less than 66 2/3%
of

                                      62
<PAGE>

the then Outstanding Principal Amount of the Notes (if an Insurer Default has
occurred and is continuing) may direct and as are specifically authorized to be
exercised by the Trustee by the terms hereof, together with such actions,
rights, remedies, powers and privileges as are reasonably incidental thereto.
The Trustee shall act upon and in compliance with the written instructions of
the Insurer or the Noteholders given in accordance with the provisions of this
Indenture promptly following receipt of such written instructions; provided that
the Trustee shall not act in accordance with any instructions (i) which are not
authorized by, or in violation of the provisions of, this Indenture, (ii) which
are in violation of any applicable law, rule or regulation or (iii) for which
the Trustee has not received indemnity satisfactory to it. Receipt of such
instructions shall not be a condition to the exercise by the Trustee of its
express duties hereunder, except where this Indenture provides that the Trustee
is permitted to act only following and in accordance with such instructions.

     SECTION 8.17. Performance of Duties.
                   ----------------------

     The Trustee shall have no duties or responsibilities except those expressly
set forth in this Indenture and the other Transaction Documents to which the
Trustee is a party or as directed in writing by the Insurer or the Noteholders
in accordance with this Indenture. The Trustee shall not be required to take any
discretionary action hereunder except at the written direction and with the
indemnification of the Controlling Party and as provided in Section 7.12. The
Trustee shall, and hereby agrees that it will, perform all of the duties and
obligations required of it under this Indenture and the other Transaction
Documents to which it is a party.

     SECTION 8.18. Control by the Insurer.
                   -----------------------

     The Trustee shall comply with notices and instructions given by the Issuer
only if accompanied by the written consent of the Insurer, except that if any
Event of Default has occurred and is continuing, the Trustee shall act upon and
comply with notices and instructions given by the Insurer alone in the place and
stead of the Issuer.

                                  ARTICLE IX

                                   COVENANTS

     SECTION 9.01. Payment of Principal and Interest.
                   ---------------------------------

     The Issuer will duly and punctually pay the principal of and interest on
the Notes in accordance with the terms of the Notes and this Indenture.

     SECTION 9.02. Maintenance of Office or Agency; Chief Executive Office.
                   -------------------------------------------------------

     (a) The Issuer will maintain at the Corporate Trust Office an office or
agency where Notes may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served. The Issuer hereby appoints the Trustee as its
agent to receive all such presentations, surrenders, notices and demands.

                                      63
<PAGE>

     (b) The chief executive office of each of the Issuer, the Seller and the
Servicer, and the office at which each of the Issuer, the Seller and the
Servicer maintains its records with respect to the Leases, its interests in the
Equipment, and the transactions contemplated hereby, is currently located in
Macon, Georgia. None of the Issuer, the Seller or the Servicer will change the
location of such offices without giving the Trustee and the Insurer at least 30
days prior written notice thereof.

     SECTION 9.03. Money for Payments to Noteholders to be Held in Trust.
                   -----------------------------------------------------

     (a) All payments of amounts due and payable with respect to any Notes that
are to be made from amounts withdrawn from the Collection Account pursuant to
Section 3.03(b) or Section 7.06 shall be made on behalf of the Issuer by the
Trustee, and no amounts so withdrawn from the Collection Account for payments of
Notes shall be paid over to the Issuer under any circumstances except as
provided in this Section 9.03 or in Section 3.03(b), Section 3.04(b) or Section
7.06.

     (b) In making payments hereunder, the Trustee will:

     (i)   allocate all sums received for payment to the Noteholders on each
Payment Date among such Noteholders pursuant to Section 3.03(b) or Section 7.06,
as applicable, in accordance with the information known to the Trustee;

     (ii)  hold all sums held by it for the payment of amounts due with respect
to the Notes in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided; and

     (iii) comply with all requirements of the Code (or any successor statutes),
and all regulations thereunder, with respect to the withholding from any
payments made by it on any Notes of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in connection
therewith.

     Whenever the Issuer shall have one or more Paying Agents, it will, prior to
each due date of the principal of or interest on any Notes, deposit with a
Paying Agent a sum sufficient to pay the principal or interest so becoming due,
such sum to be held in trust for the benefit of the Noteholders entitled to such
principal or interest, and (unless such Paying Agent is the Trustee) the Issuer
will promptly notify the Trustee of its action or failure so to act.

     The Issuer will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:

     (1) hold all sums held by it for the payment of the principal of or
  interest on Notes in trust for the benefit of the Persons entitled thereto
  until such sums shall be paid to such Persons or otherwise disposed of as
  herein provided, and

                                      64
<PAGE>

     (2) give the Trustee notice of any default by the Issuer (or any other
  obligor upon the Notes) in the making of any payment of principal or interest.

     (c) Except as required by applicable law, any money held by the Trustee in
trust for the payment of any amount due with respect to any Note and remaining
unclaimed for three years after such amount has become due and payable to the
Noteholder shall be discharged from such trust and, subject to applicable
escheat laws, paid to the Issuer upon request; and such Noteholder shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Trustee with respect to such trust money shall
thereupon cease.

     SECTION 9.04. Corporate Existence; Merger; Consolidation, etc.
                   -----------------------------------------------

     (a) The Issuer will keep in full effect its existence and rights as a
limited liability company under the laws of the State of Delaware.

     (b) The Issuer shall at all times observe and comply in all material
respects with (i) all laws applicable to it, (ii) all requisite and appropriate
organizational and other formalities in the management of its business and
affairs and the conduct of the transactions contemplated hereby and by the
Underwriting Agreement and the Assignment and Servicing Agreement.

     (c) The Issuer shall not (i) consolidate or merge with or into any other
Person or convey or transfer its properties and assets substantially as an
entirety to any other Person or (ii) commingle its assets with those of any
other Person.

     SECTION 9.05. Protection of Asset Pool; Further Assurances.
                   --------------------------------------------

     The Issuer will from time to time execute and deliver all such supplements
and amendments hereto and all such Financing Statements, continuation
statements, instruments of further assurance, and other instruments, and will
take such other action as may be necessary or advisable to:

     (i)   Grant more effectively all or any portion of the Asset Pool;

     (ii)  maintain or preserve the Lien of this Indenture or carry out more
effectively the purposes hereof;

     (iii) publish notice of, or protect the validity of, any Grant made or to
be made by this Indenture and perfect the security interest contemplated hereby
in favor of the Trustee in each of the Leases, and all other property included
in the Asset Pool;

     (iv)  enforce or cause the Servicer to enforce any of the Leases; or

     (v)   preserve and defend title to the Leases (including the right to
receive all payments due or to become due thereunder), the interests in the
Equipment, or other property included in the Asset Pool and preserve and defend
the rights of the Trustee and the Noteholders in such Leases (including the
right to receive all payments due or to

                                      65
<PAGE>

become due thereunder), interests in the Equipment and other property against
the claims of all Persons and parties.

The Issuer, upon the Issuer's failure to do so, hereby designates the Trustee
its agent and attorney-in-fact to execute any Financing Statement or
continuation statement required pursuant to this Section 9.05; provided,
                                                               --------
however, that such designation shall not be deemed to create a duty in the
-------
Trustee to monitor the compliance of the Issuer with the foregoing covenants;
and provided, further, that the duty of the Trustee to execute any instrument
    --------  -------
required pursuant to this Section 9.05 shall arise only if a Responsible Officer
of the Trustee has actual knowledge of any failure of the Issuer to comply with
the provisions of this Section 9.05.

     SECTION 9.06. [Reserved].
                   ----------

     SECTION 9.07. Performance of Obligations; Assignment and Servicing
                   ----------------------------------------------------
Agreement.
---------

     (a) The Issuer will punctually perform and observe all of its obligations
and agreements contained in the Notes and the Transaction Documents.

     (b) The Issuer will not take any action or permit any action to be taken by
others which would release any Person from any of such Person's covenants or
obligations under any Lease or any other instrument included in the Asset Pool,
or which would result in the amendment, hypothecation, subordination,
termination, or discharge of, or impair the validity or effectiveness of, any
Lease or such other instrument, except as expressly provided in this Indenture
or the Assignment and Servicing Agreement.

     (c) If any Authorized Officer shall have knowledge of the occurrence of a
default under the Assignment and Servicing Agreement, the Issuer shall promptly
notify the Trustee and the Noteholders thereof, and shall specify in such notice
the action, if any, the Issuer is taking in respect of such default. Unless
consented to by the Insurer (if no Insurer Default has occurred and is
continuing) or the holders of 66 2/3% of the then Outstanding Principal Amount
of the Notes (if an Insurer Default has occurred and is continuing), the Issuer
may not waive any default under or amend the Assignment and Servicing Agreement.

     SECTION 9.08. Negative Covenants.
                   ------------------

     The Issuer will not:

     (a) sell, transfer, exchange or otherwise dispose of any portion of the
Asset Pool except as expressly permitted by this Indenture;

     (b) claim any credit on, or make any deduction from, the principal of, or
interest on, any of the Notes by reason of the payment of any taxes levied or
assessed upon any portion of the Asset Pool;

                                      66
<PAGE>

     (c) engage in any business or activity other than in connection with, or
relating to the ownership of, the Leases and the interests in the Equipment, the
issuance of the Notes, and the specific transactions contemplated by the
Transaction Documents;

     (d) become liable for, issue, incur, assume, or allow to remain outstanding
any indebtedness, or guaranty any indebtedness of any Person, other than the
Notes, except as contemplated by this Indenture, the registration statement
filed with respect to the Notes and the Assignment and Servicing Agreement;

     (e) seek dissolution or liquidation in whole or in part or reorganization
of its business or affairs;

     (f) (i) permit the validity or effectiveness of this Indenture or any Grant
hereby to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations under this Indenture, except as may
be expressly permitted hereby, (ii) permit any Lien to be created on or to
extend to or otherwise arise upon or burden the Asset Pool or any part thereof
or any interest therein or the proceeds thereof other than the lien of this
Indenture, or (iii) subject to Section 4.01(c) of the Assignment and Servicing
Agreement, permit the lien of this Indenture not to constitute a valid first
priority security interest in the Asset Pool; or

     (g) make any loan or advance to any Affiliate of the Issuer or to any other
Person.

     SECTION 9.09. Information as to Issuer.
                   ------------------------

     The Issuer shall deliver to the Trustee and the Insurer and, the Trustee
shall deliver to each Rating Agency and to each holder of Outstanding Notes
(and, upon the request of any Noteholder, to any prospective transferee of any
Notes):

     (a) Notice of Event of Default - immediately upon becoming aware of the
existence of any condition or event which constitutes a Default or an Event of
Default, a written notice describing its nature and period of existence and what
action the Issuer is taking or proposes to take with respect thereto; and

     (b) Report on Proceedings - promptly upon the Issuer's becoming aware of
(i) any proposed or pending investigation of it by any Governmental Authority or
agency, or (ii) any pending or proposed court or administrative proceeding which
involves or may involve the possibility of materially and adversely affecting
the properties, business, prospects, profits or condition (financial or
otherwise) of the Issuer, a written notice specifying the nature of such
investigation or proceeding and what action the Issuer is taking or proposes to
take with respect thereto and evaluating its merits.

     SECTION 9.10. Taxes.
                   -----

     (a) The Issuer shall pay all taxes when due and payable or levied against
its assets, properties or income, including any property that is part of the
Asset Pool.

                                      67
<PAGE>

     (b) The parties hereto agree that it is their mutual intent that, for all
applicable tax purposes, the Notes will constitute indebtedness. Further, each
party hereto and each Noteholder (by accepting and holding a Note) hereby
covenants to every other party hereto and to every other Noteholder to treat the
Notes as indebtedness for all applicable tax purposes in all tax filings,
reports and returns and otherwise, and further covenants that neither it nor any
of its Affiliates will take, or participate in the taking of or permit to be
taken, any action that is inconsistent with the treatment of the Notes as
indebtedness for tax purposes. All successors and assignees of the parties
hereto shall be bound by the provisions hereof.

     SECTION 9.11. Indemnification.
                   ---------------

     The Issuer agrees to indemnify and hold harmless the Trustee (and its
officers, directors employees and agents), the Insurer and each Noteholder (each
an "Indemnified Party") against any and all liabilities, losses, damages,
penalties, costs and expenses (including costs of defense and legal fees and
expenses) which may be incurred or suffered by such Indemnified Party without
gross negligence or willful misconduct on the part of the Indemnified Party as a
result of claims, actions, suits or judgments asserted or imposed against it and
arising out of the transactions contemplated hereby or by the Assignment and
Servicing Agreement, including without limitation, any claims resulting from any
use, operation, maintenance, repair, storage or transportation of any item of
Equipment, whether or not in the Issuer's possession or under its control, and
any tort claims and any fines or penalties arising from any violation of the
laws or regulations of any Governmental Authority; provided that, all amounts
                                                   --------
payable pursuant to this Section 9.11 shall be fully subordinated to amounts
payable under the Notes, shall be without recourse to the Issuer except to the
extent that all amounts otherwise due and payable under the terms of this
Indenture have been fully paid and shall not, to the extent that such amounts
are unpaid, constitute a claim against the Issuer except to the extent that all
amounts otherwise due and payable under the terms of this Indenture have been
fully paid.  This section shall survive the termination of this Indenture and
the earlier removal or resignation of the Trustee.

     SECTION 9.12. Commission Reports; Reports to Trustee; Reports to
                   --------------------------------------------------
Noteholders.
-----------

     To the extent it has not satisfied the following requirements by reporting
under Section 9.09 hereof, the Issuer shall:

     (a) file with the Trustee and the Insurer, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports which the Issuer may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act (or copies of such portions thereof as may be prescribed by
rules and regulations of the Commission); or, if the Issuer is not required to
file with the Commission information, documents or reports pursuant to either
Section 13 or Section 15(d) of the Exchange Act, then the Issuer will file with
the Trustee and with the Commission, in accordance with rules and regulations
prescribed by the Commission, such of the supplementary and periodic
information, documents and reports required pursuant to Section 13 of the

                                      68
<PAGE>

Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations;

     (b) file with the Trustee, the Insurer and with the Commission, in
accordance with the rules and regulations prescribed by the Commission, such
additional information, documents and reports with respect to compliance by the
Issuer with the conditions and covenants provided for in this Indenture as may
be required by such rules and regulations; and

     (c) furnish to the Insurer and to the Trustee for distribution to the
Noteholders, as the names and addresses of such Noteholders appear in the Note
Register, in the manner and to the extent provided in Section 8.14 hereof, such
summaries of any information, documents and reports required to be filed with
the Trustee pursuant to the provisions of Subsections (a) and (b) of this
Section 9.12 as may be required to be provided to such Noteholders by the rules
and regulations of the Commission under the provisions of the Trust Indenture
Act.

                                   ARTICLE X

                            SUPPLEMENTAL INDENTURES

     SECTION 10.01. Supplemental Indentures Without Consent of Noteholders.
                    ------------------------------------------------------

     (a) Without the consent of any Noteholders, the Issuer, by an Issuer Order,
and the Trustee, at any time and from time to time, may, with the consent of the
Insurer (if no Insurer Default has occurred and is continuing) enter into one or
more indentures supplemental hereto, for any of the following purposes:

     (i)   to add to the covenants of the Issuer for the benefit of the
Noteholders, or to surrender any right or power herein conferred upon the
Issuer;

     (ii)  to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein; or

     (iii) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or to better assure, convey and confirm
unto the Trustee any property subject or required to be subjected to the lien of
this Indenture; provided such action pursuant to this Section 10.01(a) shall not
                --------
adversely affect the interests of the Noteholders in any respect or in the
reduction or withdrawal of the then current ratings of the Outstanding Notes.

     (b) The Trustee shall promptly deliver to each Noteholder and each Rating
Agency a copy of any supplemental indenture entered into pursuant to Section
10.01(a).

                                      69
<PAGE>

     SECTION 10.02. Supplemental Indentures with Consent of Noteholders.
                    ---------------------------------------------------

     (a) With the consent of the Insurer (if no Insurer Default has occurred and
is continuing) or the holders of not less than 66-2/3% of the then Outstanding
Principal Amount of the Notes and by Act of said Noteholders delivered to the
Issuer and the Trustee (if an Insurer Default has occurred and is continuing),
the Issuer, by an Issuer Order, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Noteholders under this Indenture;
provided, that, subject to the express rights of the Insurer under the
--------
Transaction Documents, no supplemental indenture shall be entered into if it
would result in the reduction or withdrawal of the then current ratings of the
Outstanding Notes and no supplemental indenture shall, without the consent of
the holder of each Outstanding Note affected thereby:

     (i)   change the Stated Maturity of any Note or the Principal Payments or
Interest Payments due or to become due on any Payment Date with respect to any
Note, or change the priority of payment thereof as set forth herein, or reduce
the principal amount thereof or the Note Interest Rate thereon, or change the
place of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Maturity thereof;

     (ii)  reduce the percentage of the Outstanding Principal Amount of the
Notes the consent of whose Noteholders is required for any such supplemental
indenture, for any waiver of compliance with provisions of this Indenture or
Events of Default and their consequences, or for any Act of Noteholders;

     (iii) modify any of the provisions of this Section except to increase any
percentage or fraction set forth therein or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the holder of each Outstanding Note affected thereby;

     (iv)  modify or alter the provisions of the proviso to the definition of
the term "Outstanding"; or

     (v)   permit the creation of any Lien ranking prior to or on a parity with
the lien of this Indenture with respect to any part of the Asset Pool or, except
as provided in Sections 5.01 or 5.02, terminate the lien of this Indenture on
any property at any time subject hereto or deprive any Noteholder of the
security afforded by the lien of this Indenture.

     (b) The Trustee shall promptly deliver to the Insurer and each Noteholder
and each Rating Agency a copy of any supplemental indenture entered into
pursuant to this Section 10.02.

                                      70
<PAGE>

     SECTION 10.03. Execution of Supplemental Indentures.
                    ------------------------------------

     In executing any supplemental indenture or any amendment, modification or
supplement to any other Transaction Document the Trustee and the Insurer shall
be entitled to receive, and (subject to Section 8.01) shall be, fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
instrument is authorized or permitted by this Indenture or such applicable
Transaction Document. The Trustee may, but shall not be obligated to, enter into
any supplemental indenture which affects the Trustee's own rights, duties,
obligations, immunities or indemnities under this Indenture or otherwise.

     SECTION 10.04. Effect of Supplemental Indentures.
                    ---------------------------------

     Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes, and every
Noteholder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.

     SECTION 10.05. Reference in Notes to Supplemental Indentures.
                    ---------------------------------------------

     Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Issuer shall so determine, new Notes so
modified as to conform, in the opinion of the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Trustee in exchange for Outstanding Notes.

     SECTION 10.06. Compliance with Trust Indenture Act.
                    -----------------------------------

     Every amendment, supplement or waiver to this Indenture or the Notes shall
comply with the Trust Indenture Act as then in effect.

                                  ARTICLE XI

                          SATISFACTION AND DISCHARGE

     SECTION 11.01. Satisfaction and Discharge of Indenture.
                    ---------------------------------------

     (a) This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Issuer, shall execute proper instruments provided to it acknowledging
satisfaction and discharge of this Indenture, when

     (i)   100 days shall have elapsed since either

           (A) all Notes theretofore authenticated and delivered (other than (1)
     Notes which have been destroyed, lost or stolen and which have

                                      71
<PAGE>

     been replaced or paid as provided in Section 2.04 and (2) Notes for whose
     payment money has theretofore been deposited in trust or segregated and
     held in trust by the Issuer and thereafter repaid to the Issuer or
     discharged from such trust, as provided in Section 9.03(c)) have been
     delivered to the Trustee for cancellation; or

           (B) the final installments of principal on all such Notes not
     theretofore delivered to the Trustee for cancellation

               (1)  have become due and payable, or

               (2)  will become due and payable at their Stated Maturity,
                    as applicable, within one year,

     and the Issuer has irrevocably deposited or caused to be deposited with the
     Trustee as trust funds in trust for the purpose an amount sufficient to pay
     and discharge the entire indebtedness on such Notes not theretofore
     delivered to the Trustee for cancellation, for principal and interest to
     the date of such deposit (in the case of Notes which have become due and
     payable) or to the Stated Maturity thereof;

     (ii)  the Issuer has paid or caused to be paid all Insurer Secured
Obligations and all Trustee Secured Obligations; and

     (iii) the Issuer has delivered to the Trustee and the Insurer an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.

At such time, the Trustee shall deliver to the Issuer or, upon an Issuer Order,
its assignee, all cash, securities and other property held by it as part of the
Asset Pool other than funds deposited with the Trustee pursuant to Section
11.01(a)(i)(B), for the payment and discharge of the Notes.

     (b) Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Sections 8.06 and 9.11, and, if
money shall have been deposited with the Trustee pursuant to Section
11.01(a)(i)(B), the obligations of the Trustee under Section 11.02 and Section
9.03(c), shall survive.

     (c) The Trustee shall provide prompt written notice to each Rating Agency
of any satisfaction and discharge of this Indenture pursuant to this Article 11.

     SECTION 11.02. Application of Trust Money.
                    --------------------------

     Subject to the provisions of Section 9.03(c), all money deposited with the
Trustee pursuant to Sections 11.01 and 9.03 shall be held in trust and applied
by it, in accordance with the provisions of the Notes and this Indenture, to the
payment to the Persons entitled thereto, of the principal and interest for whose
payment such money has been deposited with the Trustee.

                                      72
<PAGE>

                                  ARTICLE XII

                                 MISCELLANEOUS

     SECTION 12.01. Trust Indenture Act Controls.
                    ----------------------------

     If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by operation of Trust Indenture Act Section 318(a), the
duties imposed by Section 318(c) shall control.

     SECTION 12.02. Communication by Noteholders with Other Noteholders.
                    ---------------------------------------------------

     Noteholders may communicate, pursuant to Trust Indenture Act Section
312(b), with other Noteholders with respect to their rights under this Indenture
or the Notes. The Issuer, the Trustee, the Note Registrar and all other parties
shall have the protection of Trust Indenture Act Section 312(c).

     SECTION 12.03. Location of Leases.
                    ------------------

     Subject to the provisions of Section 1.04(e) of the Assignment and
Servicing Agreement, the Servicer shall maintain the Leases at its office in
Macon, Georgia or at such other offices of the Servicer as shall from time to
time be identified by prior written notice to the Trustee and the Insurer.
Subject to the foregoing, the Servicer may temporarily move individual Leases or
any portion thereof without notice as necessary to conduct collection and other
servicing activities.

     SECTION 12.04. Officers' Certificate and Opinion of Counsel as to
                    --------------------------------------------------
Conditions Precedent.
--------------------

     Upon any request or application by the Issuer (or any other obligor upon
the Notes) to the Trustee to take any action under this Indenture or the other
Transaction Documents, the Issuer (or such other Obligor) shall furnish to the
Trustee and the Insurer:

     (a) an Officers' Certificate (which shall include the statements set forth
in Section 12.05) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been complied with; and

     (b) an Opinion of Counsel (which shall include the statements set forth in
Section 12.05) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been complied with.

     SECTION 12.05. Statements Required in Certificate or Opinion.
                    ---------------------------------------------

     Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

                                      73
<PAGE>

     (a) a statement that the Person making such certificate or opinion has read
such covenant or condition;

     (b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

     (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and

     (d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.

     SECTION 12.06. Nonpetition.
                    -----------

     The Trustee shall not petition or otherwise invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
its respective property, or ordering the winding up or liquidation of the
affairs of the Issuer, provided, however, that nothing herein shall prohibit the
Trustee from filing proofs of claim or otherwise participating in any such
proceedings instituted by any other Person.

                                      74
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.

                              IKON RECEIVABLES, LLC,
                              as Issuer

                              By:  IKON RECEIVABLES FUNDING, INC.,
                              its Manager

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

                              [HARRIS TRUST AND SAVINGS BANK],
                              as Trustee

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

                              IOS CAPITAL,  INC., as Servicer

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

                                      75
<PAGE>

                               CLASS [A-1] NOTE

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
     DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
     ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
     CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
     NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
     PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN
     AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
     FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
     REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                             IKON RECEIVABLES, LLC

             ______% CLASS [A-1] LEASE-BACKED NOTE, SERIES 2000-1

CUSIP NO.  _______________
No. R-1                                                            $____________

     IKON Receivables, LLC, a limited liability company duly organized and
existing under the laws of Delaware (herein called the "Issuer", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of _______________________________________________
($_____________), payable in monthly installments beginning ________, 2000, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of ______% per annum, until the
full amount of principal hereof is otherwise paid or made available for payment
and shall be computed on the basis of a year of 360 days and the actual number
of days in the period since the last Payment Date or with respect to the
________, 2000, Payment Date, since ________, 2000.

     Principal and interest on this Class [A-1] Note shall be paid on the 15th
day of each month (or, if such day is not a Business Day, the next succeeding
Business Day), commencing ________, 2000, either by check to the registered
address of the Holder of this Class [A-1] Note as of the relevant Record Date or
by wire transfer to an account at a bank in the United States as the Holder
shall specify, as provided more fully in the Indenture; provided, that the final
                                                        --------
payment of principal and interest in respect of the Notes shall be payable to
the Holder of this Note only upon presentation
<PAGE>

and surrender of this Note at the Corporate Trust Office of the Trustee or at
the principal office of any Paying Agent appointed pursuant to the Indenture.

     This Class [A-1] Note is one of a duly authorized issue of Class A Notes of
the Issuer designated as its ______% Class [A-1] Lease-Backed Notes, Series
2000-1" (herein called the "Class [A-1] Notes") limited in aggregate principal
amount to $_________, issued under the Indenture, dated as of ________, 2000
(herein called the "Indenture"), among the Issuer, IOS Capital Inc. as Servicer,
and [Harris Trust and Savings Bank], as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Issuer, the Trustee and the Holders and of the terms upon
which the Class [A-1] Notes are authenticated and delivered. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings set
forth in the Indenture.

     The Class [A-1] Notes are entitled to the benefits of a financial guarantee
insurance policy issued by Ambac Assurance Corporation (the "Insurer"), pursuant
to which the Insurer has unconditionally guaranteed payments of the Insured
Payments with respect to the Class [A-1] Notes on each Payment Date, all as more
fully set forth in the Indenture.

     The Stated Maturity of the Class [A-1] Notes is the Payment Date in October
2000 on which date the Outstanding Principal Amount of the Class [A-1] Notes
shall be due and payable.

     The Class [A-1] Notes are subject to redemption, without premium, at the
option of the Issuer as of any Payment Date on which the Discounted Present
Value of the Performing Leases is less than or equal to ten percent (10%) of the
aggregate Discounted Present Value of the Leases as of the Cut-Off Date after
giving effect to all principal Payment on such Payment Date.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Class [A-1]
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     This Class [A-1] Note will be secured by the pledge to the Trustee of the
Asset Pool.

     If an Event of Default under the Indenture occurs, the Trustee shall, at
the direction of the Insurer (if no Insurer Default has occurred and is
continuing) or of Holders of not less than 66 2/3% of the aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing), and, if an Insurer Default has occurred and is continuing,
may, declare due and payable in the manner and with the effect provided in the
Indenture, the principal of all the Class [A-1] Notes (but not less than all the
Class [A-1] Notes). Notice of such declaration will be given by mail

                                     A-1-2
<PAGE>

to Holders, as their names and addresses appear in the Note Register, as
provided in the Indenture. Upon payment of such principal amount together with
all accrued interest, the obligations of the Issuer with respect to the payment
of principal and interest on this Class [A-1] Note shall terminate.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders under the Indenture at any time by the
Issuer and the Trustee with the consent of the Insurer (with or without the
consent of any Holder of the Notes if no Insurer Default has occurred and is
continuing) or the Holders of not less than 66-2/3% in aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing). The Indenture also contains provisions permitting the
Insurer (with or without the consent of any Holder of the Notes if no Insurer
Default has occurred and is continuing) or the Holders of not less than 66 2/3%
in aggregate principal amount of the Notes at the time Outstanding (if an
Insurer Default has occurred and is continuing), on behalf of all the Holders,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Insurer (with or without the consent of any Holder of
the Notes if no Insurer Default has occurred and is continuing) or the Holder of
this Class [A-1] Note (if an Insurer Default has occurred and is continuing)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Class [A-1] Note and of any Class [A-1] Note issued upon the registration
of transfer hereof or in exchange here for or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Class [A-1] Note or any
Class [A-1] Note.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Class [A-1] Note is registrable in the Note
Register, upon surrender of this Class [A-1] Note for registration of transfer
at the office or agency of the Trustee in the City of Chicago, Illinois and at
any other office or agency maintained by the Issuer for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class [A-1]
Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.

     The Class [A-1] Notes are issuable only in registered form without coupons
in minimum denominations of $1,000,000. As provided in the Indenture and subject
to certain limitations therein set forth, Class [A-1] Notes are exchangeable for
a like aggregate principal amount of Class [A-1] Notes of a different authorized
denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or
exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Issuer, the Trustee, the Insurer and any agent of the Issuer, the
Trustee or the Insurer may treat the Person in whose name this Class [A-1] Note
is registered as

                                     A-1-3
<PAGE>

the owner hereof for all purposes, whether or not this Class [A-1] Note may be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.

     Each Noteholder, by acceptance of this Note, covenants and agrees to treat
the Notes as indebtedness for purposes of federal income, state and local income
and franchise and any other income taxes.

     The Indenture and this Class [A-1] Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.

                                     A-1-4
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.

Dated: _____, 2000

                              IKON RECEIVABLES, LLC

                              By:  IKON RECEIVABLES FUNDING, INC., its Manager

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                    Trustee's Certificate of Authentication
                    ---------------------------------------

     This is one of the Class [A-1] Notes referred to in the within mentioned
Indenture.

                              [HARRIS TRUST AND SAVINGS BANK], as Trustee

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                                     A-1-5
<PAGE>

                                ASSIGNMENT FORM
                                ---------------

     If you the holder want to assign this Class [A-1] Note, fill in the form
below and have your signature guaranteed:

I or we assign and transfer this Class [A-1] Note to:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                 (Print or type name, address and zip code and
                 social security or tax ID number of assignee)

and irrevocably appoint ____________, agent to transfer this Class [A-1] Note on
the books of the Issuer.  The agent may substitute another to act for him.

Dated:                        Signed:
       -----------------              -------------------------------------

                                      -------------------------------------
                                            (sign exactly as the name
                                            appears on the other side of
                                            this Class [A-1] Note)

Signature Guarantee
                    -------------------------------------------------------

Important Notice:   When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank.  Therefore, to safeguard a
signed Class [A-1] Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank.  Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class [A-1] Note and the signed "power of attorney" in separate
envelopes.  For added protection, use certified or registered mail for a Class
[A-1] Note.

                                     A-1-6
<PAGE>

                               CLASS [A-2] NOTE

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
     DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
     ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
     CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
     NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
     PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN
     AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
     FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
     REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                             IKON RECEIVABLES, LLC

             ______% CLASS [A-2] LEASE-BACKED NOTE, SERIES 2000-1

CUSIP NO.  _______________
No. R-1                                                            $____________

     IKON Receivables, LLC, a limited liability company duly organized and
existing under the laws of Delaware (herein called the "Issuer", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of _______________________________________________
($_____________), payable in monthly installments beginning on ________, 2000,
in accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of ______% per annum, until the
full amount of principal hereof is otherwise paid or made available for payment
and shall be computed on the basis of a year of 360 days comprised of twelve
thirty day months.

     Principal and interest on this Class [A-2] Note shall be paid on the 15th
day of each month (or, if such day is not a Business Day, the next succeeding
Business Day), commencing ________, 2000, either by check to the registered
address of the Holder of this Class [A-2] Note as of the relevant Record Date or
by wire transfer to an account at a bank in the United States as the Holder
shall specify, as provided more fully in the Indenture; provided, that the final
                                                        --------
payment of principal and interest in respect of the Notes shall be payable to
the Holder of this Note only upon presentation and surrender of this Note at the
Corporate Trust Office of the Trustee or at the principal office of any Paying
Agent appointed pursuant to the Indenture.
<PAGE>

     This Class [A-2] Note is one of a duly authorized issue of Class A Notes of
the Issuer designated as its "______% Class [A-2] Lease-Backed Notes, Series
2000-1" (herein called the "Class [A-2] Notes") limited in aggregate principal
amount to $__________ issued under the Indenture, dated as of ________, 2000
(herein called the "Indenture"), among the Issuer, IOS Capital Inc. as Servicer,
and [Harris Trust and Savings Bank], as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Issuer, the Trustee and the Holders and of the terms upon
which the Class [A-2] Notes are authenticated and delivered. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings set
forth in the Indenture.

     The Class [A-2] Notes are entitled to the benefits of a financial guarantee
insurance policy issued by Ambac Assurance Corporation (the "Insurer"), pursuant
to which the Insurer has unconditionally guaranteed payments of the Insured
Payments with respect to the Class [A-2] Notes on each Payment Date, all as more
fully set forth in the Indenture.

     The Stated Maturity of the Class [A-2] Notes is the Payment Date in May
2001 on which date the Outstanding Principal Amount of the Class [A-2] Notes
shall be due and payable.

     The Class [A-2] Notes are subject to redemption, without premium, at the
option of the Issuer as of any Payment Date on which the Discounted Present
Value of the Performing Leases is less than or equal to ten percent (10%) of the
aggregate Discounted Present Value of the Leases as of the Cut-Off Date after
giving effect to all principal Payment on such Payment Date.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Class [A-2]
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     This Class [A-2] Note will be secured by the pledge to the Trustee of the
Asset Pool.

     If an Event of Default under the Indenture occurs, the Trustee shall, at
the direction of the Insurer (if no Insurer Default has occurred and is
continuing) or of Holders of not less than 66 2/3% of the aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing), and, if an Insurer Default has occurred and is continuing,
may, declare due and payable in the manner and with the effect provided in the
Indenture, the principal of all the Class [A-2] Notes (but not less than all the
Class [A-2] Notes). Notice of such declaration will be given by mail to Holders,
as their names and addresses appear in the Note Register, as provided in the
Indenture. Upon payment of such principal amount together with all accrued
interest, the

                                     A-2-2
<PAGE>

obligations of the Issuer with respect to the payment of principal and interest
on this Class [A-2] Note shall terminate.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders under the Indenture at any time by the
Issuer and the Trustee with the consent of the Insurer (with or without the
consent of any Holder of the Notes if no Insurer Default has occurred and is
continuing) or the Holders of not less than 66-2/3% in aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing). The Indenture also contains provisions permitting the
Insurer (with or without the consent of any Holder of the Notes if no Insurer
Default has occurred and is continuing) or the Holders of not less than 66 2/3%
in aggregate principal amount of the Notes at the time Outstanding (if an
Insurer Default has occurred and is continuing), on behalf of all the Holders,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Insurer (with or without the consent of any Holder of
the Notes if no Insurer Default has occurred and is continuing) or the Holder of
this Class [A-2] Note (if an Insurer Default has occurred and is continuing)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Class [A-2] Note and of any Class [A-2] Note issued upon the registration
of transfer hereof or in exchange here for or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Class [A-2] Note or any
Class [A-2] Note.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Class [A-2] Note is registrable in the Note
Register, upon surrender of this Class [A-2] Note for registration of transfer
at the office or agency of the Trustee in the City of Chicago, Illinois and at
any other office or agency maintained by the Issuer for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class [A-2]
Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.

     The Class [A-2] Notes are issuable only in registered form without coupons
in minimum denominations of $1,000,000. As provided in the Indenture and subject
to certain limitations therein set forth, Class [A-2] Notes are exchangeable for
a like aggregate principal amount of Class [A-2] Notes of a different authorized
denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or
exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Issuer, the Trustee, the Insurer and any agent of the Issuer, the
Trustee or the Insurer may treat the Person in whose name this Class [A-2] Note
is registered as the owner hereof for all purposes, whether or not this Class
[A-2] Note may be overdue,

                                     A-2-3
<PAGE>

and neither the Issuer, the Trustee nor any such agent shall be affected by
notice to the contrary.

     Each Noteholder, by acceptance of this Note, covenants and agrees to treat
the Notes as indebtedness for purposes of federal income, state and local income
and franchise and any other income taxes.

     The Indenture and this Class [A-2] Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.

                                     A-2-4
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.

Dated: _____, 2000

                              IKON RECEIVABLES, LLC

                              By:  IKON RECEIVABLES FUNDING, INC., its Manager

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                    Trustee's Certificate of Authentication
                    ---------------------------------------

     This is one of the Class [A-2] Notes referred to in the within mentioned
Indenture.

                              [HARRIS TRUST AND SAVINGS BANK], as Trustee

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                                     A-2-5
<PAGE>

                                ASSIGNMENT FORM
                                ---------------

     If you the holder want to assign this Class [A-2] Note, fill in the form
below and have your signature guaranteed:

I or we assign and transfer this Class [A-2] Note to:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                 (Print or type name, address and zip code and
                 social security or tax ID number of assignee)

and irrevocably appoint ____________, agent to transfer this Class [A-2] Note on
the books of the Issuer.  The agent may substitute another to act for him.

Dated:                        Signed:
       -----------------              -------------------------------------

                                      -------------------------------------
                                            (sign exactly as the name
                                            appears on the other side of
                                            this Class [A-2] Note)

Important Notice:   When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank.  Therefore, to safeguard a
signed Class [A-2] Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank.  Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class [A-2] Note and the signed "power of attorney" in separate
envelopes.  For added protection, use certified or registered mail for a Class
[A-2] Note.

                                     A-2-6
<PAGE>

                               Class [A-3a] Note

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
     DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
     ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
     CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
     NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
     PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN
     AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
     FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
     REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                             IKON RECEIVABLES, LLC

             ______% Class [A-3a] LEASE-BACKED NOTE, SERIES 2000-1

CUSIP NO.  _______________
No. R-1                                                            $____________

     IKON Receivables, LLC, a limited liability company duly organized and
existing under the laws of Delaware (herein called the "Issuer", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of _______________________________________________
($_____________), payable in monthly installments beginning on ________, 2000,
in accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of ______% per annum, until the
full amount of principal hereof is otherwise paid or made available for payment
and shall be computed on the basis of a year of 360 days comprised of twelve
thirty day months.

     Principal and interest on this Class [A-3a] Note shall be paid on the 15th
day of each month (or, if such day is not a Business Day, the next succeeding
Business Day), commencing ________, 2000, either by check to the registered
address of the Holder of this Class [A-3a] Note as of the relevant Record Date
or by wire transfer to an account at a bank in the United States as the Holder
shall specify, as provided more fully in the Indenture; provided, that the final
                                                        --------
payment of principal and interest in respect of the Notes shall be payable to
the Holder of this Note only upon presentation and surrender of this Note at the
Corporate Trust Office of the Trustee or at the principal office of any Paying
Agent appointed pursuant to the Indenture.

     This Class [A-3a] Note is one of a duly authorized issue of Class A Notes
of the Issuer designated as its "______% Class [A-3a] Lease-Backed Notes, Series
2000-1" (herein called the "Class [A-3a] Notes") limited in aggregate principal
amount to $__________, issued under the Indenture, dated as of ________, 2000
(herein called the "Indenture"), among the Issuer, IOS Capital Inc. as Servicer,
and [Harris Trust and Savings Bank], as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Issuer, the Trustee and the Holders and of the terms upon
which the Class [A-3a] Notes are authenticated and delivered. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings set
forth in the Indenture.
<PAGE>

     The Class [A-3a] Notes are entitled to the benefits of a financial
guarantee insurance policy issued by Ambac Assurance Corporation (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments of the Insured Payments with respect to the Class [A-3a] Notes on each
Payment Date, all as more fully set forth in the Indenture.

     The Stated Maturity of the Class [A-3a] Notes is the Payment Date in August
2003, on which date the Outstanding Principal Amount of the Class [A-3a] Notes
shall be due and payable.

     The Class [A-3a] Notes are subject to redemption, without premium, at the
option of the Issuer as of any Payment Date on which the Discounted Present
Value of the Performing Leases is less than or equal to ten percent (10%) of the
aggregate Discounted Present Value of the Leases as of the Cut-Off Date after
giving effect to all principal Payment on such Payment Date.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Class [A-3a]
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     This Class [A-3a] Note will be secured by the pledge to the Trustee of the
Asset Pool.

     If an Event of Default under the Indenture occurs, the Trustee shall, at
the direction of the Insurer (if no Insurer Default has occurred and is
continuing) or of Holders of not less than 66-2/3% of the aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing), and, if an Insurer Default has occurred and is continuing,
may, declare due and payable in the manner and with the effect provided in the
Indenture, the principal of all the Class [A-3a] Notes (but not less than all
the Class [A-3a] Notes). Notice of such declaration will be given by mail to
Holders, as their names and addresses appear in the Note Register, as provided
in the Indenture. Upon payment of such principal amount together with all
accrued interest, the

                                    A-3a-2
<PAGE>

obligations of the Issuer with respect to the payment of principal and interest
on this Class [A-3a] Note shall terminate.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders under the Indenture at any time by the
Issuer and the Trustee with the consent of the Insurer (with or without the
consent of any Holder of the Notes if no Insurer Default has occurred and is
continuing) or the Holders of not less than 66-2/3% in aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing). The Indenture also contains provisions permitting the
Insurer (with or without the consent of any Holder of the Notes if no Insurer
Default has occurred and is continuing) or the Holders of not less than 66-2/3
in aggregate principal amount of the Notes at the time Outstanding (if an
Insurer Default has occurred and is continuing), on behalf of all the Holders,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Insurer (with or without the consent of any Holder of
the Notes if no Insurer Default has occurred and is continuing) or the Holder of
this Class [A-3a] Note (if an Insurer Default has occurred and is continuing)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Class [A-3a] Note and of any Class [A-3a] Note issued upon the registration
of transfer hereof or in exchange here for or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Class [A-3a] Note or any
Class [A-3a] Note.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Class [A-3a] Note is registrable in the Note
Register, upon surrender of this Class [A-3a] Note for registration of transfer
at the office or agency of the Trustee in the City of Chicago, Illinois and at
any other office or agency maintained by the Issuer for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class [A-3a]
Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.

     The Class [A-3a] Notes are issuable only in registered form without coupons
in minimum denominations of $1,000,000. As provided in the Indenture and subject
to certain limitations therein set forth, Class [A-3a] Notes are exchangeable
for a like aggregate principal amount of Class [A-3a] Notes of a different
authorized denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or
exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Issuer, the Trustee, the Insurer and any agent of the Issuer, the
Trustee or the Insurer may treat the Person in whose name this Class [A-3a] Note
is registered as the owner hereof for all purposes, whether or not this Class
[A-3a] Note may be overdue,

                                    A-3a-3
<PAGE>

and neither the Issuer, the Trustee nor any such agent shall be affected by
notice to the contrary.

     Each Noteholder, by acceptance of this Note, covenants and agrees to treat
the Notes as indebtedness for purposes of federal income, state and local income
and franchise and any other income taxes.

     The Indenture and this Class [A-3a] Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.

                                    A-3a-4
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.

Dated:__________, 2000

                              IKON RECEIVABLES, LLC

                              By:  IKON RECEIVABLES FUNDING, INC., its Manager

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                    Trustee's Certificate of Authentication
                    ---------------------------------------

     This is one of the Class [A-3a] Notes referred to in the within mentioned
Indenture.

                              [HARRIS TRUST AND SAVINGS BANK], as Trustee

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                                    A-3a-5
<PAGE>

                                ASSIGNMENT FORM
                                ---------------

     If you the holder want to assign this Class [A-3a] Note, fill in the form
below and have your signature guaranteed:

I or we assign and transfer this Class [A-3a] Note to:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                 (Print or type name, address and zip code and
                 social security or tax ID number of assignee)

and irrevocably appoint ____________, agent to transfer this Class [A-3a] Note
on the books of the Issuer. The agent may substitute another to act for him.

Dated:                        Signed:
       -----------------              -------------------------------------

                                      -------------------------------------
                                            (sign exactly as the name
                                            appears on the other side of
                                            this Class [A-3a] Note)

Signature Guarantee
                   --------------------------------------------------------

Important Notice:   When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank.  Therefore, to safeguard a
signed Class [A-3a] Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank.  Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class [A-3a] Note and the signed "power of attorney" in separate
envelopes.  For added protection, use certified or registered mail for a Class
[A-3a] Note.

                                    A-3a-6
<PAGE>

                               Class [A-3b] Note

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
     DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
     ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
     CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
     NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
     PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN
     AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
     FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
     REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                             IKON RECEIVABLES, LLC

                 Class [A-3b] LEASE-BACKED NOTE, SERIES 2000-1

CUSIP NO.  _______________
No. R-1                                                            $____________

     IKON Receivables, LLC, a limited liability company duly organized and
existing under the laws of Delaware (herein called the "Issuer", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of _______________________________________________
($_____________), payable in monthly installments on each Payment Date, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, for each Interest Accrual Period at the rate
per annum equal to the sum of .__% and LIBOR for that Interest Accrual Period,
until the full amount of principal hereof is otherwise paid or made available
for payment and shall be computed on the basis of a year of 360 days and the
actual number of days in that Interest Accrual Period. Interest accruing as
provided above for each Interest Accrual Period will be payable on the Payment
Date corresponding to that Interest Accrual Period.

     Principal and interest on this Class [A-3b] Note shall be paid on the 15th
day of each month (or, if such day is not a Business Day, the next succeeding
Business Day), commencing ________, 2000, either by check to the registered
address of the Holder of this Class [A-3b] Note as of the relevant Record Date
or by wire transfer to an account at a bank in the United States as the Holder
shall specify, as provided more fully in the Indenture; provided, that the final
                                                        --------
payment of principal and interest in respect of the Notes shall be payable to
the Holder of this Note only upon presentation and
<PAGE>

surrender of this Note at the Corporate Trust Office of the Trustee or at the
principal office of any Paying Agent appointed pursuant to the Indenture.

     This Class [A-3b] Note is one of a duly authorized issue of Class A Notes
of the Issuer designated as its "Class [A-3b] Lease-Backed Notes, Series 2000-1"
(herein called the "Class [A-3b] Notes") limited in aggregate principal amount
to $__________, issued under the Indenture, dated as of ________, 2000 (herein
called the "Indenture"), among the Issuer, IOS Capital Inc. as Servicer, and
[Harris Trust and Savings Bank], as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Issuer, the Trustee and the Holders and of the terms upon which the Class
[A-3b] Notes are authenticated and delivered. Unless otherwise defined herein,
all capitalized terms used herein shall have the meanings set forth in the
Indenture.

     The Class [A-3b] Notes are entitled to the benefits of a financial
guarantee insurance policy issued by Ambac Assurance Corporation (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments of the Insured Payments with respect to the Class [A-3b] Notes on each
Payment Date, all as more fully set forth in the Indenture.

     The Stated Maturity of the Class [A-3b] Notes is the Payment Date in August
2003, on which date the Outstanding Principal Amount of the Class [A-3b] Notes
shall be due and payable.

     The Class [A-3b] Notes are subject to redemption, without premium, at the
option of the Issuer as of any Payment Date on which the Discounted Present
Value of the Performing Leases is less than or equal to ten percent (10%) of the
aggregate Discounted Present Value of the Leases as of the Cut-Off Date after
giving effect to all principal Payment on such Payment Date.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Class [A-3b]
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     This Class [A-3b] Note will be secured by the pledge to the Trustee of the
Asset Pool.

     If an Event of Default under the Indenture occurs, the Trustee shall, at
the direction of the Insurer (if no Insurer Default has occurred and is
continuing) or of Holders of not less than 66-2/3% of the aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing), and, if an Insurer Default has occurred and is continuing,
may, declare due and payable in the manner and with the effect provided in the
Indenture, the principal of all the Class [A-3b] Notes (but not less than all
the Class [A-3b] Notes). Notice of such declaration will be given by

                                    A-3b-2
<PAGE>

mail to Holders, as their names and addresses appear in the Note Register, as
provided in the Indenture. Upon payment of such principal amount together with
all accrued interest, the obligations of the Issuer with respect to the payment
of principal and interest on this Class [A-3b] Note shall terminate.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders under the Indenture at any time by the
Issuer and the Trustee with the consent of the Insurer (with or without the
consent of any Holder of the Notes if no Insurer Default has occurred and is
continuing) or the Holders of not less than 66-2/3% in aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing). The Indenture also contains provisions permitting the
Insurer (with or without the consent of any Holder of the Notes if no Insurer
Default has occurred and is continuing) or the Holders of not less than 66-2/3
in aggregate principal amount of the Notes at the time Outstanding (if an
Insurer Default has occurred and is continuing), on behalf of all the Holders,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Insurer (with or without the consent of any Holder of
the Notes if no Insurer Default has occurred and is continuing) or the Holder of
this Class [A-3b] Note (if an Insurer Default has occurred and is continuing)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Class [A-3b] Note and of any Class [A-3b] Note issued upon the registration
of transfer hereof or in exchange here for or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Class [A-3b] Note or any
Class [A-3b] Note.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Class [A-3b] Note is registrable in the Note
Register, upon surrender of this Class [A-3b] Note for registration of transfer
at the office or agency of the Trustee in the City of Chicago, Illinois and at
any other office or agency maintained by the Issuer for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class [A-3b]
Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.

     The Class [A-3b] Notes are issuable only in registered form without coupons
in minimum denominations of $1,000,000. As provided in the Indenture and subject
to certain limitations therein set forth, Class [A-3b] Notes are exchangeable
for a like aggregate principal amount of Class [A-3b] Notes of a different
authorized denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or
exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

                                    A-3b-3
<PAGE>

     The Issuer, the Trustee, the Insurer and any agent of the Issuer, the
Trustee or the Insurer may treat the Person in whose name this Class [A-3b] Note
is registered as the owner hereof for all purposes, whether or not this Class
[A-3b] Note may be overdue, and neither the Issuer, the Trustee nor any such
agent shall be affected by notice to the contrary.

     Each Noteholder, by acceptance of this Note, covenants and agrees to treat
the Notes as indebtedness for purposes of federal income, state and local income
and franchise and any other income taxes.

     The Indenture and this Class [A-3b] Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.

                                    A-3b-4
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.

Dated: _____, 2000

                              IKON RECEIVABLES, LLC

                              By:  IKON RECEIVABLES FUNDING, INC., its Manager

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                    Trustee's Certificate of Authentication
                    ---------------------------------------

     This is one of the Class [A-3b] Notes referred to in the within mentioned
Indenture.

                              [HARRIS TRUST AND SAVINGS BANK], as Trustee

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                                    A-3b-5
<PAGE>

                                ASSIGNMENT FORM
                                ---------------

     If you the holder want to assign this Class [A-3b] Note, fill in the form
below and have your signature guaranteed:

I or we assign and transfer this Class [A-3b] Note to:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                 (Print or type name, address and zip code and
                 social security or tax ID number of assignee)

and irrevocably appoint ____________, agent to transfer this Class [A-3b] Note
on the books of the Issuer. The agent may substitute another to act for him.

Dated:                        Signed:
       -----------------              -------------------------------------

                                      -------------------------------------
                                            (sign exactly as the name
                                            appears on the other side of
                                            this Class [A-3b] Note)

Signature Guarantee
                   --------------------------------------------------------

Important Notice:   When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank.  Therefore, to safeguard a
signed Class [A-3b] Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank.  Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class [A-3b] Note and the signed "power of attorney" in separate
envelopes.  For added protection, use certified or registered mail for a Class
[A-3b] Note.

                                    A-3b-6
<PAGE>

                               CLASS [A-4] NOTE

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
     DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
     ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
     CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
     NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
     PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN
     AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
     FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
     REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                             IKON RECEIVABLES, LLC

             ______% CLASS [A-4] LEASE-BACKED NOTE, SERIES 2000-1

CUSIP NO.  _______________
No. R-1                                                            $____________

     IKON Receivables, LLC, a limited liability company duly organized and
existing under the laws of Delaware (herein called the "Issuer", which term
includes any successor Person under the Indenture referred to herein), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of _______________________________________________
($_____________), payable in monthly installments beginning on ________, 2000,
in accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of ______% per annum, until the
full amount of principal hereof is otherwise paid or made available for payment
and shall be computed on the basis of a year of 360 days comprised of twelve
thirty day months.

     Principal and interest on this Class [A-4] Note shall be paid on the 15th
day of each month (or, if such day is not a Business Day, the next succeeding
Business Day), commencing ________, 2000, either by check to the registered
address of the Holder of this Class [A-4] Note as of the relevant Record Date or
by wire transfer to an account at a bank in the United States as the Holder
shall specify, as provided more fully in the Indenture; provided, that the final
                                                        --------
payment of principal and interest in respect of the Notes shall be payable to
the Holder of this Note only upon presentation and surrender of this Note at the
Corporate Trust Office of the Trustee or at the principal office of any Paying
Agent appointed pursuant to the Indenture.
<PAGE>

     This Class [A-4] Note is one of a duly authorized issue of Class A Notes of
the Issuer designated as its "______% Class [A-4] Lease-Backed Notes, Series
2000-1" (herein called the "Class [A-4] Notes") limited in aggregate principal
amount to $__________, issued under the Indenture, dated as of ________, 2000
(herein called the "Indenture"), among the Issuer, IOS Capital Inc. as Servicer,
and [Harris Trust and Savings Bank], as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Issuer, the Trustee and the Holders and of the terms upon
which the Class [A-4] Notes are authenticated and delivered. Unless otherwise
defined herein, all capitalized terms used herein shall have the meanings set
forth in the Indenture.

     The Class [A-4] Notes are entitled to the benefits of a financial guarantee
insurance policy issued by Ambac Assurance Corporation (the "Insurer"), pursuant
to which the Insurer has unconditionally guaranteed payments of the Insured
Payments with respect to the Class [A-4] Notes on each Payment Date, all as more
fully set forth in the Indenture.

     The Stated Maturity of the Class [A-4] Notes is the Payment Date in
November 2005, on which date the Outstanding Principal Amount of the Class [A-4]
Notes shall be due and payable.

     The Class [A-4] Notes are subject to redemption, without premium, at the
option of the Issuer as of any Payment Date on which the Discounted Present
Value of the Performing Leases is less than or equal to ten percent (10%) of the
aggregate Discounted Present Value of the Leases as of the Cut-Off Date after
giving effect to all principal Payment on such Payment Date.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Class [A-4]
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

     This Class [A-4] Note will be secured by the pledge to the Trustee of the
Asset Pool.

     If an Event of Default under the Indenture occurs, the Trustee shall, at
the direction of the Insurer (if no Insurer Default has occurred and is
continuing) or of Holders of not less than 66-2/3% of the aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing), and, if an Insurer Default has occurred and is continuing,
may, declare due and payable in the manner and with the effect provided in the
Indenture, the principal of all the Class [A-4] Notes (but not less than all the
Class [A-4] Notes). Notice of such declaration will be given by mail to Holders,
as their names and addresses appear in the Note Register, as provided in the
Indenture. Upon payment of such principal amount together with all accrued
interest, the

                                     A-4-2
<PAGE>

obligations of the Issuer with respect to the payment of principal and interest
on this Class [A-4] Note shall terminate.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders under the Indenture at any time by the
Issuer and the Trustee with the consent of the Insurer (with or without the
consent of any Holder of the Notes if no Insurer Default has occurred and is
continuing) or the Holders of not less than 66-2/3% in aggregate principal
amount of the Notes at the time Outstanding (if an Insurer Default has occurred
and is continuing). The Indenture also contains provisions permitting the
Insurer (with or without the consent of any Holder of the Notes if no Insurer
Default has occurred and is continuing) or the Holders of not less than 66-2/3%
in aggregate principal amount of the Notes at the time Outstanding (if an
Insurer Default has occurred and is continuing), on behalf of all the Holders,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Insurer (with or without the consent of any Holder of
the Notes if no Insurer Default has occurred and is continuing) or the Holder of
this Class [A-4] Note (if an Insurer Default has occurred and is continuing)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Class [A-4] Note and of any Class [A-4] Note issued upon the registration
of transfer hereof or in exchange here for or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Class [A-4] Note or any
Class [A-4] Note.

     As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Class [A-4] Note is registrable in the Note
Register, upon surrender of this Class [A-4] Note for registration of transfer
at the office or agency of the Trustee in the City of Chicago, Illinois and at
any other office or agency maintained by the Issuer for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class [A-4]
Notes, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.

     The Class [A-4] Notes are issuable only in registered form without coupons
in minimum denominations of $1,000,000. As provided in the Indenture and subject
to certain limitations therein set forth, Class [A-4] Notes are exchangeable for
a like aggregate principal amount of Class [A-4] Notes of a different authorized
denomination, as requested by the Holder surrendering the same.

     No service charge shall be made for any such registration of transfer or
exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     The Issuer, the Trustee, the Insurer and any agent of the Issuer, the
Trustee or the Insurer may treat the Person in whose name this Class [A-4] Note
is registered as the owner hereof for all purposes, whether or not this Class
[A-4] Note may be overdue,
                                     A-4-3
<PAGE>

and neither the Issuer, the Trustee nor any such agent shall be affected by
notice to the contrary.

     Each Noteholder, by acceptance of this Note, covenants and agrees to treat
the Notes as indebtedness for purposes of federal income, state and local income
and franchise and any other income taxes.

     The Indenture and this Class [A-4] Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.

                                     A-4-4
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed under its corporate seal.

Dated: _____, 2000

                              IKON RECEIVABLES, LLC

                              By:  IKON RECEIVABLES FUNDING, INC., its Manager

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                    Trustee's Certificate of Authentication
                    ---------------------------------------

     This is one of the Class [A-4] Notes referred to in the within mentioned
Indenture.

                              [HARRIS TRUST AND SAVINGS BANK], as Trustee

                              By:
                                 ----------------------------------------------
                                              Authorized Officer

                                     A-4-5
<PAGE>

                                ASSIGNMENT FORM
                                ---------------

     If you the holder want to assign this Class [A-4] Note, fill in the form
below and have your signature guaranteed:

I or we assign and transfer this Class [A-4] Note to:

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                 (Print or type name, address and zip code and
                 social security or tax ID number of assignee)

and irrevocably appoint ____________, agent to transfer this Class [A-4] Note
on the books of the Issuer. The agent may substitute another to act for him.

Dated:                        Signed:
       -----------------              -------------------------------------

                                      -------------------------------------
                                            (sign exactly as the name
                                            appears on the other side of
                                            this Class [A-4] Note)

Signature Guarantee
                   --------------------------------------------------------

Important Notice:   When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank.  Therefore, to safeguard a
signed Class [A-4] Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank.  Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class [A-4] Note and the signed "power of attorney" in separate
envelopes.  For added protection, use certified or registered mail for a Class
[A-4] Note.

                                     A-4-6

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