10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period endedDecember 31, 2006

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number: 0-4408

RESOURCE AMERICA, INC.

(Exact name of registrant as specified in its charter)

Delaware	72-0654145
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
One Crescent Drive, Suite 203
Navy Yard Corporate Center
Philadelphia, PA	19112
(Address of principal executive offices)	(Zip code)

Registrant's telephone number, including area code: (215) 546-5005

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

Large accelerated filer [  ]Accelerated filer [X]Non-accelerated filer [ ]

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

The number of outstanding shares of the registrant’s common stock on February 1, 2007 was 17,588,658.

RESOURCE AMERICA, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

		PAGE
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets - December 31, 2006 (unaudited) and September 30, 2006	3
	Consolidated Statements of Income - Three Months Ended December 31, 2006 and 2005 (unaudited)	4
	Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income -  Three Months Ended December 31, 2006 (unaudited)	5
	Consolidated Statements of Cash Flows - Three Months Ended December 31, 2006 and 2005 (unaudited)	6 − 7
	Notes to Consolidated Financial Statements - December 31, 2006 (unaudited)	8 − 22
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23 − 38
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38 − 39
Item 4.	Controls and Procedures	39
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 6.	Exhibits	40
SIGNATURES		41

2

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

RESOURCE AMERICA, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31, 2006			September 30, 2006
	(unaudited)
ASSETS
Cash	$	19,868		$	37,622
Restricted cash		13,897			8,103
Receivables from managed entities		10,587			8,795
Investments in commercial finance		172,334			108,850
Loans held for investment		283,198			69,314
Investments in real estate		49,492			50,104
Investment securities available-for-sale		70,277			64,857
Investments in unconsolidated entities		34,280			26,626
Property and equipment, net		9,277			9,525
Deferred income taxes		7,070			6,408
Other assets		33,541			26,549
Total assets	$	703,821		$	416,753
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	9,483		$	12,448
Accrued expenses and other liabilities		22,754			17,078
Payables to managed entities		1,250			1,579
Borrowings		449,874			172,238
Deferred income tax liabilities		12,458			10,746
Minority interests		9,370			9,602
Total liabilities		505,189			223,691
Commitments and contingencies		−			−
Stockholders’ equity:
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none outstanding		-			-
Common stock, $.01 par value, 49,000,000 shares authorized; 26,408,298 and  26,401,708 shares issued, respectively		264			264
Additional paid-in capital		260,296			259,882
Retained earnings		28,870			25,464
Treasury stock, at cost; 9,109,151 and 9,110,290 shares, respectively		(96,948	)		(96,960	)
ESOP loan receivable		(459	)		(465	)
Accumulated other comprehensive income		6,609			4,877
Total stockholders’ equity		198,632			193,062
	$	703,821		$	416,753

See accompanying notes to consolidated financial statements

3

RESOURCE AMERICA, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

	Three Months Ended December 31,
	2006			2005
REVENUES
Financial fund management	$	12,387		$	7,479
Real estate		4,564			4,654
Commercial finance		7,089			5,081
		24,040			17,214
COSTS AND EXPENSES
Financial fund management		4,552			2,299
Real estate		3,013			2,265
Commercial finance		3,631			2,918
General and administrative		2,834			3,225
Depreciation and amortization		709			838
		14,739			11,545
OPERATING INCOME		9,301			5,669
OTHER INCOME (EXPENSE)
Interest expense		(4,591	)		(2,296	)
Minority interest		(560	)		(402	)
Other income, net		2,528			873
		(2,623	)		(1,825	)
Income from continuing operations before taxes and cumulative effect of a change in accounting principle		6,678			3,844
Provision (benefit) for income taxes		2,210			(1,537	)
Income from continuing operations before cumulative effect of a change in accounting principle		4,468			5,381
(Loss) income from discontinued operations, net of tax		(19	)		938
Cumulative effect of a change in accounting principle, net of tax		−			1,357
NET INCOME	$	4,449		$	7,676
Basic earnings per common share:
Continuing operations	$	0.26		$	0.30
Discontinued operations		−			0.05
Cumulative effect of accounting change		−			0.08
Net income	$	0.26		$	0.43
Weighted average shares outstanding		17,292			18,055
Diluted earnings per common share:
Continuing operations	$	0.23		$	0.27
Discontinued operations		−			0.05
Cumulative effect of accounting change		−			0.07
Net income	$	0.23		$	0.39
Weighted average shares outstanding		19,122			19,986
Dividends declared per common share	$	0.06		$	0.06

See accompanying notes to consolidated financial statements

4

RESOURCE AMERICA, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

THREE MONTHS ENDED DECEMBER 31, 2006

(in thousands)

(unaudited)

														Accumulated
			Additional								ESOP			Other		Totals
	Common		Paid-In		Retained			Treasury			Loan			Comprehensive		Stockholders’			Comprehensive
	Stock		Capital		Earnings			Stock			Receivable			Income		Equity			Income
Balance, October 1, 2006	$	264	$	259,882	$	25,464		$	(96,960	)	$	(465	)	$	4,877	$	193,062
Net income		-		-		4,449			-			-			-		4,449		$	4,449
Treasury shares issued		-		70		-			12			-			-		82			−
Stock-based compensation		-		217		-			-			-			-		217			−
Restricted stock awards		-		102		-			-			-			-		102			−
Issuance of common shares		-		25		-			-			-			-		25			−
Other comprehensive income		−		−		−			−			−			1,732		1,732			1,732
Cash dividends		-		-		(1,043	)		-			-			-		(1,043	)		−
Repayment of ESOP loan		-		-		-			-			6			−		6			−
Balance, December 31, 2006	$	264	$	260,296	$	28,870		$	(96,948	)	$	(459	)	$	6,609	$	198,632		$	6,181

See accompanying notes to consolidated financial statements

5

RESOURCE AMERICA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended December 31,
	2006			2005 (1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,449		$	7,676
Adjustments to reconcile net income to net cash used in operating activities:
Cumulative effect of a change in accounting principle, net of tax		−			(1,357	)
Depreciation and amortization		810			861
Distributions from unconsolidated entities		3,941			3,675
Equity in earnings of unconsolidated entities		(3,981	)		(1,981	)
Minority interest earnings		560			402
Loss (income) from discontinued operations		19			(938	)
Gain on sale of investment securities available-for-sale		(1,347	)		−
Deferred income tax benefit		(671	)		(3,190	)
Gain on asset dispositions		(74	)		(879	)
Non-cash compensation on long-term incentive plans		401			310
Non-cash compensation issued		797			361
Non-cash compensation received		(673	)		(821	)
Increase in commercial finance investments		(63,594	)		(26,523	)
Changes in operating assets and liabilities		(7,680	)		1,965
Net cash used in operating activities of continuing operations		(67,043	)		(20,439	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate		(10,188	)		(9,963	)
Payments received on real estate loans and real estate		3,256			8,366
Purchases of investment securities available-for-sale		(5,795	)		(4,453	)
Proceeds from sale of available-for-sale securities		3,381			3,500
(Increase) decrease in restricted cash		(5,639	)		5,000
Capital expenditures		(219	)		(1,080	)
Decrease (increase) in other assets		1,769			(515	)
Net cash (used in) provided by investing activities of continuing operations		(13,435	)		855

See accompanying notes to consolidated financial statements

6

RESOURCE AMERICA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS − (Continued)

(in thousands)

(unaudited)

	Three Months Ended December 31,
	2006			2005 (1)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings		161,507			123,930
Principal payments on borrowings		(97,751	)		(99,398	)
Dividends paid		(1,043	)		(1,082	)
Proceeds from issuance of stock		25			40
Purchase of treasury stock		−			(3,681	)
Net cash provided by financing activities of continuing operations		62,738			19,809
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities		(14	)		(976	)
Investing activities		−			17,020
Net cash (used in) provided by discontinued operations		(14	)		16,044
Net cash retained by entities previously consolidated		−			(3,825	)
(Decrease) increase in cash		(17,754	)		12,444
Cash at beginning of period		37,622			30,353
Cash at end of period	$	19,868		$	42,797

(1) Revised presentation to reflect detail of cash flows from discontinued operations.

See accompanying notes to consolidated financial statements

7

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2006

(unaudited)

NOTE 1 - MANAGEMENT’S OPINION REGARDING INTERIM FINANCIAL STATEMENTS

Resource America, Inc. (the "Company" or “RAI”) is a specialized asset management company that uses industry specific expertise to generate and administer investment opportunities for the Company and for outside investors in the financial fund management, real estate and commercial finance sectors. As a specialized asset manager, the Company seeks to develop investment vehicles in which outside investors invest along with the Company and for which the Company manages the assets acquired pursuant to long-term management and operating agreements. The Company limits its investment vehicles to investment areas where it owns existing operating companies or has specific expertise.

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned except for certain financial fund management entities and LEAF Financial Corp. (“LEAF”) in which the senior executives of LEAF hold an 11.5% interest.

In addition, in accordance with Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) 46-R, “Consolidation of Variable Interest Entities,” the Company consolidated certain variable interest entities (“VIEs”) as to which it has determined that it is the primary beneficiary. Due to the timing of the receipt of financial information from third parties, the Company accounts for these entities’ activities on a one quarter lag, except when adjusting for the impact of significant events such as a refinance or sale. The assets, liabilities, revenues and costs and expenses of the VIEs that are included in the consolidated financial statements are not those of the Company. The liabilities of the VIEs will be satisfied from the cash flows of the VIE, not from assets of the Company which has no legal obligation to satisfy those liabilities.

The consolidated financial statements and the information and tables contained in the notes thereto as of December 31, 2006 and for the three months ended December 31, 2006 and 2005 are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006 (“fiscal 2006”). The results of operations for the three months ended December 31, 2006 may not necessarily be indicative of the results of operations for the full fiscal year ending September 30, 2007 (“fiscal 2007”).

Certain reclassifications have been made to the fiscal 2006 consolidated financial statements to conform to the fiscal 2007 presentation.

8

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Supplemental Cash Flow Information

Supplemental disclosure of cash flow information (in thousands):

	Three Months Ended December 31,
	2006		2005
Cash paid during the period for:
Interest	$	1,650	$	3,561
Income taxes paid	$	61	$	603
Non-cash activities include the following:
Transfer of loans held for investment (see Note 6):
Reduction of loans held for investment	$	−	$	121,722
Termination of associated secured warehouse credit facilities	$	−	$	121,722
Activity on secured warehouse facilities:
Purchase of loans held for investment	$	213,884	$	23,970
Borrowings on associated secured warehouse credit facilities	$	213,881	$	23,921
Receipt of a note upon resolution of a real estate investment	$	−	$	2,000

Recently Issued Financial Accounting Standards

In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) 157, “Fair Value Measurements” (“SFAS 157”), which provides guidance on measuring the fair value of assets and liabilities. SFAS 157 will apply to other accounting pronouncements that require or permit assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard will also require additional disclosures in both annual and quarterly reports. SFAS 157 will be effective for financial statements issued for fiscal years beginning after November 15, 2007 and will be adopted by the Company in the first quarter of its fiscal year 2009. The Company is currently determining the effect, if any, the adoption of SFAS 157 will have on its financial statements.

In September 2006, the Securities and Exchange Commission staff issued Staff Accounting Bulletin (“SAB”) 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement.  It establishes an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the company's financial statements and the related financial statement disclosures.  SAB 108 is effective for the Company’s current fiscal year ending September 30, 2007. Management does not believe adoption of SAB 108 will have a material impact on the Company's consolidated financial statements.

On July 13, 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes - An Interpretation of SFAS 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS 109, “Accounting for Income Taxes.” FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The new accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of FIN 48 are effective as of the beginning of the first fiscal year beginning after December 15, 2006 with early adoption permitted if no interim financial statements have been issued. The Company will not elect for early adoption of FIN 48, thus the provisions of FIN 48 will be implemented in the quarter ending December 31, 2007. The Company is currently determining the effect, if any, the adoption of FIN 48 will have on its financial statements.

9

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES − (Continued)

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of periodic temporary investments of cash and cash equivalents. The Company places its temporary cash investments in high-quality, short-term money market instruments and deposits with high-quality financial institutions and brokerage firms. At December 31, 2006, the Company had $26.7 million in deposits at various banks, of which $24.0 million was over the insurance limit of the Federal Deposit Insurance Corporation. No losses have been experienced on such investments.

NOTE 3 − COMPREHENSIVE INCOME

Comprehensive income includes net income and all other changes in the equity of a business from transactions and other events and circumstances from non-owner sources. These changes, other than net income, are referred to as “other comprehensive income” and for the Company include changes in the fair value, net of taxes, of its investments securities, available-for-sale and derivative instruments that qualify as cash flow hedges.

Assets and liabilities in foreign currencies are translated into U.S. dollars at the rate of exchange prevailing at the balance sheet date. Revenues and expenses are translated at the average rate of exchange for the period. The resulting translation adjustments are also included in comprehensive income.

The following table reflects the changes in comprehensive income (in thousands):

	Three Months Ended December 31,
	2006			2005
Net income	$	4,449		$	7,676
Other comprehensive income:
Unrealized gains on investment securities available-for-sale net of tax of $2,292 (1)and $337 (2)		2,300			209
Less: reclassification for gains realized in net income, net of tax of $579 and $0		(768	)		−
		1,532			209
Unrealized gain on hedging contracts, net of tax $9 and $0		13			−
Foreign currency translation gain		187			−
Comprehensive income	$	6,181		$	7,885

(1) Reflects the cumulative adjustment for the change in the Company’s effective tax rate from 39% at September 30, 2006 to 43% at December 31, 2006.

(2) Reflects the cumulative adjustment for the change in the Company’s effective tax rate from 40% at September 30, 2005 to 43% at December 31, 2005.

NOTE 4 − EARNINGS PER SHARE

Basic earnings per share (“Basic EPS”) is determined by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share (“Diluted EPS”) is computed by dividing net income by the sum of the weighted average number of shares of common stock outstanding after giving effect to the potential dilution from the exercise of securities, such as stock options, into shares of common stock as if those securities were exercised as well as the dilutive effect of other award plans, including restricted stock and director units.

10

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 4 − EARNINGS PER SHARE − (Continued)

The following table presents a reconciliation of the components used in the computation of Basic EPS and Diluted EPS (in thousands):

	Three Months Ended December 31,
	2006			2005
Earnings - Basic
Continuing operations	$	4,468		$	5,381
Discontinued operations		(19	)		938
Cumulative effect of accounting change (1)		−			1,357
Net income	$	4,449		$	7,676
Earnings - Diluted
Continuing operations (2)	$	4,468		$	5,344
Discontinued operations		(19	)		938
Cumulative effect of accounting change (1)		−			1,357
Net income	$	4,449		$	7,639
Shares (3)
Basic shares outstanding		17,292			18,055
Dilutive effect of stock option and award plans		1,830			1,931
Dilutive shares outstanding		19,122			19,986

(1) The Company recorded a cumulative adjustment for the elimination of the one-quarter delay in reporting its equity in earnings of the Trapeza entities (see Note 9).

(2) Reflects $37,000 of minority interest, net of tax, upon the assumed conversion of notes outstanding for the three months ended December 31, 2005. These notes have since converted and the minority interest is reflected in reported results for the three months ended December 31, 2006.

(3) All outstanding options were dilutive as of December 31, 2006. As of December 31, 2005, options to purchase 451,000 shares were outstanding but were excluded from the computation of Diluted EPS as their effect would have been antidilutive. The exercise prices on those options were at $16.66 and $17.26 per share.

NOTE 5 - INVESTMENTS IN COMMERCIAL FINANCE

The Company’s investments in commercial finance include the following (in thousands):

	December 31,		September 30,
	2006		2006
Notes receivable, net	$	141,240	$	74,864
Direct financing leases, net		30,408		32,275
Assets subject to operating leases, net of accumulated depreciation of $19 and $46		686		1,711
Investments in commercial finance	$	172,334	$	108,850

11

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 5 - INVESTMENTS IN COMMERCIAL FINANCE − (Continued)

The components of direct financing leases are as follows (in thousands):

	December 31,			September 30,
	2006			2006
Total future minimum lease payments receivable	$	35,232		$	37,398
Initial direct costs, net of amortization		641			598
Unguaranteed residual		581			362
Unearned income		(6,046	)		(6,083	)
Investments in direct financing leases	$	30,408		$	32,275

Although the terms of the leases and notes extend over many years, the Company routinely sells without recourse the leases and notes it acquires or originates to the investment entities it manages (including RCC and prior to September 26, 2006, certain subsidiaries of Merrill Lynch Pierce, Fenner & Smith Inc. (“ML”) shortly after their acquisition or origination in accordance with agreements with each party. As a result of these routine sales of leases and notes as well as the Company’s credit evaluations, management concluded that no allowance for loan and lease losses was deemed necessary at December 31 and September 30, 2006.

NOTE 6 − LOANS HELD FOR INVESTMENT

The Company typically funds the initial acquisition of portfolio assets for collateralized debt obligations (“CDOs”) issuers it sponsors through a secured warehouse credit facility prior to closing the offering of the CDO. In those transactions in which the Company is deemed to be the primary beneficiary (as defined by FIN 46-R), the assets and liabilities of the CDO issuer are consolidated. Upon the execution of the CDO, the warehouse facility is refinanced through the issuance of CDOs and the CDO issuer is no longer consolidated with the Company.

The following is a summary of the Company’s bank loans held for investment (in thousands):

	December 31,			September 30,
	2006			2006
Principal	$	282,660		$	69,312
Unamortized premium		677			18
Unamortized discount		(139	)		(16	)
Loans held for investment	$	283,198		$	69,314

At December 31, 2006, the Company’s secured bank loan portfolio consisted of $283.2 million of floating rate loans, which bear interest at various London Inter-Bank Offered Rates (“LIBOR”), including European LIBOR rates, plus 1.50% to 7.50%, with maturity dates ranging from March 2010 to March 2016. There were no fixed rate loans as of December 31, 2006.

At December 31 and September 30, 2006, all of the Company’s loans are current with respect to the scheduled payments of principal and interest. In reviewing the portfolio of loans and the observable secondary market prices, the Company did not identify any loans with characteristics indicating that impairment had occurred. Accordingly, as of December 31 and September 30, 2006, management of the Company determined that no allowance for possible loan losses was needed.

12

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 6 − LOANS HELD FOR INVESTMENT − (Continued)

At September 30, 2006, the Company’s secured bank loan portfolio consisted of $69.3 million of floating rate loans, which bear interest at various LIBOR rates, including European LIBOR rates, plus 1.75% to 4.25%, with maturity dates ranging from October 2012 to March 2016. There were no fixed rate loans as of September 30, 2006.

NOTE 7 - INVESTMENTS IN REAL ESTATE

The following is a summary of the changes in the carrying value of the Company’s investments in real estate (in thousands):

	December 31,						September 30,
	2006			2005			2006
Real estate loans:
Balance, beginning of period	$	28,739		$	25,923		$	25,923
New loans		−			2,000			5,109
Additions to existing loans		−			65			2,310
Collection of principal		(281	)		(250	)		(5,068	)
Other		47			98			465
Balance, end of period		28,505			27,836			28,739
Real estate:
Ventures		9,421			8,168			9,519
Owned, net of accumulated depreciation of $1,833, $1,444 and $1,736		12,336			12,683			12,616
Total real estate		21,757			20,851			22,135
		50,262			48,687			50,874
Allowance for loan losses		(770	)		(770	)		(770	)
Investments in real estate	$	49,492		$	47,917		$	50,104

NOTE 8 − INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The Company’s investment securities available-for-sale are carried at fair market value based on market quotes. Unrealized gains or losses, net of tax, are included in accumulated comprehensive income in stockholders’ equity.

The Company has invested in two affiliated publicly-traded companies, Resource Capital Corp. (“RCC”) (NYSE: RSO), and The Bancorp, Inc. (“TBBK”) (Nasdaq: TBBK), in addition to CDO issuers it has sponsored and manages as follows (in thousands):

	December 31,		September 30,
	2006		2006
Investment in RCC, including unrealized gains of $3,752 and $879	$	32,461	$	29,588
Investment in TBBK, including unrealized gains of $5,463 and $5,696		8,238		9,132
Investments in CDO securities, including net unrealized losses of $1,704 and $1,471		29,578		26,137
Investment securities available-for-sale	$	70,277	$	64,857

RCC is a specialty finance real estate investment trust (“REIT”) that the Company sponsored in fiscal 2005. The Company, through its indirect wholly-owned subsidiary, Resource Capital Manager, Inc. (“RCM”), provides certain services including investment management and administrative services to RCC in accordance with its management agreement with RCM.

13

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 8 − INVESTMENT SECURITIES AVAILABLE-FOR-SALE − (Continued)

The Company held 1.9 million shares of RCC at December 31 and September 30, 2006, respectively. In addition, the Company held options to acquire 2,166 shares (at an average price per share of $15.00) and warrants to acquire an additional 100,088 shares (at $15.00 per share) of RCC common stock at December 31 and September 30, 2006, respectively.

The Company held 402,009 and 482,009 shares of TBBK as of December 31 and September 30, 2006, respectively, of which 278,290 and 358,290 shares were included in investment securities available-for-sale. During the quarter ended December 31, 2006, the Company sold 80,000 of its shares of TBBK stock for $2.0 million and realized a gain of $1.3 million (see Note 15). Additionally, the 123,719 shares of TBBK held in the supplemental employment retirement plan for our former Chief Executive Officer are included in other assets.

Investments in CDO securities include investments in 12 and 10 CDOs at December 31 and September 30, 2006, respectively, which are held through the Company’s financial fund management entities.

NOTE 9 − INVESTMENTS IN UNCONSOLIDATED ENTITIES

As a specialized asset manager, the Company develops various types of investment vehicles, including partnerships and TIC programs. The following table details these investments, including the range of partnership interests owned, which are accounted for using the equity method because the Company has the ability to exercise significant influence over their operating and financial decisions (in thousands):

	December 31, 2006		September 30, 2006		Range of Combined Partnership Interests
Trapeza entities	$	15,167	$	15,007		13% to 18%
Financial fund management partnerships		6,351		5,772		10%
Real estate investment partnerships		4,993		3,927		5.0% to 10.0%
Commercial finance investment partnerships		1,300		1,353		1% to 5%
TIC property interests		6,469		567		N/A
Investments in unconsolidated entities	$	34,280	$	26,626

Historically, the Company presented its equity in the earnings and losses of the Trapeza entities on a one-quarter delay as permitted under GAAP. Improvements in the timeliness and availability of financial data from the Trapeza entities allowed the Company to report its share in those earnings on a current basis as of October 1, 2005. As a result of this change, the Company’s equity in the earnings of the Trapeza entities of $1.4 million, net of tax of $983,000, for the three months ended September 30, 2005 was reported as a cumulative change in accounting principle as of October 1, 2005.

14

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 9 − INVESTMENTS IN UNCONSOLIDATED ENTITIES − (Continued)

The Company has equity interests of 50% and 33.33% in the managers of the Trapeza CDO entities, Trapeza Capital Management, LLC and Trapeza Management Group, LLC, respectively. The Company does not consolidate these entities since it does not have control over them and reports the equity results of these entities on a current basis beginning in fiscal 2006. Summarized operating data for these entities is presented below (in thousands):

	Three Months Ended
	December 31,
	2006			2005
Trapeza Capital Management, LLC
Management fees	$	3,839		$	1,547
Operating expenses		(824	)		(374	)
Other expense		(29	)		(48	)
Net income	$	2,986		$	1,125

	Three Months Ended
	December 31,
	2006			2005
Trapeza Management Group, LLC
Management fees	$	680		$	682
Operating expenses		(48	)		(97	)
Other expense		(5	)		(21	)
Net income	$	627		$	564

NOTE 10 - BORROWINGS

Borrowings consist of the following (in thousands):

						Balance as of
	Amount of Facility			Interest Rate at December 31, 2006		December 31, 2006		September 30, 2006
	(in millions)
Financial fund management - Secured warehouse credit facilities-FIN 46-R	$	350.0			5.99%	$	109,064	$	2,900
	$	350.0	(a)		5.98%		45,863		−
	$	300.0			4.28%		128,250		66,397
Commercial finance - Secured revolving credit facilities	$	150.0			6.89%		110,800		86,400
	$	250.0	(b)		5.92%		39,561		−
Other debt	$	17.4			5.40 - 8.80%		16,336		16,541
Total borrowings						$	449,874	$	172,238

15

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 10 - BORROWINGS − (Continued)

^(a) Financial fund management - Secured warehouse credit facilities-FIN 46-R. In December 2006, the Company entered into a $350.0 million warehouse credit facility with affiliates of Credit Suisse Securities (USA) LLC (“Credit Suisse”) to fund its purchases of bank loans. The Company is charged interest during the warehouse period at LIBOR plus 62.5 basis points in return for a participation interest in the interest earned on the loans. The facility agreement provides for a guarantee by the Company as well as an escrow deposit (see Note 16). In January 2007, this warehouse credit facility was assumed by RCC. As a result, the escrow deposit was returned with interest and the Company’s guarantee on this facility was terminated.

^(b) Commercial finance - Secured revolving credit facilities. In December 2006, LEAF purchased the equity of a subsidiary of RCC in order to utilize an unused $250.0 million line of credit RCC had with Morgan Stanley Bank to fund commercial finance assets originated by LEAF. As part of the agreement, LEAF reimbursed RCC $125,000 for the commitment fees it had paid and assumed the liability for an additional $725,000 of commitment fees and other costs. The maximum amount of the Company’s borrowings under this facility is $100.0 million for the first ten months and $250.0 million thereafter. The facility is non-recourse to the Company and expires in October 2009. The underlying equipment being leased or financed collateralizes the borrowings under this facility. Borrowings outstanding bear interest at one of two rates, determined by the utilization under the facility: less than $100.0 million are at a rate of one-month LIBOR plus 0.60%, and in excess of $100.0 million are at a rate of one-month LIBOR plus 0.75%. Interest and principal are due monthly.

To mitigate fluctuations in the interest rate on the Morgan Stanley line, the Company has entered into interest rate swap agreements. The interest rate swaps terminate at various dates ranging from May 2012 to October 2016. As of December 31, 2006, the interest rate swap agreements fix the rate on the outstanding balance at 5.69% on a weighted average basis (see Note 11).

Annual principal payments over the next five years ending December 31 and thereafter are as follows (in thousands):

2007	$	121,693	(1)
2008		10,202
2009		21,183
2010		837
2011		12,150
Thereafter		632
	$	166,697

(1) Excludes $283.2 million related to secured warehouse credit facilities that will be transferred upon the execution of the associated CDO transactions and will not have to be repaid by the Company.

Covenants

At December 31, 2006, the Company was in compliance with all of the financial covenants under its various debt agreements. These financial covenants are customary for the type and size of the related debt facilities and include minimum equity requirements as well as specified debt service coverage and leverage ratios.

All other credit facilities remained substantially unchanged from what was previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

16

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 11 - DERIVATIVE INSTRUMENTS

The Company implemented a hedging strategy using derivative financial instruments including interest rate swaps designated as cash flow hedges. The Company does not use derivative financial instruments for trading or speculative purposes. The Company manages the credit risk of possible counterparty default in these derivative transactions by dealing exclusively with counterparties with investment grade ratings.

Before entering into a derivative transaction for hedging purposes, the Company determines that a high degree of initial effectiveness exists between the change in the value of the hedged item and the change in the value of the derivative from a movement in interest rates. High effectiveness means that the change in the value of the derivative will be effectively offset by the change in the value of the hedged asset or liability. The Company measures the effectiveness of each hedge throughout the hedge period. Any hedge ineffectiveness, as defined by GAAP, will be recognized in the consolidated statements of operations.

There can be no assurance that the Company’s hedging strategies or techniques will be effective, that profitability will not be adversely affected during any period of change in interest rates, or that the costs of hedging will not exceed the benefits.

At December 31, 2006, the notional amount of the interest rate swaps were $38.8 million. For the three months ended December 31, 2006, the Company had an unrealized net gain of $13,000 (net of tax of $9,000) on these interest rate swaps which is included in comprehensive income. The Company recognized no gain or loss during the three months ended December 31, 2006 for hedge ineffectiveness. Assuming market rates remain constant with the rates at December 31, 2006, the $13,000 in accumulated other comprehensive income is projected to be recognized in earnings over the next 12 months.

NOTE 12 - STOCK-BASED COMPENSATION

Employee stock options.

The Company adopted Statement of Financial Accounting Standards 123R, “Accounting for Stock-Based Compensation” as revised (“SFAS 123R”), as of October 1, 2005. Accordingly, employee stock options granted are being expensed by the Company over the option vesting period, based on the estimated fair value of the award on the date of grant. The Company’s calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions:

	Three Months Ended December 31,
	2006		2005
Expected life (years)		6.25		6.25
Expected stock volatility		27.8%		27.8%
Risk-free interest rate		4.0%		4.3%
Dividends		0.9%		1.4%

17

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 12 - STOCK-BASED COMPENSATION − (Continued)

Transactions for employee stock options for the three months ended December 31, 2006 are summarized as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term (in years)		Value
Outstanding - beginning of period		3,641,096		$	7.77
Granted		−		$	−
Exercised		(6,590	)	$	3.33
Forfeited		−		$	−
Outstanding - end of period		3,634,506		$	7.78		5.34	$	67,677,000
Exercisable - end of period		3,259,952		$	6.78		4.99	$	63,968,000
Available for grant		705,853	(1)

(1) Adjusted for shares of restricted stock granted under the 2005 employee stock plan.

The following table summarizes the activity for unvested employee stock options during the three months ended December 31, 2006:

			Weighted
			Average
			Grant Date
	Units		Fair Value
Unvested shares outstanding - beginning of period		374,554	$	7.37
Granted		−	$	−
Vested		−	$	−
Forfeited		−	$	−
Unvested shares outstanding - end of period		374,554	$	7.37

As of March 31, 2006, there was a total of $2.0 million of unrecognized compensation cost related to unvested awards under stock option plans. This cost is expected to be recognized over a weighted-average period of 1.9 years. The total fair value of shares vested and expensed during the three months ended December 31, 2006 and 2005 was $217,000 and $274,000, respectively.

Restricted common stock

In February 2006, LEAF issued 300,000 shares of its restricted common stock valued at $69,000 based on 3% of LEAF’s equity as of the date of issuance. These restricted shares, issued to three senior officers of LEAF, vest 50% per year commencing on February 1, 2007. For the three months ended December 31, 2006, the Company recorded stock-based compensation for the LEAF restricted stock of $12,000.

In January 2006, the Company issued 83,519 shares of restricted RAI common stock valued at $1.4 million based on the closing price of the Company’s stock as of the date of grant. These restricted shares vest 25% per year commencing on January 3, 2007. For the three months ended December 31, 2006, the Company recorded stock-based compensation expense for these restricted shares of $90,000.

18

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 13 - INCOME TAXES

The Company recorded the following provision (benefit) for income taxes as follows (in thousands):

	Three Months Ended
	December 31,
	2006			2005
Provision (benefit) for income taxes:
Provision for income taxes, at estimated effective rates	$	2,872		$	1,653
Reduction of valuation allowances		(662	)		(3,190	)
Provision (benefit) for income taxes	$	2,210		$	(1,537	)

In the three months ended December 31, 2006, the Company continued to implement tax planning strategies that management believes make it more likely than not that the Company will be able to utilize $6.6 million of state and local net operating loss carry forwards (“NOLs”) before their expiration. Accordingly, $662,000 of the valuation allowance was reversed. Management will continue to assess its estimate of the amount of NOLs that the Company will be able to utilize and the estimate of the required valuation allowance could be adjusted in the future if estimates of taxable income are revised.

In the three months ended December 31, 2005, the Company implemented tax planning strategies that management believed made it more likely than not that the Company will be able to utilize approximately $32.0 million of NOLs before their expiration. Accordingly, $3.2 million of the valuation allowance was reversed.

NOTE 14 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of its business operations, the Company has ongoing relationships with several related entities. The following table details the receivables and payables with these related parties (in thousands):

	December 31,		September 30,
	2006		2006
Receivables from managed entities and related parties:
Commercial finance investment partnerships	$	4,031	$	3,938
RCC		2,846		1,409
Financial fund management entities		2,102		2,064
Real estate investment partnerships and TIC property interests		1,403		952
Atlas America		117		265
Anthem Securities		81		154
Other		7		13
Receivables from managed entities	$	10,587	$	8,795
Payables due to managed entities and related parties:
Real estate investment partnerships and TIC property interests	$	952	$	1,325
Anthem Securities		298		254
Payables to managed entities	$	1,250	$	1,579

19

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 14 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS - (Continued)

The Company receives fees, dividends and reimbursed expenses from several related/managed entities. In addition, the Company reimburses another related entity for certain operating expenses. The following table details those activities (in thousands):

	Three Months Ended
	December 31,
	2006			2005
Financial Fund Management - fees from managed entities	$	2,611		$	2,090
Real Estate - fees from investment partnerships and TIC property interests		2,338			2,927
Commercial finance - fees from investment partnerships		2,128			799
RCC:
Fees and equity compensation		2,828			2,059
Reimbursement of expenses from RCC		264			289
Dividend income		823			697
Atlas America - reimbursement of net costs and expenses		196			262
Anthem Securities:
Payment of operating expenses		(198	)		(110	)
Reimbursement of costs and expenses from Anthem Securities		201			442
1845 Walnut Associates Ltd - payment of rent and operating expenses		(159	)		(74	)
9 Henmar LLC - payment of broker/consulting fees		(158	)		(187	)
Ledgewood P.C. - payment of legal services		(57	)		(119	)

NOTE 15 − OTHER INCOME, NET

The following table details the Company’s other income, net (in thousands):

	Three Months Ended
	December 31,
	2006		2005
Gain on sale of investment securities available-for-sale	$	1,347	$	−
RCC dividends		823		697
Interest and other income		358		176
Other income, net	$	2,528	$	873

NOTE 16 - COMMITMENTS AND CONTINGENCIES

The Company is a party to various routine legal proceedings arising out of the ordinary course of its business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the Company’s financial condition or operations.

Senior lien financing obtained with respect to certain acquired properties, TIC investment programs and real estate loans are with recourse only to the properties securing them, subject to certain standard exceptions. The Company has provided guarantees on these senior liens, TIC programs, and loans totaling $371.3 million which expire as the related indebtedness is paid down over the next ten years.

In August 2006, the Company entered into a warehouse agreement with Credit Suisse Securities (USA) LLC which provides for guarantees by the Company on the lesser of 8% of the warehouse balance or the first $10.0 million of losses on the portfolio of bank loans. As of December 31, 2006, the guarantee was $8.7 million. This guarantee, secured by a $5.0 million cash deposit, expires upon the closing of the associated CDO which is expected in the fourth quarter of fiscal 2007.

20

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 16 - COMMITMENTS AND CONTINGENCIES − (Continued)

In December 2006, the Company entered into a $350.0 million warehouse agreement with affiliates of Credit Suisse which provides for guarantees by the Company on the first $10.0 million of losses on another portfolio of bank loans. This guarantee, secured by a $3.0 million cash deposit, expires upon the closing of the associated CDO (see Note 10). Upon the assumption of this warehouse facility by RCC in January 2007, the escrow deposit was returned with interest and the Company’s guarantee on this facility was terminated.

NOTE 17 - DISCONTINUED OPERATIONS

Based on the Company’s intent to sell its interests, certain operations have been classified as discontinued and the related assets and liabilities as held for sale. These operations include those of two real estate entities as of December 31, 2005 that were consolidated under the provisions of FIN 46-R and the operations of one and two real estate properties owned by the Company at December 31, 2006 and 2005, respectively. Included in other assets in the consolidated balance sheets is a $1.3 million property which is being held for sale. The related $1.1 million mortgage on that property is included in accrued expenses and other liabilities.

Summarized discontinued operating results are as follows (in thousands):

	Three Months Ended
	December 31,
	2006			2005
(Loss) income from discontinued operations before taxes	$	(29	)	$	1,319
Gain on disposal		−			150
Benefit (provision) for income taxes		10			(531	)
(Loss) income from discontinued operations, net of tax	$	(19	)	$	938

21

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2006

(unaudited)

NOTE 18 - OPERATING SEGMENTS

The Company’s operations include three reportable operating segments that reflect the way the Company manages its operations and makes business decisions. In addition to its reporting operating segments, certain other activities are reported in the “all other” category. Segment profit (loss) represents income from continuing operations before income taxes and cumulative effect of accounting change. Summarized operating segment data are as follows (in thousands):

	Revenues from external customers		Equity in income (losses) of equity method investees			Interest expense			Depreciation and amortization		Segment profit (loss) (2)			Segment assets
Three Months Ended December 31, 2006
Financial fund management	$	8,232	$	4,155		$	3,697		$	14	$	3,381		$	396,866
Real estate		4,732		(168	)		261			169		1,164			145,074
Commercial finance		7,095		(6	)		2,519			327		467			192,668
All other (1)		−		−			42			199		1,666			72,878
Eliminations		−		−			(1,928	)		−		−			(103,665	)
Totals	$	20,059	$	3,981		$	4,591		$	709	$	6,678		$	703,821
Three Months Ended December 31, 2005
Financial fund management	$	4,746	$	2,733		$	1,481		$	15	$	2,837		$	63,056
Real estate		5,397		(743	)		261			151		1,847			198,557
Commercial finance		5,090		(9	)		1,078			540		461			83,931
All other (1)		−		−			6			132		(1,301	)		68,640
Eliminations		−		−			(530	)		−		−			(51,797	)
Totals	$	15,233	$	1,981		$	2,296		$	838	$	3,844		$	362,387

(1) Includes general corporate expenses and assets not allocable to any particular segment.

(2) Excluding intercompany interest charges, segment profit (loss) as adjusted for the three months ended December 31, 2006 and 2005 would have been as follows (in thousands): Financial fund management - $4,803 and $2,837 respectively; Real estate - $1,164 and $2,040, respectively; Commercial finance - $973 and $798, respectively; and All other ($262) and ($1,831), respectively.

Significant Customer. Management and acquisition fees received from RCC were $2.8 million, or 11.8% of the Company’s consolidated revenues for the three months ended December 31, 2006. For the three months ended December 31, 2005, RCC fees were $2.1 million, or 11.9% of the Company’s consolidated revenues.

Geographic Information. Revenues generated from the Company’s European operations totaled $1.5 million for the three months ended December 31, 2006. The Company began to acquire European bank loans in the fourth quarter of fiscal 2006. Included in segment assets as of December 31, 2006 and 2005, were $130.9 million and $279,000, respectively, of assets held in Europe, primarily loans held for investment.

22

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (unaudited)

When used in this Form 10-Q, the words “believes” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties more particularly described in Item 1A, under the caption “Risk Factors,” in our Annual Report on Form 10-K for fiscal 2006. These risks and uncertainties could cause actual results to differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to forward-looking statements which we may make to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

Overview of the Three Months Ended December 31, 2006 and 2005

We are a specialized asset management company that uses industry specific expertise to generate and administer investment opportunities for our own account and for outside investors in the financial fund management, real estate and commercial finance sectors. As a specialized asset manager, we develop investment funds in each sector in which outside investors invest along with us and for which we provide asset management services. As of December 31, 2006, we managed $13.6 billion of assets.

We limit our fund development and asset management services to asset classes in which we have specific expertise. We believe this strategy enhances the return on investment we can achieve for ourselves and for the investors in our funds. In our financial fund management operations, the asset classes on which we concentrate are asset-backed securities, known as ABS (principally residential and commercial mortgage-backed securities), structured finance securities, bank loans and the trust preferred securities of banks, bank holding companies, insurance companies and other financial companies. In our real estate operations, we concentrate on investments in multi-family and commercial real estate and real estate mortgage loans including whole loans, first priority interests in commercial mortgage loans, known as A notes, subordinated interests in first mortgage loans, known as B notes, and mezzanine loans. In our commercial finance operations, we focus on originating small and middle-ticket equipment leases and commercial notes secured by business-essential equipment, including technology, commercial and industrial equipment and medical equipment.

We have continued to develop our existing operations with the sponsorship of new investment funds and tenant-in-common, or TIC, property programs. Additionally, we have undertaken several initiatives to further expand the scope of our asset management operations, in particular, through the sponsorship of a secondary offering for Resource Capital Corp, or RCC, and through Resource Europe Management, Ltd., or Resource Europe, in the origination and management of international debt assets.

Assets Under Management

We increased our assets under management by $5.0 billion to $13.6 billion at December 31, 2006 from $8.6 billion at December 31, 2005. The growth in our assets under management was the result of:

· an increase in the financial fund management assets we manage on behalf of individual and institutional investors and RCC, both in the United States and in Europe;

· an increase in real estate assets managed on behalf of RCC and limited partnerships and TIC property interests that we sponsor; and

· an increase in commercial finance assets managed on behalf of the limited partnerships we sponsor, and RCC and affiliates of Merrill Lynch Pierce Fenner and Smith, or ML.

23

 The following table sets forth information relating to our assets under management by operating segment and their growth from December 31, 2005 to December 31, 2006 (in millions):

	As of December 31,				Increase
	2006		2005		Amount		Percentage
Financial fund management	$	11,775	$	7,544	$	4,231		56%
Real estate		1,159		676		483		71%
Commercial finance		682		414		268		65%
	$	13,616	$	8,634	$	4,982		58%

Included in these assets at December 31, 2006 and 2005 were $10.0 billion and $4.1 billion of assets held through the 23 and 12 collateralized debt obligation, or CDO, issuers we have sponsored, including $1.3 billion and $731.6 million in four and two CDOs sponsored for RCC, respectively, and $2.0 billion held on warehouse facilities for CDOs which had not closed as of December 31, 2006 for which we have been engaged as the collateral manager.

The assets we manage are classified by asset class as follows (in millions):

	As of December 31, 2006
	Company		Institutional and Individual Investors		RCC		Assets Held on Warehouse Facilities			Total
Asset-backed securities	$	−	$	3,597	$	396	$	867		$	4,860
Trust preferred securities		−		4,017		−		311			4,328
Bank loans		−		1,067		614		828	(1)		2,509
Real properties		−		403		−		−			403
Mortgage and other real estate-related loans		100		−		656		−			756
Commercial finance assets		172		421		89		−			682
Private equity and hedge fund assets		−		78		−		−			78
	$	272	$	9,583	$	1,755	$	2,006		$	13,616

(1) Includes $283.0 million of bank loans which are reflected on our consolidated balance sheets, of which $128.3 million are European bank loans.

	As of December 31, 2005
	Company		Institutional and Individual Investors		RCC		Assets Held on Warehouse Facilities		Total
Asset-backed securities	$	−	$	397	$	1,411	$	1,793	$	3,601
Trust preferred securities		−		2,743		−		581		3,324
Bank loans		−		219		335		63		617
Real properties		−		260		−		−		260
Mortgage and other real estate-related loans		245		−		171		−		416
Commercial finance assets		67		324		23		−		414
Private equity and hedge fund assets		−		2		−		−		2
	$	312	$	3,945	$	1,940	$	2,437	$	8,634

24

 Our assets under management are primarily managed through various investment vehicles including CDOs, public and private limited partnerships, TIC property interests, a real estate investment trust, and other investment funds. The following table sets forth the number of entities we manage by operating segment:

	CDOs		Limited Partnerships (b)		TIC Property Interests		Other Investment Funds
As of December 31, 2006 (a)
Financial fund management		22		11		−		−
Real estate		1		5		6		−
Commercial finance		−		2		−		1
		23		18		6		1
As of December 31, 2005 (a)
Financial fund management		12		9		−		−
Real estate		−		5		3		−
Commercial finance		−		2		−		2
		12		16		3		2

(a) All of our operating segments manage assets on behalf of RCC.

(b) Includes one real estate LLC investment program at December 31, 2006.

Employees

As of December 31, 2006, we employed 237 full-time workers, an increase of 60, or 34%, from 177 employees at December 31, 2005. The following table summarizes our employees by operating segment:

	Total		Financial Fund Management		Real Estate		Commercial Finance		Corporate/ Other
December 31, 2006
Investment professionals		82		34		23		24		1
Other		155		20		9		95		31
Total		237		54		32		119		32
December 31, 2005
Investment professionals		52		20		15		16		1
Other		125		13		8		80		24
Total		177		33		23		96		25

Revenues

The revenues in each of our business segments are generated by the fees we earn for structuring and managing the investment vehicles we sponsor on behalf of individual and institutional investors, RCC and ML and the income produced by the assets and investments we manage for our own account. The following table sets forth certain information related to the revenues we have recognized in each of these revenue categories (in thousands):

	Three Months Ended
	December 31,
	2006		2005
Fund management revenues (1)	$	14,526	$	9,914
Finance and rental revenues (2)		7,595		5,760
Gain on resolution of loans and other property interests (3)		−		98
Net gain from TIC property interests (4)		91		338
Other (5)		1,828		1,104
	$	24,040	$	17,214

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(1) Includes fees from each of our financial fund management, real estate and commercial finance operations and our share of the income or loss from limited and general partnership interests we own in our financial fund management and real estate operations.

(2) Includes interest income on bank loans from our financial fund management, interest and accreted discount income from our real estate operations, interest and rental income from our commercial finance operations and revenues from certain real estate assets.

(3) Includes the resolution of loans we hold in our real estate segment.

(4) Reflects net gains recognized by our real estate segment on the sale of TIC interests to outside investors.

(5) Includes the equity compensation earned in connection with the formation of RCC and the disposition of leases and loans as well as other charges in our commercial finance operations.

A detailed description of the revenues generated by each of our business segments can be found under Results of Operations: Financial Fund Management, Real Estate and Commercial Finance.

Results of Operations: Financial Fund Management

    We conduct our financial fund management operations through four principal subsidiaries:

· Apidos Capital Management, LLC, or Apidos, which invests in, finances, structures and manages investments in bank loans.

· Ischus Capital Management, LLC, or Ischus, which invests in, finances, structures and manages investments in asset-backed securities or ABS, including residential mortgage-backed securities, or RMBS, and commercial mortgage-backed securities, or CMBS.

· Trapeza Capital Management, LLC, or Trapeza, a joint venture between us and an unrelated third party, which originates, structures, finances and manages investments in trust preferred securities and senior debt securities of banks, bank holding companies, insurance companies and other financial companies.

· Resource Europe invests in, finances, structures and manages investments in international bank loans.

The following table sets forth information relating to assets managed by us on behalf of institutional and individual investors and RCC (in millions):

	As of December 31, 2006
	Institutional and Individual Investors		RCC		Assets Held on Warehouse Facilities		Total
Apidos	$	1,067	$	614	$	583	$	2,264
Ischus		3,597		396		867		4,860
Trapeza		4,017		−		311		4,328
Resource Europe		−		−		245		245
Other company-sponsored partnerships		78		−		−		78
	$	8,759	$	1,010	$	2,006	$	11,775

	As of December 31, 2005
	Institutional and Individual Investors		RCC		Assets Held on Warehouse Facilities		Total
Apidos	$	219	$	335	$	63	$	617
Ischus		397		1,411		1,793		3,601
Trapeza		2,743		−		581		3,324
Other company-sponsored partnerships		2		−		−		2
	$	3,361	$	1,746	$	2,437	$	7,544

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We earn fees on assets managed on behalf of institutional and individual investors as follows:

· collateral management fees− these vary by CDO, ranging from an annual fee between 0.08% and 0.75% of the aggregate principal balance of the collateral securities owned by the CDO issuers; and

· administration fees− these vary by limited partnership, ranging from between 0.75% and 2.00% of the partnership capital balance.

The distributions we expect to receive from each CDO issuer vary and are dependent on our investment in a particular limited partnership and with the terms of our general partner interest.

Apidos

We sponsored, structured and currently manage five CDO issuers for institutional and individual investors and RCC which hold approximately $1.7 billion in bank loans at December 31, 2006, of which $614.2 million are managed on behalf of RCC through Apidos CDO I and Apidos CDO III. In addition, at December 31, 2006, we managed $583.0 million of bank loans for three CDOs currently in their accumulation stage, two of which we expect to close in the second quarter of fiscal 2007 and one which we expect to close in subsequent periods.

We derive revenues from our Apidos operations through base and incentive management fees of up to 0.75% of the aggregate principal balance of the collateral held by the CDO issuers of which a portion is subordinated to debt service payments on the CDOs and interest income earned on the assets of certain issuers during the warehousing period prior to execution of a CDO.

Ischus

We sponsored, structured and currently manage six CDO issuers for institutional and individual investors and RCC, which hold approximately $4.0 billion in primarily real estate ABS including RMBS, CMBS and credit default swaps, of which $396.0 million is managed on behalf of RCC for Ischus CDO II. In addition, at December 31, 2006, we managed $867.3 million of ABS for two CDOs currently in their accumulation stage, one of which we expect to close in the second quarter of fiscal 2007 and one which we expect to close in a subsequent period.

We own a 50% interest in the general partner and manager of Structured Finance Fund, L.P. and Structured Finance Fund II, L.P., collectively referred to as the SFF partnerships. These partnerships own a portion of the equity interests of three Trapeza CDO issuers and Ischus CDO I. We also have invested as a limited partner in each of these limited partnerships.

We derive revenues from our Ischus operations through management and administration fees. We also receive distributions on amounts we invest in the limited partnerships. Management fees vary by CDO issuer, ranging from between 0.08% and 0.40% of the aggregate principal balance of the collateral held by the CDO issuer of which a portion is subordinated to debt service payments on the CDOs.

Trapeza

We have co-sponsored, structured and currently co-manage 11 CDO issuers holding approximately $4.0 billion in trust preferred securities of banks, bank holding companies, insurance companies and other financial companies. In addition, at December 31, 2006, we managed $310.8 million in trust preferred securities for one CDO, which we expect to close in the second quarter of fiscal 2007.

We own a 50% interest in an entity that manages nine Trapeza CDO issuers and a 33.33% interest in another entity that manages two Trapeza CDO issuers. We also own a 50% interest in the general partners of the limited partnerships that own the equity interests of five Trapeza CDO issuers. We also have invested as a limited partner in each of these limited partnerships.

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We derive revenues from our Trapeza operations through base and incentive management and administration fees. We also receive distributions on amounts we have invested in limited partnerships. Management fees, including incentive fees, vary by CDO issuer, but have ranged from between 0.25% and 0.60% of the aggregate principal balance of the collateral held by the CDO issuers of which a portion is subordinated. These fees are also shared with our co-sponsors. We are also entitled to incentive distributions in four of the partnerships we manage.

Resource Europe

In April 2006, we commenced our European leverage loan operations based in London, England. As of December 31, 2006, we managed $244.6 million in bank loan assets for two CDOs held on warehouse credit facilities.

Other Company-Sponsored Partnerships

We sponsored, structured and currently manage three affiliated partnerships for individual and institutional investors that invest in financial institutions. We derive revenues from these operations through an annual management fee, based on 2.0% of equity. We also have invested as the general partner of these partnerships and may receive a carried interest of up to 20% upon meeting specific investor return rates.

We have also sponsored, structured and currently manage another affiliated partnership organized as a hedge fund. We derive revenues from this partnership through base and incentive management fees. Base management fees are calculated monthly at 1/12^th of 2% of the partnership’s net assets. Incentive management fees are calculated annually at 20% of cumulative annual net profits. We also have invested as a limited partner in this partnership.

The following table sets forth certain information relating to the revenues recognized and costs and expenses incurred in our financial fund management operations (in thousands):

	Three Months Ended
	December 31,
	2006		2005
Revenues:
Fund management fees	$	4,908	$	1,216
RCC management fees and equity compensation		1,470		1,721
Interest income on loans		3,212		2,341
Limited and general partner interests		1,479		1,546
Earnings of Structured Finance Fund partnerships		529		536
Earnings on unconsolidated CDOs		445		20
Other		344		99
	$	12,387	$	7,479
Costs and expenses:
General and administrative expenses	$	3,878	$	1,959
Equity compensation expense		673		361
Expenses (reimbursements) of Structured Finance Fund partnerships		1		(21	)
	$	4,552	$	2,299

Fees and/or reimbursements that we receive vary by transaction and, accordingly, there may be significant variations in the revenues we recognize from our financial fund management operations from period to period.

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Revenues - Three Months Ended December 31, 2006 as Compared to the Three Months Ended December 31, 2005

Revenues from our financial fund management operations increased $4.9 million (66%) to $12.4 million for the three months ended December 31, 2006 from $7.5 million for the three months ended December 31, 2005. We attribute the increase primarily to the following;

· a $3.7 million increase in fund management fees;

- a $2.8 million increase in collateral management fees principally caused by the completion of 10 new CDOs since December 31, 2005;

- a $909,000 portfolio management fee paid in connection with the formation of Trapeza CDO XI during the three months ended December 31, 2006. No such fee was received during the three months ended December 31, 2005;

· an $871,000 increase in interest income on loans held for investment resulting from an increase in the weighted average loan balances of CDO issuers we consolidate to $181.3 million (weighted average interest rate of 6.85%) for the three months ended December 31, 2006 from $141.1 million (weighted average interest rate of 6.50%) for the three months ended December 31, 2005. At December 31, 2006, we consolidated three Apidos CDO issuers while they were accumulating assets on warehouse facilities. During the three months ended December 31, 2005, we consolidated one Apidos CDO issuer which was transferred upon the execution of the related CDO to the CDO issuer.

· a $425,000 increase in our earnings in unconsolidated CDOs, primarily reflecting the $394,000 increase in earnings from investments in seven previously sponsored CDO issuers.

Costs and Expenses − Three Months Ended December 31, 2006 as Compared to the Three Months Ended December 31, 2005

Costs and expenses of our financial fund management operations increased $2.3 million (98%) for the three months ended December 31, 2006 as compared to the three months ended December 31, 2005. We attribute the increase to the following:

· a $1.9 million increase in general and administrative expenses, reflecting a $1.5 million increase in wages and benefits as a result of the additional personnel in response to the growth in our assets under management and a $280,000 increase in operating costs, primarily from rent and travel; and

· a $312,000 increase in equity compensation expense related to the award of RCC restricted stock and options to members of management.

Results of Operations: Real Estate

In our real estate segment, we manage three classes of assets:

· commercial real estate debt, principally first mortgage debt, whole loans, mortgage participations, subordinated notes, mezzanine debt and related commercial real estate securities;

· real estate investment limited partnerships, limited liability company and TIC property interests; and

· real estate loans, owned assets and ventures, known collectively as our legacy portfolio.

	As of December 31,
	2006		2005
	(in millions)
Assets under management:
Commercial real estate debt	$	656	$	171
Real estate investment entities		403		260
Legacy portfolio		100		245
	$	1,159	$	676

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During the three months ended December 31, 2006, our real estate operations were affected by two principal trends or events:

· the continued development of our commercial real estate debt platform; and

· growth in our real estate business through the sponsorship of real estate investment partnerships and the sponsorship of TIC property interests.

We support our real estate investment partnerships by making long-term limited partnership investments. In addition, from time-to-time, we make bridge investments in the underlying partnerships and TIC property interests to facilitate acquisitions. We record losses on these equity method investments primarily as a result of depreciation and amortization expense recorded by the partnerships and TIC property interests. As additional investors are admitted to the partnerships and TIC programs, we transfer our bridge investment to new investors at our original cost and recognize a gain approximately equal to the previously recognized loss.

Gains on resolution of loans, FIN 46-R assets and other real estate assets (if any) and the amount of fees received (if any) vary from transaction to transaction. There have been in the past, and we expect that in the future, that there will be significant period-to-period variations in our gains on resolution and fee income. Moreover, it is anticipated that gains on resolution will likely decrease in the future as we complete the resolution of our legacy portfolio.

In the twelve months ended December 31, 2006, we resolved loans with a combined book value of $26.5 million, realizing $24.8 million in net proceeds. We reduced the number of loans in our portfolio from eleven at December 31, 2005 to nine at December 31, 2006 through the repayment of six loans, offset by the addition of four loans in conjunction with the resolution of an existing loan, two ventures and one owned asset. As a result, the face value of the assets we manage in our legacy portfolio, principally outstanding loans receivable, decreased from $207.2 million at December 31, 2005 to $77.2 million at December 31, 2006.

The following table sets forth certain information relating to the revenues recognized and costs and expenses incurred in our real estate operations (in thousands):

	Three Months Ended
	December 31,
	2006			2005
Revenues:
Fee income from sponsorship of partnerships and TIC property interests	$	1,783		$	2,505
FIN 46-R revenues and rental property income		1,220			1,104
REIT management fees from RCC		1,010			240
Property management fees		395			446
Interest, including accreted loan discount		225			255
Gains on resolution of loans, FIN 46-R assets and ventures		−			98
Losses of unconsolidated entities		(160	)		(332	)
Net gains on sale of TIC property interests		91			338
	$	4,564		$	4,654
Costs and expenses:
General and administrative	$	2,253		$	1,636
FIN 46-R operating and rental property expenses		760			629
	$	3,013		$	2,265

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Revenues - Three Months Ended December 31, 2006 as Compared to the Three Months Ended December 31, 2005

Revenues from our real estate operations decreased $90,000 (2%) to $4.6 million for the three months ended December 31, 2006 from $4.7 million for the three months ended December 31, 2005. We attribute the decrease to the following:

· a $722,000 decrease in fee income related to the purchase and third party financing of properties through the sponsorship of real estate investment partnerships and TIC property interests. During the quarter ended December 31, 2005, we closed 35 investors whose aggregate investment totaled $17.9 million into two TIC programs; during the quarter ended December 31, 2006, we closed 8 investors whose aggregate investment totaled $4.0 million into two other TIC programs; and

· a $247,000 decrease in net gains (including $8,000 of previously recorded losses) recognized on our sale of TIC property interests.

These decreases were partially offset by the following:

· a $770,000 increase in REIT management fees due to an increase of $485.0 million to $656.0 million from $171.0 million in commercial real estate debt managed; and

· a $172,000 decrease in our share of the operating losses of our unconsolidated real estate investments accounted for on the equity method due principally to higher revenues on one equity investment.

Costs and expenses of our real estate operations were $3.0 million for the three months ended December 31, 2006, an increase of $748,000 (33%) as compared to the three months ended December 31, 2005.

We attribute the increase to the following:

· a $617,000 increase in general and administrative expenses primarily due to the following:

- a $568,000 increase in wages and benefits as a result of the addition of personnel primarily to support the development of our debt platform and the combined growth of our investment partnerships and TIC programs; full time employees increased from 23 to 32; and

- a $177,000 increase in commissions, travel costs and rent expenses due to the higher level of sales of our real estate investment programs.

· a $131,000 increase in FIN 46-R operating expenses associated with an increase in occupancy at a hotel property we own.

Results of Operations: Commercial Finance

During the three months ended December 31, 2006, our commercial finance originations were $129.1 million compared to $104.4 million during the three months ended December 31, 2005, increasing our assets under management to $681.6 million as compared to $413.9 million at December 31, 2005, an increase of $267.7 million (65%). Our increase in commercial finance origination growth was driven by our continued growth in new and existing vendor programs, the expansion of our sales staff and new commercial finance products.

On October 13, 2006, we completed our offering of limited partnership interests in LEAF Fund II having raised $60.0 million of capital from investors.

In December 2006, LEAF assumed from RCC a new $250.0 million revolving non recourse credit facility with Morgan Stanley Bank which will be used primarily to finance our asset-backed loans to other commercial finance companies, medical and dental practice acquisitions loans and middle ticket lease and loan originations. The initial availability under this facility is $100.0 million and expands to $250.0 million in fiscal 2008. Unlike LEAF’s existing $150.0 million warehouse line which substantially could only be used to finance an origination for six months until it is sold into one of our funds, the Morgan Stanley line will allow us to hold a financing through its full maturity up to 10 years.

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The following table sets forth information related to our commercial finance assets managed (in millions):

	As of December 31,
	2006		2005
LEAF Financial	$	172	$	67
LEAF I		90		82
LEAF II		321		42
Merrill Lynch		10		200
RCC		89		23
	$	682	$	414

As of December 31, 2006, we managed approximately 14,952 leases and notes that had an average original finance value of $60,000 with an average lease term of 56 months. The following table sets forth certain information related to the types of businesses in which our commercial finance assets are used and the concentration by asset type of our portfolio under management as of December 31, 2006:

Lessee business			Equipment under management
Services	47	%		Medical	24	%
Finance/Insurance	17	%		Industrial	18	%
Retail trade services	9	%		Asset based lending	16	%
Manufacturing services	7	%		Computers	15	%
Transportation/Communication	6	%		Office equipment	5	%
Construction	4	%		Restaurant equipment	5	%
Wholesaler trade	3	%		Garment care	4	%
Agriculture	3	%		Software	3	%
Other	4	%		Communication	3	%
	100	%		Other	7	%
					100	%

The revenues from our commercial finance operations consist primarily of finance revenues from leases and notes held by us prior to being sold; asset acquisition fees which are earned when commercial finance assets are sold to one of our investment partnerships and asset management fees earned over the life of the lease or loan after it is sold. The following table sets forth certain information relating to the revenues recognized and costs and expenses incurred in our commercial finance operations (in thousands):

	Three Months Ended
	December 31,
	2006			2005
Revenues:
Finance revenues	$	2,938		$	2,060
Acquisition fees		1,006			1,498
Fund management fees		2,458			1,339
Other		687			184
	$	7,089	(1)	$	5,081	(1)
Costs and expenses	$	3,631		$	2,918

(1) Total revenues includes $348,000 and $97,000 in earnings from RCC for the three months ended December 31, 2006 and 2005, respectively.

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Revenues - Three Months Ended December 31, 2006 as Compared to the Three Months Ended December 31, 2005

Revenues in our commercial finance operations increased $2.0 million (40%) to $7.1 million in the three months ended December 31, 2006 as compared to the three months ended December 31, 2005. We attribute this increase primarily to the following:

· an $878,000 increase in finance revenues reflecting the $24.7 million increase in notes and lease originations which was facilitated by our increased borrowing capacity which allowed us to hold more finance assets on our balance sheet;

· a $492,000 decrease in asset acquisition fees as a result of selling fewer leases and loans to the funds;

· a $1.1 million increase in fund management fees directly related to our increase in assets under management to $682.0 million from $414.0 million; and

· a $503,000 increase in other revenues, including late fees, miscellaneous fees and gain or loss on equipment finance dispositions, which vary widely from period to period.

Costs and Expenses − Three Months Ended December 31, 2006 as Compared to the Three Months Ended December 31, 2005

Costs and expenses from our commercial finance operations increased $713,000 (24%) for the three months ended December 31, 2006 as compared to the three months ended December 31, 2005. This increase is principally due to a $709,000 increase in wages and benefits. Our full-time employees increased to 119 (24%) as of December 31, 2006 from 96 as of December 31, 2005 to support the expansion of our commercial finance operations.

Results of Operations: Other Costs and Expenses and Other Income (Expense)

General and administrative costs were $2.8 million for the three months ended December 31, 2006, a decrease of $391,000 (12%) as compared to $3.2 million for the three months ended December 31, 2005. Accounting and consulting fees decreased by $382,000 from fiscal 2006 which reflected our initial year of compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

Depreciation and amortization expense was $709,000 for the three months ended December 31, 2006, a decrease of $129,000 (15%) as compared to $838,000 for the three months ended December 31, 2005. This decrease relates to our commercial finance operations which decreased their average operating leases by $4.8 million.

Interest expense was $4.6 million for the three months ended December 31, 2006, an increase of $2.3 million (100%) as compared to $2.3 million for the three months ended December 31, 2005. Increased draws on our commercial finance credit facilities to the fund the growth of our commercial finance note and loan originations and our entry into asset-backed lending along with higher interest rates on borrowings caused an increase in interest expense of $1.3 million. Additionally, the expanded use of our secured warehouse credit facility to purchase loans held for investment by our financial fund management business resulted in an increase in interest expense of $794,000.

At December 31, 2006, we owned 15% and 36% limited partner interests in SFF I and II (collectively “SFF”), respectively, which invest in the equity of CDO issuers we have formed. For the three months ended December 31, 2006 and 2005, our operations reflected a charge of $560,000 and $402,000, respectively, to earnings for minority interests, principally for our partners’ share of the SFF partnerships.

Other income, net, was $2.5 million for the three months ended December 31, 2006, an increase of $1.7 million (190%) as compared to $873,000 for the three months ended December 31, 2005. During the three months ended December 31, 2006, we recognized a gain of $1.3 million from our sale of 80,000 shares of The Bancorp, Inc. common stock classified as investment securities available-for-sale.

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Our effective tax rate (income taxes as a percentage of income from continuing operations before taxes) increased to 33% for the three months ended December 31, 2006 from a tax benefit of 40% for the three months ended December 31, 2005. During the three months ended December 31, 2006, we continued to implement a tax planning strategy that management believes makes it more likely than not that we will be able to utilize an additional $6.9 million of NOLs prior to their expiration. Accordingly, $662,000 of the valuation allowance was reversed. Our effective tax rate, as adjusted to exclude this benefit, would have been 43% for the three months ended December 31, 2006. The tax benefit we recorded for the three months ended December 31, 2005 reflected the implementation of tax strategies which resulted in a reduction of the valuation allowance in connection with the utilization of state net operating loss carryforwards, or NOLs. Without the tax benefit related to the reduction in the valuation allowance, our effective tax rate would have been 43% for the three months ended December 31, 2005.

Our effective tax rate for the first fiscal quarter ended December 31, 2006 was 33%, inclusive of the $662,000 reversal of a valuation allowance. We project our effective tax rate for the next three fiscal quarters to be 43%, resulting in a 41% projected annual effective tax rate for fiscal 2007.

Discontinued Operations

In accordance with SFAS 144, "Accounting for the Impairment or Disposal of Long Lived Assets," our decision to dispose of certain entities has resulted in the presentation of these operations as discontinued.

Discontinued operations, principally from our real estate segment, were as follows (in thousands):

	Three Months Ended
	December 31,
	2006			2005
Operating (loss) income (period prior to disposition)	$	(29	)	$	1,319
Gain on disposal		−			150
Benefit (provision) for income taxes		10			(531	)
Discontinued income (loss), net of tax	$	(19	)	$	938

The activity in the number of real estate investments held for sale, including FIN 46-R entities and owned properties, was as follows:

	Three Months Ended
	December 31,
	2006		2005
Balance, beginning of period		1		6
Net additions		−		1
Resolved		−		(3	)
Balance, end of period		1		4

Cumulative Effect of Change in Accounting Principle

Historically, we presented our equity in the earnings and losses of the Trapeza entities on a one-quarter lag as permitted under generally accepted accounting principles. Improvements in the timeliness and availability of financial data from the Trapeza entities allowed us to report our share in the earnings of these entities on a current basis as of October 1, 2005. As a result of this change, our equity in the earnings of the Trapeza entities of $1.4 million, net of tax of $983,000 for the three months ended September 30, 2005 has been reflected in the consolidated statements of income as a cumulative change in accounting principle as of October 1, 2005.

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Liquidity and Capital Resources

General. Our major sources of liquidity have been from borrowings under our existing credit facilities, the resolution of our real estate legacy portfolio, and sales of our TBBK shares. We have employed these funds principally to expand our specialized asset management operations including our sponsorship and investment in RCC and the repurchase of our common stock. We expect to fund our asset management businesses from a combination of cash to be generated by operations, continued resolution of our legacy portfolio and expanded borrowings under our existing credit facilities.

The following table sets forth our sources and uses of cash (in thousands):

	Three Months Ended
	December 31,
	2006			2005
Used in operating activities of continuing operations	$	(67,043	)	$	(20,439	)
(Used in) provided by investing activities of continuing operations		(13,435	)		855
Provided by financing activities of continuing operations		62,738			19,809
(Used in) provided by discontinued operations		(14	)		16,044
Net cash retained by entities previously consolidated		−			(3,825	)
(Decrease) increase in cash	$	(17,754	)	$	12,444

We had $19.9 million in cash at December 31, 2006, a decrease of $17.8 million (47%) as compared to $37.6 million at September 30, 2006. Our ratio of earnings from continuing operations before income taxes, minority interest and interest expense to fixed charges was 2.4 to 1.0 for the three months ended December 31, 2006 as compared to 3.9 to 1.0 for the three months ended December 31, 2005. The decrease in this ratio reflects primarily the increase in interest expense associated with our increased utilization of our secured warehouse credit facilities to purchase loans held for sale as well as increased use of our commercial finance secured credit facilities to support the expanded operations of that segment. Accordingly, our ratio of debt to equity increased to 168% for the three months ended December 31, 2006 from 89% for the three months ended December 31, 2005.

Cash Flows from Operating Activities.Net cash used in operating activities of continuing operations increased by $46.6 million to a $67.0 million use of cash for the three months ended December 31, 2006 from a $20.4 million use of cash for the three months ended December 31, 2005, substantially as a result of the following:

· a $37.1 million increase in investments in commercial finance, reflecting our expanded operations in that business segment;

· changes in operating assets, liabilities and taxes accounted for an additional $7.1 million use of cash; and

· a $2.4 million decrease in net income from continuing operations, as adjusted for non-cash items such as depreciation.

Cash Flows from Investing Activities.Net cash used by our investing activities of continuing operations increased by $14.3 million for the three months ended December 31, 2006 as compared to the three months ended December 31, 2005, primarily reflecting the following:

· a $10.6 million increase in restricted cash balances. Escrow deposits increased by $3.3 million during the three months ended December 31, 2006 for the new warehouse facilities as compared to the release of $5.0 million held in escrow for a warehouse facility that was transferred to a CDO during the three months ended December 31, 2005 with the closing of the related CDO;

· a $5.1 million decrease in TIC property proceeds, reflecting $3.0 million received from TIC property interests during the three months ended December 31, 2006 as compared to $8.1 million received during the three months ended December 31, 2005; offset in part by

· a $1.3 million decrease in purchases of investment securities available- for-sale.

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Cash Flows from Financing Activities. Net cash provided by our financing activities of continuing operations increased by $42.9 million for the three months ended December 31, 2006 as compared to the three months ended December 31, 2005. This increase in our cash flows principally reflects the following:

· a $39.2 million increase in our borrowings, net of repayments, reflecting the additional net borrowings to fund our increased investments in our commercial finance operations; and

· a $3.7 million increase in cash due to the repurchase of treasury shares during the three months ended December 31, 2005 as compared to no repurchases made during the corresponding three months ended December 31, 2006.

Cash Retained by Entities Previously Consolidated. As of December 31, 2005, we ceased to consolidate with two affiliated partnerships that invest in regional banks due to a change in the rights of the limited partners to remove us as the general partner. Accordingly, the statement of cash flows for the three months ended December 31, 2005 reflects the $3.8 million decrease in cash from these entities that had been previously consolidated.

Cash Flows from Discontinued Operations. Net cash provided by discontinued operations decreased by $16.1 million reflecting the sale of three FIN 46-R assets during the three months ended December 31, 2005. There were no corresponding sales in the three months ended December 31, 2006.

Capital Requirements

The amount of funds we must commit to investments in our financial fund management, real estate and commercial finance operations depends upon the level of funds raised through financial fund management, real estate and commercial finance programs. We believe cash flows from operations, cash and other working capital and amounts available under our corporate, real estate and commercial finance credit facilities will be adequate to fund our contribution to these programs. However, the amount of funds we raise and the level of our investments will vary in the future depending on market conditions.

Contractual Obligations and Other Commercial Commitments

Senior lien financing obtained with respect to certain acquired properties, TIC investment programs and real estate loans are with recourse only to the properties securing them, subject to certain standard exceptions. We have provided guarantees on these senior liens totaling $371.3 million which expire as the related indebtedness is paid down over the next ten years.

In August 2006, we entered into a warehouse agreement with Credit Suisse Securities (USA) LLC which provides for us to guarantee the lesser of 8% of the warehouse balance or the first $10.0 million of losses on the portfolio of bank loans. As of December 31, 2006, the guarantee was $8.7 million. This guarantee, secured by a $5.0 million cash deposit, expires upon the closing of the associated CDO which is expected in the fourth quarter of fiscal 2007.

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In December 2006, we entered into a warehouse agreement with Credit Suisse Securities (USA) LLC which provides for us to guarantee the first $10.0 million of losses on a portfolio of bank loans. This guarantee, secured by a $3.0 million cash deposit, expires upon the closing of the associated CDO. Upon the assumption of this warehouse facility by RCC in January 2007, the escrow deposit was returned with interest and our guarantee on this facility was terminated.

As of December 31, 2006, we have determined it to be not probable that any payments will be required under either guarantee and accordingly, no liabilities for these obligations have been recorded in the consolidated financial statements.

LEAF acquired a new $250.0 million non-recourse line of credit with Morgan Stanley Bank in December 2006. The maximum amount of our borrowings under this facility is $100.0 million for the first ten months and $250.0 million thereafter. The facility expires in October 2009. The underlying equipment being leased or financed collateralizes the borrowings under this facility.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and cost and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the provision for possible losses, deferred tax assets and liabilities and certain accrued liabilities. We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a detailed discussion on the application of policies critical to our business operations and other accounting policies, see our Annual Report on Form 10-K for fiscal 2006, at Note 2 of the “Notes to Consolidated Financial Statements.”

All other credit facilities remained substantially unchanged from what was previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006.

Recently Issued Financial Accounting Standards

In September 2006, the FASB issued Statement of Financial Accounting Standards, or SFAS, 157, “Fair Value Measurements,” or SFAS 157, which provides guidance on how to measure assets and liabilities that use fair value. SFAS 157 will apply under other accounting pronouncements that require or permits assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard also will require additional disclosures in both annual and quarterly reports. SFAS 157 will be effective for financial statements issued for fiscal years beginning after November 15, 2007 and will be adopted by us in the first quarter of its fiscal year 2009. We currently are determining the effect, if any, the adoption of SFAS 157 will have on our financial statements.

In September 2006, the Securities and Exchange Commission staff issued Staff Accounting Bulletin, or SAB 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” SAB 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement.  It establishes an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of our financial statements and the related financial statement disclosures.  SAB 108 is effective for our current fiscal year ending September 30, 2007. Management does not believe adoption of SAB 108 will have a material impact on our consolidated financial statements.

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On July 13, 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes - An Interpretation of SFAS 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS 109, “Accounting for Income Taxes.” FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The new accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of FIN 48 are effective as of the beginning of the first fiscal year beginning after December 15, 2006 with early adoption permitted if no interim financial statements have been issued. We will not elect for early adoption of FIN 48, thus the provisions of FIN 48 will be implemented in the quarter ending December 31, 2007. We are currently determining the effect, if any, the adoption of FIN 48 will have on our financial statements.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The following discussion is not meant to be a precise indicator of expected future losses, but rather an indicator of reasonable possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our market risk-sensitive instruments were entered into for purposes other than trading.

General

We are exposed to various market risks, principally fluctuating interest rates. These risks can impact our results of operations, cash flows and financial position. We manage these risks through regular operating and financing activities.

The following analysis presents the effect on our earnings, cash flows and financial position as if hypothetical changes in market risk factors occurred at December 31, 2006. We analyze only the potential impacts of hypothetical assumptions. Our analysis does not consider other possible effects that could impact our business.

Financial Fund Management

At December 31, 2006, we had three outstanding secured warehouse facilities to purchase bank loans with balances of $128.2 million, $109.1 million and $45.9 million at interest rates of 4.3%, 6.0% and 6.0%, respectively. A hypothetical 10% change in the interest rates on these facilities would change our annual interest expense by a total of approximately $574,000 based on projected CDO execution dates.

Real Estate

Portfolio Loans and Related Senior Liens. As of December 31, 2006, we believe that none of the three loans held in our portfolio that have senior liens are sensitive to changes in interest rates since:

· the loans are subject to forbearance or other agreements that require all of the operating cash flow from the properties underlying the loans, after debt service on senior lien interests, to be paid to us and thus are not currently being paid based on the stated interest rates of the loans;

· the senior lien interests ahead of our interests are at fixed rates and are thus not subject to interest rate fluctuation that would affect payments to us; and

· each loan has significant accrued and unpaid interest and other charges outstanding to which cash flow from the underlying property would be applied even if cash flow were to exceed the interest due, as originally underwritten.

FIN 46-R Loans. One mortgage that we consolidate at December 31, 2006 as a result of FIN 46-R, is at a fixed interest rate and, therefore, not subject to interest rate fluctuations.

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Commercial Finance

At December 31, 2006, we had an outstanding secured revolving credit facilities which had an outstanding balance of $110.8 million, with an interest rate of 6.89%. A hypothetical 10% change in the interest rate on this facility would change our annual interest expense by a total of approximately $750,000. The other facility had an outstanding balance of $39.6 million. The interest rate on this facility was fixed by the use of interest rate swaps.

ITEM 4.CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) or 15(d)-15(e) under the Securities Exchange Act of 1934) that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our Chief Executive Officer and Chief Financial Officer and with the participation of our disclosure committee, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

There were no material changes in the Company’s internal control over financial reporting during the first fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

We are a party to various routine legal proceedings arising out of the ordinary course of our business.  Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or operations. 

ITEM 6.EXHIBITS

Exhibit No.Description

3.1	Restated Certificate of Incorporation of Resource America. (1)
3.2	Amended and Restated Bylaws of Resource America. (1)
10.16	U.S. $250,000,000 Receivables Loan and Security Agreement, dated as of October 31, 2006, among Resource Capital Funding II, LLC, as the Borrower, and LEAF Financial Corporation, as the Servicer, and Morgan Stanley Bank, as a Lender and Collateral Agent, and U.S. Bank National Association, as the Custodian and the Lender’s Bank and Lyon Financial Services, Inc. (D/B/A U.S. Bank Portfolio Services), as the Backup Servicer.
10.16(a)	First Amendment to Receivables Loan and Security Agreement, dated as of October 31, 2006.
10.16(b)	Purchase and Sale Agreement, dated as of October 31, 2006.
10.16(c)	First amendment to Purchase and Sale Agreement, dated as of December 21, 2006.
10.16(d)	Morgan Stanley Bank, Fee Letter, dated October 31, 2006
10.17	Second Amendment to Credit Agreement, dated December 2006, between LEAF Financial Corporation, LEAF Funding, Inc. and National City Bank.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1) Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended December 31, 1999 and by this reference incorporated herein.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	RESOURCE AMERICA, INC.
	(Registrant)
Date: February 5, 2007	By:/s/ Steven J. Kessler
	STEVEN J. KESSLER
	Executive Vice President and Chief Financial Officer

Date: February 5, 2007	By:/s/ Arthur J. Miller
	ARTHUR J. MILLER
	Vice President and Chief Accounting Officer

EX-10.16

EXECUTION COPY

[incorporates First Amendment,

dated as of December 21, 2006]

U.S. $250,000,000

RECEIVABLES LOAN AND SECURITY AGREEMENT

Dated as of October 31, 2006

Among

RESOURCE CAPITAL FUNDING II, LLC,

as the Borrower

and

LEAF FINANCIAL CORPORATION,

as the Servicer

and

MORGAN STANLEY BANK,

as a Lender and Collateral Agent

and

U.S. BANK NATIONAL ASSOCIATION,

as the Custodian and the Lender’s Bank

and

LYON FINANCIAL SERVICES, INC. (D/B/A U.S. BANK PORTFOLIO SERVICES),

as the Backup Servicer

This RECEIVABLES LOAN AND SECURITY AGREEMENT is made as of October 31, 2006, among:

(1)RESOURCE CAPITAL FUNDING II, LLC, a Delaware limited liability company (the “Borrower”);

(2)LEAF FINANCIAL CORPORATION, a Delaware corporation (“LEAF Financial” or the “initial Servicer”), as the Servicer (as defined herein);

(3)MORGAN STANLEY BANK (“Morgan Stanley”), as a Lender and Collateral Agent (as defined herein);

(4)U.S. BANK NATIONAL ASSOCIATION, as the Custodian and the Lender’s Bank (as each such term is defined herein); and

(5)LYON FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services), a Minnesota corporation, as the Backup Servicer (as defined herein).

IT IS AGREED as follows:

ARTICLE I.

DEFINITIONS

SECTION 1.01Certain Defined Terms. i) Certain capitalized terms used throughout this Agreement are defined above or in this Section 1.01.

(b)As used in this Agreement and the exhibits and schedules thereto (each of which is hereby incorporated herein and made a part hereof), the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Accountants’ Report” has the meaning assigned to that term in Section 6.11(b).

“Active Backup Servicer’s Fee” means, for any Fee Period or portion thereof after the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to the greater of (i) the Active Backup Servicing Fee Rate, multiplied by the Net Eligible Receivables Balance as of the first day of such Fee Period, multiplied by a fraction, the numerator of which shall be the actual number of days in such Fee Period and the denominator of which shall be 360, and (ii) $5,000. The Active Backup Servicer’s Fees shall also include reasonable out-of-pocket expenses incurred by the Backup Servicer in performing its duties as Servicer.

“Active Backup Servicing Fee Rate” means 1.00%.

“Active Backup Servicer’s Indemnified Amounts” has the meaning assigned to that term in Section 6.09.

“Adjusted Eurodollar Rate” means, with respect to any Interest Period for any Loan allocated to such Interest Period, an interest rate per annum equal to the sum of (i) the Adjusted Eurodollar Rate Margin and (ii) an interest rate per annum equal to the average of the interest rates per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) reported during such Interest Period on Telerate Access Service Page 3750 (British Bankers Association Settlement Rate) as the London Interbank Offered Rate for United States dollar deposits having a term of thirty (30) days and in a principal amount of $1,000,000 or more (or, if such page shall cease to be publicly available or, if the information contained on such page, in the Lender’s sole judgment, shall cease to accurately reflect such London Interbank Offered Rate, such rate as reported by any publicly available recognized source of similar market data selected by the Lender that, in the Lender’s reasonable judgment, accurately reflects such London Interbank Offered Rate).

“Adjusted Eurodollar Rate Margin” has the meaning ascribed thereto in the Fee Letter.

“Adverse Claim” means a lien, security interest, charge, encumbrance or other right or claim of any Person other than, with (i) respect to the Pledged Assets, any lien, security interest, charge, encumbrance or other right or claim in favor of the Collateral Agent or (ii) any Permitted Lien.

“Affected Party” has the meaning assigned to that term in Section 2.09.

“Affiliate” when used with respect to a Person, means any other Person controlling, controlled by or under common control with such Person. For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agreement” means this Receivables Loan and Security Agreement, as the same may be amended, restated, supplemented and/or otherwise modified from time to time hereafter in accordance with its terms.

“Allonge” means an allonge in the form attached hereto as Exhibit G.

“Amortized Equipment Cost” means, as of any date of determination, (i) for any Pool A Receivable, the net investment with respect to such Pool A Receivables, where “net investment” means (a) the present value of the remaining Scheduled Payments under the related Contract, discounted at the rate at which the present value of all Scheduled Payments under the related Contract, including any Balloon Payment or Put Payment, equals the original equipment cost related to such Receivable, plus (b) the associated amortized indirect costs related to the applicable equipment, amortized using the interest method over the life of the related Contract and (ii) for any Pool B Receivable, the net investment with respect to such Pool B Receivable, where “net investment” means (a) the sum of the present values of the remaining Underlying Scheduled Payments under each related Eligible Underlying Contract, discounted at the rate at which the present value of all scheduled payments under such Eligible Underlying Contract, including any Balloon Payment or Put Payment, equals the original equipment cost related to

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such Eligible Underlying Contract, plus (b) the associated amortized indirect costs related to the applicable equipment, amortized using the interest method over the life of the related Underlying Contract.

“Annualized Default Rate” means, as of any date of determination after the end of the first Collection Period following the date hereof, an amount (expressed as a percentage) equal to (i) the product of (A) the aggregate Discounted Balances of all Pledged Receivables which were Eligible Receivables at the time of their Pledge hereunder and which became Defaulted Receivables during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods and (B) 2 (if six or more Collection Periods have occurred since the date hereof), 2.4 (if five Collection Periods have occurred since the date hereof), 3 (if four Collection Periods have occurred since the date hereof), 4 (if three Collection Periods have occurred since the date hereof), 6 (if two Collection Periods have occurred since the date hereof) or 12 (if one Collection Period has occurred since the date hereof) divided by (ii) the average Eligible Receivables Balance as of the first Business Day of each of the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods.

“Annualized Net Loss Rate” means, as of any date of determination after the end of the first Collection Period following the date hereof, an amount (expressed as a percentage) equal to (i) the product of (A) (x) the aggregate Discounted Balances of all Pledged Receivables which were Eligible Receivables at the time of their Pledge hereunder and which became Defaulted Receivables during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods minus (y) Recoveries received during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods and (B) 2 (if six or more Collection Periods have occurred since the date hereof), 2.4 (if five Collection Periods have occurred since the date hereof), 3 (if four Collection Periods have occurred since the date hereof), 4 (if three Collection Periods have occurred since the date hereof), 6 (if two Collection Periods have occurred since the date hereof) or 12 (if one Collection Period has occurred since the date hereof) divided by (ii) the Eligible Receivables Balance as of the first Business Day of the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods.

“Applicable Date” has the meaning set forth in definition of Pool B Annualized Net Loss Rate.

“Assigned Documents” has the meaning assigned to that term in Section 2.10.

“Assignment” has the meaning set forth in the Purchase and Sale Agreement.

“Assignment and Acceptance” has the meaning assigned to that term in Section 9.04.

“Available Funds” has the meaning assigned to that term in Section 2.04(c).

“Backup Servicer” means Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) or any successor Backup Servicer appointed by the Lender pursuant to Section 6.13.

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“Backup Servicer Delivery Date” has the meaning assigned to that term in Section 6.10(d).

“Balloon Payment” means a payment due, or which may be required, at the end of the term of a Contract or Underlying Contract (which constitutes a loan) equal to the principal amount under such Contract or Underlying Contract which remains outstanding after the payment of all regular scheduled payments of principal during the term of such Contract or Underlying Contract.

“Bankruptcy Code” means Title 11, United States Code, 11 U.S.C. §§ 101 etseq., as amended.

“Bankruptcy Event” shall be deemed to have occurred with respect to a Person if either:

(c)a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or

(d)such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors or members shall vote to implement any of the foregoing.

“Base Rate” means, on any date, a fluctuating rate of interest per annum equal to the arithmetic average of the rates of interest publicly announced by JPMorgan Chase Bank and Citibank, N.A. (or their respective successors) as their respective prime commercial lending rates (or, as to any such bank that does not announce such a rate, such bank’s “base” or other rate determined by the Lender to be the equivalent rate announced by such bank), except that, if any such bank shall, for any period, cease to announce publicly its prime commercial lending (or equivalent) rate, the Lender shall, during such period, determine the Base Rate based upon the prime commercial lending (or equivalent) rates announced publicly by the other such bank or, if each such bank ceases to announce publicly its prime commercial lending (or equivalent) rate, based upon the prime commercial lending (or equivalent) rate or rates announced publicly by one or more other banks selected by the Lender. The prime commercial lending (or equivalent) rates used in computing the Base Rate are not intended to be the lowest rates of interest charged by

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such banks in connection with extensions of credit to debtors. The Base Rate shall change as and when such banks’ prime commercial lending (or equivalent) rates change.

“Borrower” has the meaning assigned to that term in the preamble hereto.

“Borrower Pension Plan” means a “pension plan” as such term is defined in section 3(2) of ERISA, which is subject to title IV of ERISA and to which the Borrower or any ERISA Affiliate of Borrower may have any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

“Borrowing” means a borrowing of Loans under this Agreement.

“Borrowing Base” means, at any time, the sum of the Pool A Borrowing Base plus the Pool B Borrowing Base at such time.

“Borrowing Base Certificate” means a report, in substantially the form of Exhibit A, prepared by the Borrower (or the initial Servicer on its behalf) for the benefit of Lender pursuant to Section 6.10(c).

“Borrowing Base Deficiency” means, at any time, that the Borrowing Base is less than the Facility Amount, an amount equal to the amount of such deficiency.

“Borrowing Base Surplus” means, at any time, that the Borrowing Base exceeds the Facility Amount, an amount equal to the amount of such excess.

“Borrowing Date” means, with respect to any Borrowing, the date on which such Borrowing is funded, which date, other than in the case of the initial Borrowing, shall be a Subsequent Borrowing Date.

“Borrowing Limit” means initially (i) prior to and including the first anniversary of the Closing Date, $100,000,000 and (ii) after the first anniversary of the Closing Date until the Facility Maturity Date, $250,000,000, as such amounts may be increased pursuant to Section 2.16; provided, however, that at all times, on or after the Program Termination Date, the Borrowing Limit shall mean the aggregate outstanding principal balance of the Loans.

“Breakage Fee” means, for Loans allocated to any Interest Period during which such Loans are repaid (in whole or in part) prior to the end of such Interest Period, the breakage costs, if any, related to such repayment plus the amount, if any, by which (i) interest (calculated without taking into account any Breakage Fee), which would have accrued on the amount of the payment of such Loans during such Interest Period (as so computed) if such payment had not been made, as the case may be, exceeds (ii) the sum of (A) interest actually received by the Lender in respect of such Loans for such Interest Period and, if applicable, (B) the income, if any, received by the Lender from the Lender’s investing the proceeds of such payments on such Loans.

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“Business Day” means a day of the year other than a Saturday or a Sunday or any other day on which banks are authorized or required to close in New York City, St. Paul, Minnesota or Salt Lake City, Utah; provided, that, if any determination of a Business Day shall relate to a Loan bearing interest at the Adjusted Eurodollar Rate, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

“Calculated Swap Amortizing Balance” means, with respect to a Qualifying Interest Rate Swap and as of any date of determination, the projected scheduled amortizing balance of the Pledged Receivables which were Pledged during the period ending on the Remittance Date on which such Qualifying Interest Rate Swap became effective and beginning on the day following the immediately preceding Remittance Date, determined by the Servicer and accepted by the Lender based upon the Discounted Balance of such Pledged Receivables as of such date of determination, adjusted for prepayments using an absolute prepayment speed which, in the judgment of the Lender, is consistent with the speed with which the Pledged Receivables have prepaid in the past.

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, contingent share issuances, participations or other equivalents of or interest in equity (however designated) of such Person.

“Cash Reserve” means any amount paid to the Originator, the Servicer or the Borrower by an Obligor that is an Underlying Originator as a cash reserve which may be drawn upon if amounts due under the related Underlying Originator Loan Contract are not paid when due (or by the end of any cure period related thereto), which has not previously been refunded to such Obligor or applied toward such Obligor’s obligations under such Underlying Originator Loan Contract.

“Cash Reserve Account” has the meaning assigned to that term in Section 2.06.

“Cash Reserve Account Agreement” means any Securities Account Agreement with respect to any Cash Reserve Account established by an Originator, among the Borrower, the Servicer, the Lender’s Bank and the Lender, in form and substance satisfactory to the parties thereto, as such agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms thereof.

“Certificate of Title” means with respect to a Vehicle, an original certificate of title issued by the Registrar of Titles of the applicable State.

“Change of Control” means that at any time (i) Owner shall own directly or indirectly less than 100% of all membership interests of the Borrower, (ii) Resource America shall own directly or indirectly less than 50.1% of all Capital Stock or voting power of the initial Servicer, (iii) the initial Servicer shall own directly or indirectly less than 80% of all Capital Stock or voting power of Originator and Owner, (iv) Resource America, Owner or the Borrower merges or consolidates with any other Person without the prior written consent of the Lender, (v) the initial Servicer or the Originator merges or consolidates with any other Person and the initial Servicer or the Originator, as applicable, is not the surviving entity or (vi) either of Crit DeMent

6

or Miles Herman is not employed in a senior management position at the initial Servicer, is not involved in the day-to-day operations of the initial Servicer or is not able to perform substantially all of his duties as an employee of the initial Servicer during any three month period and, in each case, has not been replaced by a person approved by the Lender in writing within 90 days of any such event.

“Closing Date” means October 31, 2006.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral Agent” means the Lender in its capacity as collateral agent on behalf of the Secured Parties.

“Collateral Receipt” has the meaning assigned to that term in the Custodial Agreement.

“Collection Account” means a special trust account (account number 106682000 at the Lender’s Bank) in the name of the Borrower and under the control of the Lender; provided, that the funds deposited therein (including any interest and earnings thereon) from time to time shall constitute the property and assets of the Borrower and the Borrower shall be solely liable for any taxes payable with respect to the Collection Account.

“Collection Account Agreement” means that certain Collection Account Agreement, dated the date of this Agreement, among the Borrower, the Servicer, the Lender’s Bank and the Lender, as such agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms thereof.

“Collection Date” means the date on which the aggregate outstanding principal amount of the Loans have been repaid in full and all interest and Fees and all other Obligations have been paid in full, and the Lender shall have no further obligation to make any additional Loans.

“Collection Period” means, (i) with respect to any Remittance Date (including the initial Remittance Date), the period beginning on, and including, the first day of the most recently ended calendar month and ending on, and including, the last day of the most recently ended calendar month; provided, that the final Collection Period shall begin on, and include, the first day of the then current calendar month and shall end on the Collection Date and (ii) in any context other than with respect to any Remittance Date, a calendar month.

“Collections” means, without duplication, with respect to any Pledged Receivable, all Scheduled Payments (and, in the case of a Pledged Pool B Receivable after a Pool B Termination Event has occurred with respect to the related Underlying Originator, all Underlying Scheduled Payments) related to such Receivable, all prepayments and related penalty payments with respect to the Contract (and any related Underlying Contract related to a Pledged Pool B Receivable after a Pool B Termination Event has occurred with respect to the related Underlying Originator) related to such Receivable, all overdue payments and related interest and penalty payments with respect to the Contract (and any related Underlying Contract related to a Pledged Pool B Receivable after a Pool B Termination Event has occurred with respect to the related Underlying Originator) related to such Receivable, all Guaranty Amounts, all Insurance Proceeds, all Servicing Charges, all proceeds under “buyout letters” or other prepayment/termination

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agreements and all Recoveries related to such Receivable, all amounts paid to the Borrower related to such Receivable pursuant to the terms of the Purchase and Sale Agreement, all amounts paid by the Servicer related to such Receivable in connection with its obligations under Section 6.20 hereof, and all other payments received with respect to the Contract (and, if applicable, Underlying Contract) related to such Receivable, all cash receipts and proceeds in respect of the Other Conveyed Property or Related Security (including, without limitation, the Obligor Collateral) related to such Receivable, any Servicer Advances related to such Receivable, and any amounts paid to the Borrower under or in connection with any Qualifying Interest Rate Swap or the hedging arrangements contemplated thereunder.

“Commitment Percentage” has the meaning assigned to that term in Section 9.04(b).

“Computer Tape or Listing” means the computer tape or listing (whether in electronic form or otherwise) generated by the Servicer on behalf of the Borrower, which provides information relating to the Receivables included in the Net Eligible Receivables Balance.

“Contract” means a Pool A Contract or a Pool B Contract.

“Credit and Collection Policy” means (i) collectively, the “Operations Policies & Procedures” memorandum, the “Limited Recourse Term Debt Facility” memorandum of the Servicer, and certain other items, as annexed hereto as Schedule IV as such policy may hereafter be amended, modified or supplemented from time to time in compliance with this Agreement and (ii) with respect to any Servicer other than LEAF Financial, that Servicer’s collection policies for similar assets in effect from time to time.

“Critical Defaults” has the meaning assigned to that term in Section 5.01(u) hereof.

“Custodial Agreement” means that certain Custodial Agreement dated as of the date hereof among the Servicer, the Borrower, the Lender and the Custodian, together with all instruments, documents and agreements executed in connection therewith, as such Custodial Agreement may from time to time be amended, restated, supplemented and/or otherwise modified in accordance with the terms thereof.

“Custodian” means U.S. Bank National Association (or a sub-custodian on its behalf) or any substitute Custodian appointed by the Lender pursuant to the Custodial Agreement.

“Custodian’s Fee” means, for any Fee Period, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to the aggregate fees listed in that certain “Schedule of Fees” letter dated October 19, 2006 between U.S. Bank National Association and Leaf Financial Corporation which relate to such Fee Period.

“Debt” of any Person means (i) indebtedness of such Person for borrowed money, (ii) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments related to transactions that are classified as financings under GAAP, (iii) obligations of such Person to pay the deferred purchase price of property or services, (iv) obligations of such Person as lessee under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases, (v) obligations secured by an Adverse Claim upon property or assets

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owned (under GAAP) by such Person, even though such Person has not assumed or become liable for the payment of such obligations and (vi) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor, against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (v) above.

“Default Funding Rate” means an interest rate per annum equal to 1.50% plus the Base Rate.

“Defaulted Receivable” means, as of any date of determination, any Pledged Receivable:

(i)with respect to which any part of any Scheduled Payment, or any tax-related payment, owed by the applicable Obligor under the terms of the related Contract remains unpaid for more than 120 days after the due date therefor set forth in such Contract;

(ii)with respect to which the first or second Scheduled Payment is not paid in full when due under the related Contract;

(iii)with respect to which any payment or other material terms of the related Contract have been modified due to credit related reasons after such Contract was acquired by the Borrower pursuant to the Purchase and Sale Agreement;

(iv)which has been or should be charged off as a result of the occurrence of a Bankruptcy Event with respect to the related Obligor or Underlying Obligor, if any, or which has been or should otherwise be deemed uncollectible by the Servicer, in each case, in accordance with the Credit and Collection Policy; or

(v)with respect to which the Servicer has repossessed the related Equipment.

“Delinquency Rate” means, as of any date of determination, an amount (expressed as a percentage) equal to (i) the aggregate Discounted Balances of all Delinquent Receivables as of the last day of the immediately preceding Collection Period divided by (ii) the Net Eligible Receivables Balance as of such day.

“Delinquent Receivable” means, as of any date of determination, any Pledged Receivable (other than a Defaulted Receivable) with respect to which any part of any Scheduled Payment (or other amount payable under the terms of the related Contract) remains unpaid for more than 60 days but not more than 120 days after the due date therefor set forth in such Contract.

“Depository Institution” means a depository institution or trust company, incorporated under the laws of the United States or any State thereof, that is subject to supervision and examination by federal and/or State banking authorities.

“Discount Rate” means, as of any date of determination, a percentage equal to the sum of (i) the Weighted Average Swapped Rate as of such date of determination, (ii) the Adjusted Eurodollar Rate Margin, (iii) at any time prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, the Servicing Fee Rate and the

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Standby Backup Servicing Fee Rate, (iv) at any time after the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, the Active Backup Servicing Fee Rate and (vi) a rate per annum equal to 0.05%.

“Discounted Balance” means, with respect to any Contract or Underlying Contract, as of any date of determination, the present value of the aggregate amount of Scheduled Payments or, in the case of an Underlying Contract, Underlying Scheduled Payments (including any Balloon Payment or Put Payment but, in any event, calculated without giving effect to any booked residual value with respect to any related Equipment) due or to become due under the terms of the related Contract or Underlying Contract after the Cut-Off Date applicable to the Receivable related thereto, which remain unpaid as of such date of determination, calculated by discounting such aggregate amount of such Scheduled Payments or, in the case of an Underlying Contract, such Underlying Scheduled Payments to such date of determination at an annual rate equal to the Discount Rate.

“Dollar Purchase Option Contract” means a Contract or an Underlying Contract, as applicable, (i) in connection with which an agreement was executed which grants the related Obligor or Underlying Obligor, as applicable, a right to purchase the Equipment or Underlying Equipment leased under such Contract or Underlying Contract for $1.00 or other nominal consideration at the end of the initial term of such Contract or Underlying Contract or (ii) grants the related Obligor or Underlying Obligor, as applicable, a right to purchase the Equipment or Underlying Equipment leased under such Contract for $1.00 or other nominal consideration at the end of the initial term of such Contract.

“Eligible Depository Institution” means a Depository Institution the short term unsecured senior indebtedness of which is rated at least Prime-1 by Moody’s, A-1 by S&P, and F1 by Fitch, if rated by Fitch.

“Eligible Pool A Receivable” means, at any time, a Pledged Pool A Receivable with respect to which each of the representations and warranties regarding the Contract related to such Pledged Pool A Receivable contained in Schedule III-A hereto is true and correct at such time.

“Eligible Pool A Receivables Balance” means, at any time, the aggregate Discounted Balances of all Eligible Pool A Receivables which are Pledged hereunder to secure Loans at such time.

“Eligible Pool B Receivable” means, at any time, a Pledged Pool B Receivable with respect to which each of the representations and warranties regarding the Contract related to such Pledged Pool B Receivable contained in Schedule III-B hereto is true and correct at such time.

“Eligible Pool B Receivables Balance” means, at any time, the aggregate Discounted Balances of all Eligible Pool B Receivables which are Pledged hereunder to secure Loans at such time.

“Eligible Pool B Underlying Lease Contract” means, at any time, an Underlying Lease Contract with respect to which each of the representations and warranties contained in Schedule III-C hereto is true and correct at such time.

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“Eligible Pool B Underlying Loan Contract” means, at any time, an Underlying Loan Contract with respect to which each of the representations and warranties contained in Schedule III-C hereto is true and correct at such time.

“Eligible Receivable” means, at any time, a Pledged Receivable which is an Eligible Pool A Receivable or an Eligible Pool B Receivable at such time.

“Eligible Receivables Balance” means, at any time, the aggregate Discounted Balances of all Eligible Receivables which are Pledged hereunder to secure Loans at such time.

“Eligible Underlying Contract” means an Eligible Pool B Underlying Lease Contract or Eligible Pool B Underlying Loan Contract.

“Eligible Underlying Originator” means an Underlying Originator that has been approved by the initial Servicer in accordance with the Credit and Collection Policy.

“Equipment” means the equipment or Vehicle (i) leased to an Obligor, or serving as collateral for a loan to an Obligor, under a Contract together with any replacement parts, additions and repairs thereof, and any accessories incorporated therein and/or affixed thereto or (ii) leased to an Underlying Obligor, or serving as collateral for a loan to an Underlying Obligor, under a Underlying Contract together with any replacement parts, additions and repairs thereof, and any accessories incorporated therein and/or affixed thereto.

“Equipment Category” means any of the Equipment Categories set forth on Schedule V hereto, as such schedule may be updated from time to time by the Borrower with the consent of the Lender (which such consent shall not be unreasonably withheld).

“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means a corporation, trade or business that is, along with any Person, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in section 414 of the Internal Revenue Code of 1986, as amended, or section 4001 of ERISA.

“Eurodollar Disruption Event” means any of the following: (i) a determination by the Lender that it would be contrary to law or to the directive of any central bank or other governmental authority (whether or not having the force of law) to obtain United States dollars in the London interbank market to make, fund or maintain any Loan, (ii) a determination by the Lender that the rate at which deposits of United States dollars are being offered in the London interbank market does not accurately reflect the cost to the Lender of making, funding or maintaining any Loan or (iii) the inability of the Lender to obtain United States dollars in the London interbank market to make, fund or maintain any Loan.

“Eurodollar Index” means an index based upon an interest rate reported on Telerate Access Service Page 3750 (British Bankers Association Settlement Rate) as the London Interbank Offered Rate for United States dollar deposits.

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“Event of Default” has the meaning assigned to that term in Section 7.01.

“Exception Sublimit Receivable” means a Pool A Receivable arising under a Lease Contract related to Equipment having an original cost of less than $100,000 as to which the original, executed Lease Contract has not been forwarded to the Custodian for inclusion in the related Receivable File.

“Facility Amount” means, at any time, the sum of the aggregate Loans Outstanding hereunder bearing interest at the Interest Rate, plus accrued interest and Fees with respect to such amounts.

“Facility Maturity Date” means the third anniversary of the date of this Agreement.

“Fee Letter” has the meaning assigned to that term in Section 2.08(a).

“Fee Period” means a period commencing on (and including) a Remittance Date and ending on (and including) the day prior to the next Remittance Date; provided, that, the initial Fee Period hereunder shall commence on (and include) the date hereof and end on (and include) December 22, 2006.

“Fees” has the meaning assigned to that term in Section 2.08(a).

“Fitch” means Fitch, Inc. (or its successors in interest).

“FMV Contract” means a Contract or an Underlying Contract, as applicable, which (i) in connection with which any agreement was executed which grants the related Obligor or Underlying Obligor, as applicable, a right to purchase the Equipment or Underlying Equipment leased under such Contract or Underlying Contract for the fair market value thereof at the end of the initial term of such Contract or Underlying Contract or (ii) grants the related Obligor or Underlying Obligor, as applicable, a right to purchase the Equipment or Underlying Equipment leased under such Contract for the fair market value thereof at the end of the initial term of such Contract.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States.

“Global Overconcentration Amount” means, at any time (x) after the first anniversary of the Closing Date or (y) the aggregate outstanding principal balance of the Loans is greater than $35,000,000, without duplication, the sum of:

(vi)the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables related to any one Obligor (or any Affiliate thereof) at such time exceeds $3,000,000;

(vii)the amount by which the sum of the Discounted Balances at such time of all Eligible Pool A Receivables related to the three Obligors which, together with any Affiliates thereof, owe the greatest amounts under their respective Contracts, in the aggregate, exceeds $9,500,000;

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(viii)the amount by which the sum of the Discounted Balances of all Eligible Receivables with respect to which the related Contract is a Non-Level Payment Contract exceeds 20% of the sum of the Discounted Balances of all Eligible Receivables at such time;

(ix)the amount by which the sum of the Discounted Balances of all Eligible Receivables with respect to which the related Contract provides for Scheduled Payments to be paid for any period other than monthly exceeds 10% of the sum of the Discounted Balances of all Eligible Receivables at such time;

(x)the amount by which the sum of the Discounted Balances of all Eligible Receivables related to Obligor Collateral located in the State of California at such time exceeds 30% of the sum of the Discounted Balances of all Eligible Receivables at such time;

(xi)the amount by which the sum of the Discounted Balances of all Eligible Receivables related to Obligor Collateral located in any State other than the State of California exceeds 20% of the sum of the Discounted Balances of all Eligible Receivables at such time;

(xii)the amount by which the sum of the Discounted Balances of all Eligible Receivables related to Equipment within any one Equipment Category exceeds the sum of the Discounted Balances of all Eligible Receivables at such time multiplied by 35%;

(xiii)the amount by which the sum of the Discounted Balances of all Eligible Receivables (including, without limitation, Vehicle Sublimit Pledged Receivable), with respect to which the related Obligor Collateral is a Vehicle or other type of equipment which requires a security interest therein to be noted on the certificate of title with respect thereto in order to be perfected, exceeds 20% of the sum of the Discounted Balances of all Eligible Receivables at such time;

(xiv)the amount by which the sum of the Discounted Balances of all Eligible Receivables which are Vehicle Sublimit Pledged Receivables, exceeds 5% of the sum of the Discounted Balances of all Eligible Receivables at such time;

(xv)the amount by which the sum of the Discounted Balances of all Eligible Receivables, with respect to which the related Obligor is a Government Entity, exceeds 10% of the sum of the Discounted Balances of all Eligible Receivables at such time;

(xvi)the amount by which the sum of the Discounted Balances of all Eligible Receivables, which are Exception Sublimit Receivables, exceeds 10% of the sum of the Discounted Balances of all Eligible Receivables at such time (it being understood and agreed that, notwithstanding anything herein to the contrary (including clauses (x) and (y) above), this component of the Global Overconcentration Amount shall apply at all times on and after the Closing Date); and

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(xvii)the amount by which the sum of the Discounted Balances of all Eligible Receivables with respect to which the related Obligor Collateral is a work vehicle exceeds 20% of the sum of the Discounted Balances of all Eligible Receivables at such time.

“Government Entity” means the United States, any State, any political subdivision of a State and any agency or instrumentality of the United States or any State or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Guaranty Amounts” means any and all amounts paid by any guarantor with respect to the applicable Contract.

“Holdback Amount” means, with respect to any Pool B Receivable, the amount of any loan principal or purchase price which would otherwise be advanced by the Originator to the applicable Obligor pursuant to the terms of such Contract, but which was held back by the Originator as a liquidity reserve or similar reserve.

“Included Repurchased Receivable” means any Receivable repurchased by the Originator pursuant to Section 6.1(b) of the Purchase and Sale Agreement with respect to which, as of the date of repurchase, any part of any Scheduled Payment (or other amount payable under the terms of the related Contract) remained unpaid after the due date therefor set forth in such Contract.

“Indemnified Amounts” has the meaning assigned to that term in Section 8.01.

“Independent Accountants” has the meaning assigned to that term in Section 6.11(b).

“Initial Qualified Swap Counterparty” means Morgan Stanley Capital Services Inc., a Delaware corporation and its successors and permitted assigns.

“Insurance Certificate” means the insurance certificate related to the Insurance Policy with respect to such Receivable (which insurance certificate shall list the Originator as a loss payee).

“Insurance Policy” means, with respect to any Obligor Collateral, the insurance policy maintained by or on behalf of the Obligor pursuant to the related Contract that covers physical damage to the related Equipment (in an amount sufficient to insure completely the value of such Equipment) and general liability (including policies procured by the Borrower or the Servicer, or any agent thereof, on behalf of the Obligor).

“Insurance Proceeds” means, with respect to an item of Obligor Collateral and a related Contract, any amount paid under an Insurance Policy or an Underlying Insurance Policy issued with respect to such Obligor Collateral and/or the related Contract.

“Interest Period” means, for any outstanding Loans, a period determined pursuant to Section 2.03(a).

“Interest Rate” has the meaning assigned to such term in Section 2.03(b).

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“LEAF Financial” has the meaning assigned to that term in the preamble hereto.

“Lease Contract” means (i) a “Master Lease Schedule” in the form attached hereto as Exhibit D-1(b), Exhibit D-1(c), Exhibit D-1(d), together with a “Master Lease Agreement” in the form attached hereto as Exhibit D-1(a) which is related to, and incorporated by reference into, a “Master Lease Schedule” (as such exhibits may be updated from time to time by the Borrower with the consent of the Lender), (ii) a “Lease Agreement” in the form attached hereto as Exhibit D-1(e) or (iii) a lease agreement otherwise approved by the Servicer in compliance with the Credit and Collection Policy, pursuant to which Equipment is leased to an Obligor by Originator, together with all schedules, supplements and amendments thereto and each other document and instrument related to such lease.

“Lender” means, collectively, Morgan Stanley and/or any other Person that is an Affiliate of Morgan Stanley and/or, with the consent of the Borrower (which such consent shall not be unreasonably withheld) at any time prior to the occurrence of a Program Termination Event (and without the consent of the Borrower at any time after the occurrence of a Program Termination Event), any other Person that is not an Affiliate of Morgan Stanley, in each case, that agrees, pursuant to the pertinent Assignment and Acceptance, to make Loans secured by Pledged Assets pursuant to Article II of this Agreement.

“Lender’s Bank” means U.S. Bank National Association and its successors and assigns that are Eligible Depository Institutions.

“Lender’s Bank Fee” means an annual fee paid in advance, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to $7,000. The “Lender’s Bank Fee” shall also include (i) a one-time acceptance fee of $4,500 payable on the Closing Date and (ii) reasonable out-of-pocket expenses incurred by the Lender’s Bank in the performance of its duties.

“Liquidation Proceeds” means, with respect to a Receivable with respect to which the related Obligor Collateral has been repossessed or foreclosed upon by the Servicer, all amounts realized with respect to such Receivable net of (i) reasonable expenses of the Servicer incurred in connection with the collection, repossession, foreclosure and/or disposition of the related Obligor Collateral and (ii) amounts that are required to be refunded to the Obligor on such Receivable; provided, however, that the Liquidation Proceeds with respect to any Receivable shall in no event be less than zero.

“Loan” means each loan advanced by the Lender to the Borrower on a Borrowing Date pursuant to Article II.

“Loan Contract” means, collectively, (i) a “Term Note (Level Payments)” together with the “Master Loan and Security Agreement” related thereto and incorporated by reference therein, each in the form attached hereto as Exhibit D-2(a) (as such exhibit may be updated from time to time by the Borrower with the consent of the Lender), (ii) a “Term Note (Level Payments)” or “Term Note (Step Payments)” together with the “Master Loan and Security Agreement” related thereto and incorporated by reference therein, each in the form attached hereto as Exhibit D-2(b) (as such exhibit may be updated from time to time by the Borrower with the consent of the

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Lender) or (iii) a loan agreement and promissory note otherwise approved by the Servicer in compliance with the Credit and Collection Policy, in each case, pursuant to which the Originator makes a loan to an Obligor secured by Equipment purchased by such Obligor, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“Loans Outstanding” means the sum of the principal amounts of Loans loaned to the Borrower for the initial and any subsequent borrowings pursuant to Sections 2.01 and 2.02, reduced from time to time by Collections with respect to any Pledged Receivable received and distributed as repayment of principal amounts of Loans outstanding pursuant to Section 2.04 and any other amounts received by the Lender to repay the principal amounts of Loans outstanding pursuant to Section 2.15 or otherwise; provided, however, that the principal amounts of Loans outstanding shall not be reduced by any Collections with respect to any Pledged Receivable or other amounts if at any time such Collections or other amounts are rescinded or must be returned for any reason.

“Lockbox” means a post office box to which Collections with respect to any Pledged Receivable are remitted for retrieval by the Lockbox Bank and for deposit by the Lockbox Bank into the Lockbox Account.

“Lockbox Account” means the deposit account (account number 153910088597at the Lockbox Bank) in the name of “U.S. Bank NA as Securities Intermediary for LEAF Financial and various lenders”.

“Lockbox Bank” means U.S. Bank National Association and its successors in interest.

“Lockbox Intercreditor Agreement” means the Amended and Restated Lockbox Intercreditor Agreement, dated as of April 18, 2005, among the Lockbox Bank, the Servicer, the Borrower, and certain other parties.

“Material Adverse Effect” means a material adverse effect on (i) the ability of the Borrower, the Originator and/or the Servicer to conduct its business, (ii) the ability of the Borrower, the Originator and/or the Servicer to perform its respective obligations under this Agreement and/or any other Transaction Document to which it is a party, (iii) the validity or enforceability of this Agreement and/or any other Transaction Document to which the Borrower, the Originator and/or the Servicer is a party, (iv) the rights and remedies of the Lender under this Agreement and/or any of the Transaction Documents and/or (v) the validity, enforceability or collectibility of all or any portion of the Pledged Receivables.

“Minimum Tangible Net Worth means, with respect to Resource America, a Tangible Net Worth (measured as of each fiscal quarter end) of not less than $125,000,000.

“Monthly Remittance Report” means a report, in substantially the form of Exhibit C, furnished by the Servicer to the Lender pursuant to Section 6.10(b).

“Moody’s” means Moody’s Investors Service, Inc. (or its successors in interest).

“Morgan Stanley” has the meaning assigned to that term in the preamble hereto.

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“Net Eligible Receivables Balance” means, at any time, (i) the Eligible Receivables Balance at such time, minus (ii) the Overconcentration Amount at such time.

“Non-Level Payment Contract” means a Contract that does not provide for level Scheduled Payments during the term of such Contract.

“Notice of Borrowing” has the meaning assigned to that term in Section 2.02(b) hereof.

“Notice of Pledge” has the meaning assigned to that term in the Custodial Agreement.

“Obligations” means all present and future indebtedness and other liabilities and obligations (howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or due or to become due) of the Borrower to the Secured Parties arising under this Agreement and/or any other Transaction Document and shall include, without limitation, all liability for principal of and interest on the Loans, indemnifications and other amounts due or to become due by the Borrower to the Secured Parties under this Agreement and/or any other Transaction Document, including, without limitation, interest, fees and other obligations that accrue after the commencement of an insolvency proceeding (in each case whether or not allowed as a claim in such insolvency proceeding).

“Obligor” means, collectively, each Person obligated to make payments under a Contract.

“Obligor Collateral” means (i) the Equipment leased to an Obligor under a Lease Contract, (ii) the Equipment and other property pledged by an Obligor to secure its obligations under a Loan Contract, (iii) the Equipment and other property pledged by an Obligor to secure its obligations under a Practice Acquisition Loan Contract and (iv) the Underlying Originator Loan Collateral and other property pledged by an Obligor to secure its obligations under an Underlying Originator Loan Contract.

“Obligor Financing Statement” means a UCC financing statement filed by Originator against an Obligor under a Contract which evidences a security interest in the related Obligor Collateral.

“Officer’s Certificate” means a certificate signed by the president, the secretary, the chief financial officer or any vice president of any Person.

“Opinion of Counsel” means a written opinion of independent counsel acceptable to the Lender, which opinion, if such opinion or a copy thereof is required by the provisions of this Agreement or any other Transaction Document to be delivered to the Borrower or the Lender, is acceptable in form and substance to the Lender.

“Originator” means LEAF Funding, Inc., a Delaware corporation.

“Originator Insurance Agreement” means that certain letter agreement regarding the Originator’s obligations as named loss payee under Insurance Policies and Underlying Insurance Policies, dated as of the date hereof, among the Originator, the Servicer, the Borrower and the Lender, as such agreement may from time to time be amended, restated, supplemented and/or otherwise modified in accordance with the terms thereof.

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“Other Commercial Contract” means any agreement approved by the Servicer in compliance with the Credit and Collection Policy, in each case, pursuant to which the commercial Obligor thereunder agrees to make periodic payments in connection with any loan, services, rental or sale, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“Other Conveyed Property” means, with respect to any Receivable, all of the Borrower’s right, title and interest in, to and under (i) all Collections and other monies at any time received or receivable with respect to such Receivable after the applicable Cut-Off Date (as defined in the Purchase and Sale Agreement), (ii) the Equipment or Underlying Equipment related to such Receivable (to the extent of the Borrower’s ownership rights, if any, therein), (iii) in the case of a Receivable related to any Contract, any and all agreements, documents, certificates and instruments evidencing the Borrower’s security interest or other interest in and to the related Obligor Collateral or any intercreditor agreement with respect thereto, including, without limitation, any Certificate of Title, (iv) the Obligor Collateral related to such Receivable including, without limitation, the security interest in such Obligor Collateral granted by the related Obligor to Originator under the related Contract and assigned by Originator to the Borrower under the Purchase and Sale Agreement, (v) the Obligor Financing Statement, if any, related to such Receivable, (vi) the Insurance Policy and any proceeds from the Insurance Policy relating to such Receivable, including rebates of premiums not otherwise due to an Obligor, (vii) the related Contract and all other items required to be contained in the related Receivable File, any and all other documents or electronic records that the Borrower keeps on file in accordance with its customary procedures relating to such Receivable, the related Obligor Collateral or the related Obligor, (viii) any Security Deposits or Cash Reserve related to such Receivable, (ix) all property (including the right to receive future Liquidation Proceeds) that secures such Receivable and that has been acquired by or on behalf of the Borrower pursuant to the liquidation of such Receivable, and (x) all present and future rights, claims, demands, causes and chooses in action in respect of any or all of the foregoing and all payments on or under and all proceeds and investments of any kind and nature in respect of any of the foregoing.

“Overconcentration Amount” means, at any time, the sum of the Pool A Overconcentration Amount at such time and the Pool B Overconcentration Amount at such time.

“Overdue Payment” means, with respect to a Collection Period, all payments due in a prior Collection Period that the Servicer receives from or on behalf of an Obligor during such Collection Period, including any Servicing Charges.

“Owner” means (i) the Originator or (ii) subject to the prior written consent of the Lender (such consent not to be unreasonably withheld), any other subsidiary of the initial Servicer which acquires all or part of the membership interests of the Borrower.

“Parallel Defaults” has the meaning assigned to that term in Section 5.01(u) hereof.

“Permitted Investments” means any one or more of the following:

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       (i)   direct obligations of, or obligations fully guaranteed as to principal and interest by, the United States or any agency

   or instrumentality thereof, provided such obligations are backed by the full faith and credit of the United States;

(ii)repurchase obligations (the collateral for which is held by a third party or the Trustee), with respect to any security described in clause (i) above, provided that the long-term unsecured obligations of the party agreeing to repurchase such obligations are at the time rated by Moody’s and S&P in one of their two highest long-term rating categories and if rated by Fitch, in one of its two highest long-term rating categories;

(iii)certificates of deposit, time deposits, demand deposits and bankers’ acceptances of any bank or trust company incorporated under the laws of the United States or any State thereof or the District of Columbia, provided that the short-term commercial paper of such bank or trust company (or, in the case of the principal depository institution in a depository institution holding company, the long-term unsecured debt obligations of the depository institution holding company) at the date of acquisition thereof has been rated by Moody’s and S&P in their highest short-term rating category, and if rated by Fitch, in its highest short-term rating category;

(iv) commercial paper (having original maturities of not more than 270 days) of any corporation incorporated under the laws of the United States or any State thereof or the District of Columbia, having a rating, on the date of acquisition thereof, of no less than A-1 by Moody’s, P-1 by S&P and F-1 if rated by Fitch;

(v) money market mutual funds, including funds managed by the Lender’s Bank or its Affiliates, registered under the Investment Company Act of 1940, as amended, having a rating, at the time of such investment, of no less than Aaa by Moody’s, AAA by S&P and AAA if rated by Fitch; and

(vi)any other investments approved in writing by the Lender.

provided, that no such instrument shall be a Permitted Investment if such instrument evidences the right to receive either (a) interest only payments with respect to the obligations underlying such instrument or (b) both principal and interest payments derived from obligations underlying such instrument, where the principal and interest payments with respect to such instrument provide a yield to maturity exceeding 120% of the yield to maturity at par of such underlying obligation. Each Permitted Investment may be purchased by the Lender’s Bank or through an Affiliate of the Lender’s Bank.

“Permitted Liens” means:

(i)with respect to Obligor Collateral, (A) liens and security interests in favor of the Collateral Agent, granted pursuant to the Transaction Documents, (B) the interests of an Obligor arising under the Contract to which it is a party in the Obligor Collateral related to such Contract, (C) liens for taxes, assessments, levies, fees and other governmental and similar charges either not yet due or being contested

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       in good faith and by appropriate proceedings, provided, that appropriate reserves shall have been established with respect to any such taxes either not yet due or being contested in good faith and by appropriate proceedings, (D) any liens with respect to any mechanics, suppliers, materialmen, laborers, employees, repairmen and other like liens arising in the ordinary course of a servicer’s, lessor’s/lender’s or lessee’s/borrower’s business securing obligations which are not due and payable, and (E) salvage rights of insurers with respect to the equipment subject to a Contract under insurance policies maintained pursuant to the Transaction Documents or a Contract; and

(ii) with respect to Underlying Collateral, in addition to the Permitted Liens described in clause (i) above, (x) liens in favor of Originator or the Borrower, granted by the applicable Underlying Obligor, in each case, solely to the extent assigned to the Collateral Agent and (y) the interests of an Underlying Obligor arising under the Underlying Contract to which it is a party in the Underlying Originator Loan Collateral related to such Underlying Contract.

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

“Pledge” means the pledge of any Receivable pursuant to Article II.

“Pledged Assets” has the meaning assigned to that term in Section 2.11.

“Pledged Receivables” means Pledged Pool A Receivables and Pledged Pool B Receivables.

“Pledged Pool A Receivables” has the meaning assigned to that term in Section 2.11(a).

“Pledged Pool B Receivables” has the meaning assigned to that term in Section 2.11(a).

“Pledged Receivables Balance” means, at any time, the aggregate Discounted Balances of all Receivables which are Pledged hereunder to secure Loans at such time.

“Pool A Annualized Net Loss Rate” means, as of any date of determination after the end of the third Collection Period following the date hereof, an amount (expressed as a percentage) equal to (i) the product of (A) (x) the aggregate Discounted Balances of all Pledged Pool A Receivables which were Eligible Pool A Receivables at the time of their Pledge hereunder and which became Defaulted Receivables during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods minus (y) Recoveries related to Pool A Receivable received during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods and (B) 2 (if six or more Collection Periods have occurred since the date hereof), 2.4 (if five Collection Periods have occurred since the date hereof), 3 (if four Collection Periods have occurred since the date hereof), 4 (if three Collection Periods have occurred since the date hereof), 6 (if two Collection Periods have occurred since the date hereof) or 12 (if one Collection Period has occurred since the date hereof) divided by (ii) the Eligible Pool A Receivables Balance as of the first Business Day of the six (or

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such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods.

“Pool A Borrowing Base” means, at any time, the lowest of:

(i)98% of the Amortized Equipment Cost with respect to all Eligible Pool A Receivables; and

(ii)an amount equal to the Pool A Net Eligible Receivables Balance multiplied by a percentage equal to 92%.

“Pool A Contract” means a Lease Contract, a Loan Contract, a Practice Acquisition Loan Contract, a Real Estate Contract or an Other Commercial Contract.

“Pool A Lease File” has the meaning assigned to that term in clause (a) of the definition of “Receivable File”.

“Pool A Loan” has the meaning assigned to that term in Section 2.01.

“Pool A Loan File” has the meaning assigned to that term in clause (b) of the definition of “Receivable File”.

“Pool A Net Eligible Receivables Balance” means, at any time, (i) the Eligible Pool A Receivables Balance at such time minus (ii) the Pool A Overconcentration Amount at such time.

“Pool A Overconcentration Amount” means, at any time, (x) after the first anniversary of the Closing Date or (y) the aggregate outstanding principal balance of the Loans is greater than $35,000,000, without duplication, the sum of:

(i)an amount equal to the Global Overconcentration Amount at such time multiplied by a fraction the numerator of which is the aggregate Discounted Balances of all Eligible Pool A Receivables at such time and the denominator of which is the aggregate Discounted Balances of all Eligible Receivables at such time;

(ii)the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables with respect to which the related Contract has a remaining term greater than 85 months and equal to or less than 120 months exceeds 50% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

(iii)the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables with respect to which the related Contract has a remaining term greater than 120 months exceeds 15% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

(iv)the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables with respect to which the related Contract has a Discounted Balance greater than $1,000,000 exceeds 50% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

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(v)the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables related to any one vendor of Equipment (or Affiliate thereof) at such time exceeds 35% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

(vi)the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables arising under a Contract which provides for a Balloon Payment or Put Payment, the amount of which is in excess of 34% of the original amount of the Scheduled Payments to be made under such Contract, exceeds 20% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

(vii)the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables arising from Practice Acquisition Loan Contracts at such time exceeds 50% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time; and

(viii)the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables that are Stand Alone Working Capital Loans at such time exceeds 15% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time.

“Pool A Receivable” means the rights to all payments from an Obligor under a Pool A Contract, including, without limitation, any right to the payment with respect to (i) Scheduled Payments, (ii) any prepayments or overdue payments made with respect to such Scheduled Payments, (iii) any Guaranty Amounts, (iv) any Insurance Proceeds, (v) any Servicing Charges and (vi) any Recoveries.

“Pool A Termination Event” means the occurrence of any of the following events:

(i)the rolling weighted average of the Delinquency Rates in respect of any three consecutive Collection Periods, calculated by the Lender solely with respect to Pool A Receivables, exceeds 3.5%;

(ii)the Annualized Default Rate, calculated by (or in a manner satisfactory to) the Lender solely with respect to Pool A Receivables, exceeds 4.0%; or

(iii)the Pool A Annualized Net Loss Rate exceeds 3.5%.

“Pool B Annualized Net Loss Rate” means with respect to any Underlying Originator, as of any date of determination at least three Collection Periods after the date that the Pool B Receivable

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related to such Underlying Originator is Pledged hereunder (the “Applicable Date”), an amount (expressed as a percentage) equal to (i) the product of (A) (x) the aggregate Discounted Balances of all Underlying Contracts related to such Underlying Originator which were Eligible Underlying Contracts at the time of the Pledge of the related Pool B Receivable hereunder and as to which an Underlying Contract Event of Default has occurred during the six (or such lesser number of Collection Periods since the Applicable Date) immediately preceding Collection Periods minus (y) recoveries received by the Underlying Originator during the six (or such lesser number of Collection Periods since the Applicable Date) immediately precedingCollection Periods and (B) 2 (if six or more Collection Periods have occurred since the Applicable Date), 2.4 (if five Collection Periods have occurred since the Applicable Date), 3 (if four Collection Periods have occurred since the Applicable Date), 4 (if three Collection Periods have occurred since the Applicable Date), 6 (if two Collection Periods have occurred since the Applicable Date) or 12 (if one Collection Period has occurred since the Applicable Date) divided by (ii) the aggregate Discounted Balances of all Underlying Contracts related to such Underlying Originator which are Eligible Underlying Contracts as of the first Business Day of the six (or such lesser number of Collection Periods since the Applicable Date) immediately preceding Collection Periods.

“Pool B Borrowing Base” means, at any time, (x) the sum of the amounts calculated with respect to each Eligible Pool B Receivable, equal to the least of:

(i)the sum of (A) 92% of the aggregate Discounted Balance of all related Underlying Contracts and (B) the amount of funds on deposit in the Cash Reserve Account related to such Eligible Pool B Receivable;

(ii)100% of the Amortized Equipment Cost with respect to such Eligible Pool B Receivable at such time (calculated without giving effect to any associated amortized indirect costs related to the applicable Equipment) minus the Holdback Amount for such Eligible Pool B Receivable; or

(iii)the Discounted Balance of such Eligible Pool B Receivable

minus (y) the Pool B Overconcentration Amount.

“Pool B Contract” means an Underlying Originator Loan Contract.

“Pool B Loan” has the meaning assigned to that term in Section 2.01.

“Pool B Master Receivable File” has the meaning assigned to that term in clause (c) of the definition of “Receivable File”.

“Pool B Micro Ticket Receivables” means a Pool B Receivable related to equipment with an original cost of less than $3000 and with respect to which the related Obligor is Northern Leasing Systems, Inc. or any other Obligor as approved in writing by the Lender in its sole discretion.

“Pool B Net Eligible Receivables Balance” means, at any time, (i) the Eligible Pool B Receivables Balance at such time minus (ii) the Pool B Overconcentration Amount at such time.

“Pool B Overconcentration Amount” means, at any time, (x) after the first anniversary of the Closing Date or (y) the aggregate outstanding principal balance of the Loans is greater than $35,000,000, without duplication, the sum of:

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(i)an amount equal to the Global Overconcentration Amount at such time multiplied by a fraction the numerator of which is the aggregate Discounted Balances of all Eligible Pool B Receivables at such time and the denominator of which is the aggregate Discounted Balances of all Eligible Receivables at such time;

(ii)the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables related to any one Underlying Originator (or Affiliate thereof) at such time exceeds $25,000,000;

(iii)the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables related to any one Underlying Obligor (or Affiliate thereof) at such time exceeds $1,000,000;

(iv)the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables with respect which the related Contract has a remaining term greater than 84 months exceeds 20% of the sum of the Discounted Balances of all Eligible Pool B Receivables at such time; and

(v)the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables that are Pool B Micro Ticket Receivables at such time exceeds $15,000,000.

“Pool B Receivable” means the rights to all payments from an Obligor under a Pool B Contract, including, without limitation, any right to the payment with respect to (i) Scheduled Payments and Underlying Scheduled Payments, (ii) any prepayments or overdue payments made with respect to such Scheduled Payments and Underlying Scheduled Payments, (iii) any Guaranty Amounts, (iv) any Insurance Proceeds, (v) any Servicing Charges and (vi) any Recoveries.

“Pool B Termination Event” means, with respect to an Underlying Originator, the occurrence of any of the following events:

(i)other than with respect to Pool B Micro Ticket Receivables, the rolling weighted average of the Underlying Delinquency Rates with respect to such Underlying Originator in respect of any three consecutive Collection Periods exceeds 8%;

(ii)other than with respect to Pool B Micro Ticket Receivables, the Pool B Annualized Net Loss Rate with respect to such Underlying Originator in respect of any Collection Period exceeds 6%;

(iii)other than with respect to Pool B Micro Ticket Receivables, the current amount of recourse, if any, against such Underlying Originator with respect to its obligations under the related Underlying Originator Loan Contract is less than 5% of the maximum amount of such recourse;

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(iv)with respect to Pool B Micro Ticket Receivables only, the rolling weighted average of the Underlying Delinquency Rates with respect to such Underlying Originator in respect of any three consecutive Collection Periods exceeds 10%;

(v)with respect to Pool B Micro Ticket Receivables only, the Pool B Annualized Net Loss Rate with respect to such Underlying Originator in respect of any Collection Period exceeds 25%;

(vi)with respect to Pool B Micro Ticket Receivables only, the current amount of recourse, if any, against such Underlying Originator with respect to its obligations under the related Underlying Originator Loan Contract is less than 5% of the maximum amount of such recourse; or

(vii)the occurrence of any Bankruptcy Event in respect of such Underlying Originator.

“Pool B Underlying Lease File” has the meaning assigned to that term in clause (d) of the definition of “Receivable File”.

“Pool B Underlying Loan File” has the meaning assigned to that term in clause (e) of the definition of “Receivable File”.

“Practice Acquisition Loan Contract” means, collectively, a “Term Note (Level Payments)” together with the “Master Loan and Security Agreement” related thereto and incorporated by reference therein, each in the form attached hereto as Exhibit D-3 (as such exhibit may be updated from time to time by the Borrower with the consent of the Lender) or a loan agreement and promissory note otherwise approved by the Servicer in compliance with the Credit and Collection Policy, pursuant to which Originator makes a loan to an Obligor to enable such Obligor to acquire a dental, medical, osteopathic medical, optometric or veterinary practice, secured by Equipment related to the practice of dentistry, medicine or veterinary medicine and certain non-equipment assets, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“Prepayment Amount” means the principal amount of Loans repaid by the Borrower in connection with an optional prepayment of Loans made by the Borrower pursuant to Section 2.15 hereof.

“Prepayment Date” means any date on which an optional prepayment of Loans is made by the Borrower pursuant to Section 2.15 hereof.

“Prepayment Premium” has the meaning ascribed thereto in the Fee Letter.

“Program Termination Cure Event” means the occurrence of any of the following events:

(i)following the occurrence of a Program Termination Event described in clause (iv), (v), (vi), (vii), (viii) or (ix) of the definition thereof, such Program Termination Event is cured within the following two Collection Periods and two further Collection Periods pass without the occurrence of such a Program Termination Event; or

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(ii)following the occurrence of a Program Termination Event described in clause (xi) of the definition thereof, such Program Termination Event is cured; provided that, in any event, no other Program Termination Event shall have occurred and be continuing.

“Program Termination Date” means the earliest of (i) the date of occurrence of any event described in Section 7.01(a) hereof, (ii) the date of the declaration of the Program Termination Date pursuant to any other subsection of Section 7.01 or (iii) the date of the declaration of the Program Termination Date by, and at the option of, the Lender upon the occurrence of a Program Termination Event.

“Program Termination Event” means the occurrence of any of the following events:

(i)a regulatory, tax or accounting body has ordered that the activities of the Lender or any Affiliate thereof contemplated hereby be terminated or, as a result of any other event or circumstance, the activities of the Lender or any Affiliate contemplated hereby may reasonably be expected to cause the Lender or the Person, if any, then acting as the administrator or the manager for the Lender or any of its Affiliates to suffer materially adverse regulatory, accounting or tax consequences;

(ii)an Event of Default has occurred and is continuing;

(iii)the Facility Maturity Date shall have occurred;

(iv)other than with respect to Pool B Micro Ticket Receivables,the Annualized Default Rate exceeds 4.5%;

(v)other than with respect to Pool B Micro Ticket Receivables, the rolling weighted average of the Delinquency Rates in respect of any three consecutive Collection Periods exceeds 4.0%;

(vi)other than with respect to Pool B Micro Ticket Receivables, the Annualized Net Loss Rate exceeds 4.0%;

(vii)with respect to Pool B Micro Ticket Receivables only, the Annualized Default Rate exceeds 25.0%;

(viii)with respect to Pool B Micro Ticket Receivables only, the rolling weighted average of the Delinquency Rates in respect of any three consecutive Collection Periods exceeds 10.0%;

(ix)with respect to Pool B Micro Ticket Receivables only, the Annualized Net Loss Rate exceeds 25.0%;

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(x)a Servicer Default has occurred and is continuing; or

(xi)(1) any Qualifying Swap Counterparty ceases to maintain the long-term debt ratings required of a Qualifying Swap Counterparty and (A) does not post cash collateral in a manner acceptable to the Lender within 45 days and (B) is not replaced within 45 days by a replacement acceptable to the Lender or (2) the Borrower fails to comply with any term, covenant or agreement hereunder related to the maintenance of any Qualifying Interest Rate Swaps; or

(xii)the occurrence of three or more Pool A Termination Events and/or Pool B Termination Events.

“Purchase and Sale Agreement” means that certain Purchase and Sale Agreement, dated as of the date hereof, between the Originator, as seller, and the Borrower, as purchaser, together with all instruments, documents and agreements executed in connection therewith, as such Purchase and Sale Agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms hereof.

“Purchase Date” has the meaning set forth in the Purchase and Sale Agreement.

“Put Payment” means with respect to any Contract or Underlying Contract constituting a lease, the payment, if any, required to be made by the Obligor under the terms of such lease in connection with the required purchase by such Obligor or Underlying Obligor of the related Equipment or Underlying Equipment at the end of the term of such lease.

“QSC Subordinated Termination Payment” means a termination payment required to be made by the Borrower to a Qualifying Swap Counterparty upon the termination of the related Qualifying Interest Rate Swap pursuant to an event of default or termination event (other than Illegality or Tax Event) (each as defined in the related Qualifying Interest Rate Swap) as to which the Qualifying Swap Counterparty was the defaulting party or the sole affected party under the Qualifying Interest Rate Swap.

“Qualifying Interest Rate Swap” means (X) an interest rate swap agreement (i) between the Borrower and a Qualifying Swap Counterparty, (ii) under which the Borrower shall receive a floating rate of interest based on a Eurodollar Index acceptable to the Lender in exchange for the payment by the Borrower of a fixed rate of interest equal to the applicable Swapped Rate, (iii) the effective date of which is a Borrowing Date, (iv) having a varying notional balance which is, as of the effective date thereof, in an amount equal to the aggregate principal amount of the Loans advanced on such effective date and (v) which shall otherwise be on such terms and conditions and pursuant to such documentation as shall be acceptable to the Lender or (Y) an alternative interest rate hedging agreement agreed to in writing by the Borrower and the Lender.

“Qualifying Swap Counterparty” means Morgan Stanley Capital Services Inc. (or any successors or permitted assigns) or any other financial institution that is in the business of entering into interest rate swap transactions, is acceptable to the Lender and has a long-term senior unsecured debt rating of “A” or higher (or the equivalent) by each Rating Agency then rating such long-term senior unsecured debt) or posts cash collateral in a manner and amount satisfactory to the Lender.

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“Rating Agencies” means Moody’s, S&P and Fitch, or any other nationally recognized statistical rating organizations as may be designated by the Lender.

“Real Estate Contract” means a loan agreement and promissory noteapproved by the Servicer in compliance with the Credit and Collection Policy, in each case, pursuant to which the Originator makes a loan to an Obligor secured by rentals or other receivables arising from the use of real property, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“Receivable” means a Pool A Receivable or a Pool B Receivable.

“Receivable File” means with respect to each Receivable:

(a)if such Receivable is related to a Lease Contract the following items (collectively, a “Pool A Lease File”):

(i)(1) the related original, executed Lease Contract (or, in the case of a Lease Contract under a master lease, a machine or facsimile copy of the related master lease certified by an authorized officer of the Borrower and stamped “I hereby certify that this is a true and exact copy of the original” and an original, executed schedule thereto describing the related Equipment) unless such Lease Contract is related to an Exception Sublimit Receivable, in which event the executed Lease Contract (or, in the case of Lease Contracts under a master lease, the related schedule) may be a machine or facsimile copy certified in the manner described above, (2) a true, executed copy of the related delivery/installation certificate or acknowledgment and acceptance of delivery certificate if such Receivable is related to Equipment with an original cost in excess of $50,000, (3) a true copy of the  Insurance Certificate if such Receivable is related to Equipment with an original cost in excess of $100,000, (4) other than with respect to a Lease Contract related to Equipment which has an original cost of less than $25,000 if such Lease Contract is a Dollar Purchase Option Contract or $50,000 if such Lease Contract is a FMV Contract, a “transmittal order” from the Servicer to a filing service company and an “in process report” from such filing service company to the Servicer (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement and (5) vendor order(s) or invoice(s); and

(ii)copies of any additional documents, other than servicing related documents, that the Borrower keeps on file with respect to such Receivable;

(b)if such Receivable is related to a Loan Contract or a Practice Acquisition Loan Contract the following items (collectively, a “Pool A Loan File”):

(i)(1) the original, executed promissory note (with fully executed, original Allonge attached thereto), (2) a true, executed copy of the related “Master Loan and Security Agreement”, (3) a true copy of the related Insurance Certificate if such Receivable is related to Equipment with an original cost in excess of

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       $100,000 and (4) other than with respect to a Receivable related to Equipment which has an original cost of less than $25,000, a “transmittal order” from the Servicer to afiling service company and an “in process report” from such filing service company to the Servicer (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement; and

(ii)copies of any additional documents, other than servicing related documents, that the Borrower keeps on file with respect to such Receivable;

(c)if such Receivable is related to an Underlying Originator Loan Contract the following items (collectively, a “Pool B Master Receivable File”):

(i)(1) the original, executed promissory note (with fully executed, original Allonge attached thereto) unless such Underlying Originator Loan Contract is in the form of a “Master Purchase and Sale Agreement,” (2) a true, executed copy of the related security agreement and (3) a “transmittal order” from the Servicer to a filing service company and an “in process report” from such filing service company to the Servicer (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement; and

(ii)copies of any additional documents, other than servicing related documents, that the Borrower keeps on file with respect to such Receivable;

(d)if such Receivable is related to a Underlying Originator Loan Contract which finances an Underlying Lease Contract the following items (collectively, a “Pool B Underlying Lease File”):

(i)(1) the related original, executed Underlying Lease Contract (or, in the case of an Underlying Lease Contract under a master lease, a machine or facsimile copy of the related master lease certified by an authorized officer of the Borrower and stamped “I hereby certify that this is a true and exact copy of the original” and an original, executed schedule thereto describing the related Equipment), (2) a true, executed copy of the related delivery/installation certificate or acknowledgment and acceptance of delivery certificate, (3) a true, executed copy of the related purchase agreement, (4) a true copy of the related Underlying Insurance Certificate if such Underlying Lease Contract is related to Equipment with an original cost in excess of $100,000, (5) other than with respect to an Underlying Lease Contract related to Equipment which has an original cost of less than $25,000 if such Underlying Lease Contract is a Dollar Purchase Option Contract or $50,000 if such Underlying Lease Contract is a FMV Contract, a “transmittal order” from the Underlying Originator to a filing service company and an “in process report” from such filing service company to the Underlying Originator (or other evidence of the submission of the related UCC

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       financing statement for filing in the appropriate filing office) and, within 45 days of the related Underlying Lease Contract being executed, a file-stamped copy of the related UCC financing statement and (6) vendor order or invoice; and

(ii)copies of any additional documents, other than servicing related documents, that the Borrower keeps on file with respect to such Receivable;

(e)if such Receivable is related to an Underlying Originator Loan Contract which finances an Underlying Loan Contract the following items (collectively, a “Pool B Underlying Loan File”):

(i)(1) the original, executed promissory note (with fully executed, original Allonge attached thereto), (2) a true, executed copy of the related security agreement, (3) a true copy of the related Underlying Insurance Certificate if such Underlying Loan Contract is related to Equipment with an original cost in excess of $100,000 and (4) other than with respect to an Underlying Loan Contract related to Equipment which has an original cost of less than $25,000 a “transmittal order” from the Underlying Originator to a filing service company and an “in process report” from such filing service company to the Underlying Originator (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement; and

(ii)copies of any additional documents, other than servicing related documents, that the Borrower keeps on file with respect to such Receivable.

In addition, if the Obligor Collateral related to such Receivable (other than a Vehicle Sublimit Pledged Receivable) is a Vehicle, the related Receivable File shall include the original copy of the Certificate of Title with respect to such Vehicle which such Certificate of Title notes the owner of such Vehicle as being the Borrower and indicates “Morgan Stanley Bank” as the sole lienholder with respect to such Vehicle or (prior to the 90th day after such Receivable was first included in the calculation of the Eligible Receivables Balance, if such Certificate of Title has not yet been received by the Servicer or the Borrower) a copy of the application for such Certificate of Title.

“Receivables Schedule” has the meaning assigned to that term in the Custodial Agreement.

“Records” means all documents, books, records and other information (including, without limitation, tapes, disks, punch cards and related property and rights) maintained with respect to Receivables and the related Obligors which the Borrower has itself generated, in which the Borrower has acquired an interest pursuant to the Purchase and Sale Agreement or in which the Borrower has otherwise obtained an interest.

“Recoveries” means, for any Collection Period during which, or any Collection Period after the date on which, any Receivable becomes a Defaulted Receivable and with respect to such Defaulted Receivable, all payments that the Servicer received from or on behalf of

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the related Obligor during such Collection Period in respect of such Defaulted Receivable or from the repossession, liquidation or re-leasing of the related Obligor Collateral, including but not limited to Scheduled Payments, Overdue Payments, Guaranty Amounts and Insurance Proceeds.

“Registrar of Titles” means with respect to any State, the governmental agency or body responsible for the registration of, and the issuance of certificates of title relating to, motor vehicles and liens thereon.

“Related Security” means with respect to any Receivable:

(i)any and all security interests or liens and property subject thereto from time to time securing or purporting to secure payment of such Receivable;

(ii)all guarantees, indemnities, warranties, letters of credit, insurance policies and proceeds and premium refunds thereof and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable; and

(iii)all proceeds of the foregoing.

“Release Price” means, with respect to a Pledged Receivable to be released hereunder, an amount equal to the Discounted Balance of such Pledged Receivable at the time of such release plus interest accrued thereon at the Discount Rate from and including the Remittance Date immediately preceding the date such Pledged Receivable is to be released through (but not including) the next succeeding Remittance Date.

“Remittance Date” means the twenty-third (23^rd) day of each month beginning December, 2006, or, if such date is not a Business Day, the next succeeding Business Day; provided, that the final Remittance Date shall occur on the Collection Date.

“Resource America” means Resource America, Inc., a Delaware corporation.

“Rollover Interest Period” means any Interest Period other than any Interest Period (i) applicable to the Loan arising as a result of the Borrowing on the initial Borrowing Date or (ii) applicable to any new Loan arising as a result of a Borrowing on a Subsequent Borrowing Date.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (or its successors in interest).

“Scheduled Payments” means, with respect to any Receivable, the periodic payments payable under the terms of the related Contract (but not including any such periodic payment to the extent paid in advance by the related Obligor).

“Secured Parties” means the Lender, the Servicer, the Backup Servicer, the Custodian, the Lender’s Bank, each Qualified Swap Counterparty and their respective successors and assigns.

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“Security Deposit” means any amount paid to the Servicer or the Borrower by an Obligor as a security deposit or as a payment in advance of any amounts to become due under a Contract, which has not previously been refunded to such Obligor or applied toward such Obligor’s obligations under such Contract (for purposes of clarification, a Cash Reserve shall not be deemed to constitute a Security Deposit).

“Security Deposit Account” has the meaning assigned to that term in Section 2.05.

“Security Deposit Account Agreement” means that certain Securities Account Agreement, dated the date of this Agreement, among the Borrower, the Servicer, the Lender’s Bank and the Lender, as such agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms thereof.

“Servicer” means, at any time, LEAF Financial or any other Person then authorized, pursuant to Section 6.01, to service, administer and collect Pledged Receivables.

“Servicer Advance” has the meaning assigned to such term in Section 6.19.

“Servicer Default” means the occurrence of any of the following events:

(i)the failure of the Servicer to deliver any payments, collections or proceeds which it is obligated to deliver under the terms hereof or of any other Transaction Document at the times it is obligated to make such deliveries under the terms hereof or of any other Transaction Document, and such failure remains unremedied for two Business Days;

(ii)the failure of the Servicer to satisfy any of its reporting, certification, notification or documentation requirements under the terms hereof or of any other Transaction Document or the failure of the Servicer to observe or perform any material term, covenant or agreement hereunder or under any other Transaction Document (other than those described in clause (i) above) and such failure shall remain unremedied for 10 days after the Servicer first has knowledge, whether constructive or actual, of such failure;

(iii)any representation, warranty or statement of the Servicer made herein or in any other Transaction Document shall prove to be incorrect in any material respect, and, solely if such incorrect representation, warranty or statement can be remedied, such representation, warranty or statement is not made true within 15 days;

(iv)the occurrence of an Event of Default;

(v)the occurrence of a Program Termination Event described in clauses (iv), (v), (vi), (vii), (viii), (ix) or (xii) of the definition of Program Termination Events; or

(vi)the occurrence of any Bankruptcy Event in respect of the Servicer.

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      “Servicer Pension Plan” means a “pension plan” as such term is defined in section 3(2) of ERISA, which is subject to title IV of ERISA and to which the Servicer or any ERISA Affiliate of Servicer may have any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

“Servicing Charges” means the sum of (a) all late payment charges paid by Obligors under Contracts after payment in full of any Scheduled Payments due in a prior Collection Period and Scheduled Payments for the related Collection Period and (b) any other incidental charges or fees received from an Obligor, including, but not limited to, late fees, collection fees, taxes and charges for insufficient funds.

“Servicing Fee” means, for any Fee Period, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to (i) the Servicing Fee Rate multiplied by (ii) the Net Eligible Receivables Balance as of the first day of such Fee Period multiplied by (iii) a fraction, the numerator of which shall be the actual number of days in such Fee Period and the denominator of which shall be 360. Upon assuming the duties of the Servicer hereunder, the Backup Servicer shall also be entitled to receive a one-time acceptance fee of $60,000, which shall be considered part of the “Servicing Fee” hereunder but shall be in addition to the amount set forth in the sentence above.

“Servicing Fee Rate” means 1.00%.

“Stand Alone Working Capital Loan” means a loan to a dental, medical, osteopathic medical, optometric or veterinary practice that may be secured by all assets of such dental, medical, osteopathic medical, optometric or veterinary practice or that might be unsecured.

“Standby Backup Servicer’s Fee” means, for any Fee Period or portion thereof prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to the greater of (i) the Standby Backup Servicing Fee Rate, multiplied by the Net Eligible Receivables Balance as of the first day of such Fee Period, multiplied by a fraction, the numerator of which shall be the actual number of days in such Fee Period and the denominator of which shall be 360, or (ii) $1,500. The “Standby Backup Servicer’s Fee” shall also include (i) a one-time acceptance fee of $4,000 payable on the Closing Date and (ii) reasonable out-of-pocket expenses incurred by the Standby Backup Servicer in the performance of its duties.

“Standby Backup Servicing Fee Rate” means .0215%.

“State” means one of the fifty states of the United States or the District of Columbia.

“Subsequent Borrowing” means a Borrowing which occurs on a Subsequent Borrowing Date.

“Subsequent Borrowing Date” means each Business Day occurring after the initial Borrowing Date on an additional Borrowing is funded from the Lender to the Borrower.

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“Swapped Rate” means, with respect to any Qualifying Interest Rate Swap, the annual rate of interest (expressed as a percentage) which the Borrower, as the fixed-rate payor, is required to pay under such Qualifying Interest Rate Swap in order to receive the floating rate of interest provided for under such Qualifying Interest Rate Swap.

“Tangible Net Worth” means, with respect to any Person, the amount calculated in accordance with GAAP as (i) the consolidated net worth of such Person and its consolidated subsidiaries, plus (ii) to the extent not otherwise included in such consolidated net worth, unsecured subordinated Debt of such Person and its consolidated subsidiaries, the terms and conditions of which are reasonably satisfactory to the Lender, minus (iii) the consolidated intangibles of such Person and its consolidated subsidiaries, including, without limitation, goodwill, trademarks, tradenames, copyrights, patents, patent allocations, licenses and rights in any of the foregoing and other items treated as intangibles in accordance with GAAP.

“Transaction Documents” means this Agreement, the Purchase and Sale Agreement, the Lockbox Intercreditor Agreement,the Collection Account Agreement, the Security Deposit Account Agreement, each Cash Reserve Account Agreement, the Fee Letter, the Custodial Agreement, the Originator Insurance Agreement, any lease bailment agreement with a sub-custodian and each Qualifying Interest Rate Swap and each document and instrument related to any of the foregoing.

“Transition Costs” means any documented expenses and allocated cost of personnel reasonably incurred by the Backup Servicer in connection with a transfer of servicing from the Servicer to the Backup Servicer as the successor Servicer; provided, that such expenses and allocated costs do not exceed $60,000.

“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

“Underlying Collateral” means the Underlying Equipment leased or sold to an Underlying Obligor, or serving otherwise as collateral for a loan to an Underlying Obligor under an Underlying Contract.

“Underlying Contract” means an Underlying Lease Contract or an Underlying Loan Contract.

“Underlying Contract Event of Default” means, as of any time of determination, the occurrence and continuation of any of the following events with respect to any Underlying Contract:

(i)any Underlying Scheduled Payment (or other amount payable under the terms of the related Underlying Contract) remains unpaid for more than 120 days after the due date therefor set forth in such Underlying Contract;

(ii)the first or second Underlying Scheduled Payment is not paid in full when due under the related Underlying Contract;

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(iii)any payment or other material terms of the related Underlying Contract have been modified due to credit related reasons after such Underlying Contract was acquired by Originator;

(iv)such Underlying Contract has been or should be charged off as a result of the occurrence of a Bankruptcy Event with respect to the related Underlying Obligor, if any, or has been or should otherwise be deemed uncollectible by the Underlying Originator in accordance with its credit and collection policy; or

(v)the related Underlying Equipment has been repossessed.

“Underlying Delinquency Rate” means with respect to any Underlying Originator, as of any date of determination, an amount (expressed as a percentage) equal to (i) the aggregate Discounted Balances of all Underlying Contracts related to such Underlying Originator as to which any part of any Underlying Scheduled Payment (or other amount payable under the terms of the related Underlying Contract) remains unpaid for more than 30 days but not more than 120 days after the due date therefor set forth in such Underlying Contract as of the last day of the immediately preceding Collection Period divided by (ii) the aggregate Discounted Balances with respect to all Eligible Pool B Underlying Lease Contracts and Eligible Pool B Underlying Loan Contracts related to such Underlying Originator as of such day.

“Underlying Equipment” means the equipment or Vehicle leased or sold to an Underlying Obligor by an Underlying Originator, or serving as collateral for a loan to an Underlying Obligor by an Underlying Originator, under an Underlying Contract together with any replacement parts, additions and repairs thereof, and any accessories incorporated therein and/or affixed thereto.

“Underlying Insurance Certificate” means with respect to any Pool B Receivable, the insurance certificate related to the Underlying Insurance Policy with respect to the Underlying Contract relating to such Receivable (which insurance certificate shall list the Originatoror the Underlying Originator as the loss payee).

“Underlying Insurance Policy” means, with respect to any Underlying Collateral, the insurance policy maintained by or on behalf of the Obligor pursuant to the related Contract that covers physical damage to the related Equipment (in an amount sufficient to insure completely the value of such Equipment) and general liability (including policies procured by the Borrower or the Servicer, or any agent thereof, on behalf of the Obligor).

“Underlying Lease Contract” means a lease contract pursuant to which Underlying Equipment is leased to an Underlying Obligor by an Underlying Originator, together with all schedules, supplements and amendments thereto and each other document and instrument related to such lease contract.

“Underlying Lease Documents” means, with respect to any Pool B Receivable, the Underlying Lease Contract and all agreements, documents or instruments evidencing, securing, guaranteeing or otherwise relating to the obligations of the Underlying Obligor thereunder.

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“Underlying Loan Contract” means, collectively, a promissory note, a loan agreement and a security agreement pursuant to which an Underlying Originator makes a loan to an Underlying Obligor secured by Underlying Equipment owned by such Underlying Obligor, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“Underlying Loan Documents” means, with respect to any Pool B Receivable, the Underlying Loan Contract and all agreements, documents or instruments evidencing, securing, guaranteeing or otherwise relating to the obligations of the Underlying Obligor thereunder, including, without limitation, the note or notes evidencing such indebtedness.

“Underlying Obligor” means, collectively, each Person obligated to make payments under an Underlying Contract.

“Underlying Originator” means an Obligor engaged, in the ordinary course of business in providing financing to Underlying Obligors for the purposes of acquiring Underlying Equipment.

“Underlying Originator Credit and Collection Policy” means the credit and collection policy of an Underlying Originator, as such policy may hereafter be amended, modified or supplemented from time to time in compliance with this Agreement.

“Underlying Originator Loan Collateral” means Underlying Loan Contracts and Underlying Lease Contracts and all other assets of the Underlying Originators which secure the obligations of Underlying Originators under an Underlying Originator Loan Contract, or which are sold to the Originator by Underlying Originators under an Underlying Originator Loan Contract, in each case whether now owned or hereafter acquired, and including without limitation the Underlying Loan Documents, the Underlying Lease Documents, Underlying Security Deposit (if any) and the Underlying Equipment related thereto, together with all proceeds of every kind and nature, including proceeds of proceeds, of any and all of the foregoing.

“Underlying Originator Loan Contract” means, collectively, a “Master Purchase and Sale Agreement,” a “Master Loan and Security Agreement,” or a “Loan and Security Agreement,” each of which complies with all of the criteria set forth in Exhibit D-4 hereto (as such exhibit may be updated from time to time by the Borrower with the consent of the Lender), pursuant to which Originator makes a purchase of Underlying Originator Loan Collateral from an Underlying Originator or makes a loan to an Underlying Originator secured by Underlying Originator Loan Collateral, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“Underlying Scheduled Payments” means, with respect to any Underlying Contract, the periodic payments payable under the terms of such Underlying Contract (but not including any such periodic payment to the extent paid in advance by the related Underlying Obligor).

“Underlying Security Deposit” means any amount paid to an Underlying Originator by an Underlying Obligor as a security deposit or as a payment in advance of any amounts to become due under an Underlying Contract, which has not previously been refunded to such Underlying Obligor or applied toward such Underlying Obligor’s obligations under such Underlying Contract.

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“United States” means the United States of America.

“Unmatured Event of Default” means any event that, if it continues uncured, will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default.

“Vehicle” means a new or a used automobile, minivan, sports utility vehicle, light duty truck or heavy duty truck.

“Vehicle Sublimit Pledged Receivable” means a Pledged Receivable, with respect to which the related Obligor Collateral or Underlying Collateral is a Vehicle or other type of equipment which requires a security interest therein to be noted on the certificate of title with respect thereto in order to be perfected, but the Borrower has not forwarded to the Custodian for inclusion in the appropriate Receivable File an original Certificate of Title which indicates the owner of the related Vehicle as being the Borrower and indicates “Morgan Stanley Bank” as the sole lienholder with respect to such Vehicle.

“Weighted Average Swapped Rate” means, as of any date of determination, the weighted average (weighted solely based on the Calculated Swap Amortizing Balances of such Qualifying Interest Rate Swaps as of such date of determination) of the Swapped Rates of the Qualifying Interest Rate Swaps in effect on such date of determination.

SECTION 1.02Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

SECTION 1.03Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

ARTICLE II.

THE RECEIVABLES FACILITY

SECTION 2.01Borrowings. On the terms and conditions hereinafter set forth, the Lender shall make loans (“Loans”) to the Borrower secured by Pledged Assets from time to time during the period from the date hereof until the earlier of the Program Termination Date or the Facility Maturity Date. Separate Loans will be made to finance the Borrower’s acquisition of (x) Pool A Receivables (“Pool A Loans”) and (y) Pool B Receivables (“Pool B Loans”), and no Loan shall finance both Pool A Receivables and Pool B Receivables. Under no circumstances shall the Lender make, or the Borrower request, any Loan if (a) the principal amount of such Loan is less than (i) with respect to the initial Borrowing only, $10,000,000 and (ii) with respect to any Subsequent Borrowing, $500,000, or (b) after giving effect to the Borrowing of such Loan, either (i) a Program Termination Event or an event that but for notice or lapse of time or both would constitute a Program Termination Event has occurred and is continuing or (ii) the aggregate

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Facility Amount hereunder would exceed the lesser of (A) the Borrowing Limit and (B) the Borrowing Base. Under no circumstances shall the Lender make, or the Borrower request, any Loan secured by Pool A Receivables if after giving effect to the Borrowing of such Loan, either (1) the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool A Receivables, would exceed the Pool A Borrowing Base or (2) a Pool A Termination Event shall exist. Under no circumstances shall the Lender make, or the Borrower request, any Loan secured by any Pool B Receivable if after giving effect to the Borrowing of such Loan, either (1) the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables, would exceed the Pool B Borrowing Base or (2) a Pool B Termination Event shall exist with respect to the Underlying Originator related to such Pool B Receivable.

SECTION 2.02The Initial Borrowing and Subsequent Borrowings.

(a)Until the occurrence of the earlier of the Program Termination Date and the Facility Maturity Date, the Lender will make Loans on any Business Day at the request of the Borrower, subject to and in accordance with the terms and conditions of Sections 2.01 and 2.02 and subject to the provisions of Article III hereof.

(b)(1)The initial Borrowing shall be made on at least five (5) Business Days’ irrevocable written notice from the Borrower to the Lender and each Subsequent Borrowing shall be made on at least three (3) Business Days’ irrevocable written notice from the Borrower to the Lender (any such written notice, a “Notice of Borrowing”), provided that such Notice of Borrowing is received by the Lender no later than 12:00 noon (New York City time) on the Business Day of receipt. Any Notice of Borrowing received after 12:00 noon (New York City time) shall be deemed received prior to 12:00 noon (New York City time) on the following Business Day. Each such Notice of Borrowing shall specify (A) the aggregate amount of such Borrowing, (B) the date of such Borrowing, (C) the allocation of the Loans as Pool A Loans and Pool B Loans, and (D) the Eligible Pool A Receivables and the Eligible Pool B Receivables to be Pledged in connection with such Borrowing (and upon such Borrowing, such Receivables shall be Pledged Receivables hereunder). On the date of each Borrowing, the Lender shall, upon satisfaction of the applicable conditions set forth in Article III, make available to the Borrower on the applicable Borrowing Date, no later than 2:00 P.M. (New York City time), in same day funds, the amount of such Borrowing (net of amounts payable to or for the benefit of the Lender), by payment into the account which the Borrower has designated in writing.

(ii)Each Notice of Borrowing delivered to the Lender pursuant to this Section 2.02(b) shall be in an electronic file format acceptable to the Lender (A) accompanied by a copy of the Notice of Pledge (and the Receivables Schedule attached thereto), which was sent to the Custodian pursuant to the terms of the Custodial Agreement in connection with the pledge of Eligible Receivables to be made in connection therewith and (B) specifying for each Receivables pledged therein the information set forth on Exhibit B hereto.

(iii) The Loans shall bear interest at the Interest Rate.

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(iv)Subject to Section 2.15 and the other terms, conditions, provisions and limitations set forth herein, the Borrower may borrow, repay or prepay and reborrow Loans, on and after the date hereof and prior to the earlier to occur of the Facility Maturity Date and the Program Termination Date.

(v)Determinations by the Lender of the existence of any Eurodollar Disruption Event (any such determination to be communicated to the Borrower by written notice from the Lender promptly after the Lender learns of such event), or of the effect of any Eurodollar Disruption Event on its making or maintaining Loans at the Adjusted Eurodollar Rate, shall be conclusive absent manifest error.

SECTION 2.03Determination of Interest Periods and Interest Rates.

(a)The initial Interest Period applicable to any new Loan arising as a result of a Borrowing shall commence on, and include, the date of such Borrowing and shall terminate on, and include, the day immediately prior to the next occurring Remittance Date or such earlier date as the Lender may determine (an “Early Interest Period Termination Date”). All outstanding Pool A Loans allocated to one or more initial Interest Periods or Rollover Interest Periods maturing on the same date shall be combined and allocated to a single Rollover Interest Period at the end of such initial Interest Periods or Rollover Interest Periods. All outstanding Pool B Loans allocated to one or more initial Interest Periods or Rollover Interest Periods maturing on the same date shall be combined and allocated to a single Rollover Interest Period at the end of such initial Interest Periods or Rollover Interest Periods. Each Rollover Interest Period shall commence on, and include, the Remittance Date following the last day of the immediately preceding Interest Period (or, if applicable, on an Early Interest Period Termination Date) and shall terminate on, and include, the day immediately prior to the next occurring Remittance Date.

(b)The interest rate per annum (the “Interest Rate”) applicable to any Loan for any Interest Period shall be equal to the Adjusted Eurodollar Rate; provided, however, that if the Lender shall have notified the Borrower that a Eurodollar Disruption Event has occurred, the Interest Rate for such Loan shall be equal to the Base Rate until such Eurodollar Disruption Event has ceased, at which time the Interest Rate shall again be equal to the Adjusted Eurodollar Rate. Notwithstanding the foregoing:

(c)upon the occurrence and during the continuance of any Program Termination Event, the applicable Interest Rate for all Interest Periods in effect at the time of such occurrence shall convert to, and for all Interest Periods that come into effect during the continuance of any Event of Default shall be, the Default Funding Rate;

(d)upon the occurrence and during the continuance of any Pool A Termination Event, the applicable Interest Rate for all Interest Periods with respect to all Pool A Loans in effect at the time of such occurrence shall convert to, and for all Interest Periods with respect to all Pool A Loans that come into effect during the continuance of any Pool A Termination Event shall be, the Default Funding Rate; and

(e)upon the occurrence and during the continuance of any Pool B Termination Event, the applicable Interest Rate for all Interest Periods with respect to all Pool B Loans in effect at the time of such occurrence shall convert to, and for all Interest Periods with respect to all Pool B Loans that come into effect during the continuance of any Pool B Termination Event shall be, the Default Funding Rate.

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SECTION 2.04Remittance Procedures. The Servicer, as agent for the Lender, shall instruct the Lender’s Bank and, if the Servicer fails to do so, the Collateral Agent shall instruct the Lender’s Bank, to apply funds on deposit in the Collection Account as described in this Section 2.04.

(a)Interest and Breakage Fees. On each Business Day (including any Remittance Date), the Servicer shall, and, if the Servicer fails to do so, the Lender may direct the Lender’s Bank to, retain in the Collection Account for transfer at the further direction of the Lender or any duly authorized agent of the Lender (whether on such day or on a subsequent day) collected funds in an amount equal to accrued and unpaid interest through such day on the Loans not so previously retained and the amount of any accrued and unpaid Breakage Fees owed to the Lender on such day. On or before the last day of each Interest Period, the Lender shall notify the Servicer of the accrued and unpaid interest for such Interest Period and the Servicer shall, on the last day of each Interest Period, direct the Lender’s Bank to pay collected funds set aside in respect of accrued and unpaid interest pursuant to this Section 2.04(a) to the Lender (or the designee of the Lender) in respect of payment of such accrued and unpaid interest for such Interest Period. On any Business Day on which an amount is set aside in respect of Breakage Fees pursuant to this Section 2.04(a), the Servicer shall direct the Lender’s Bank to pay such funds to the Lender in payment of such Breakage Fees.

(b)Interest Period Loan Principal Repayment. The Servicer shall, and if the Servicer fails to do so the Lender may, by 10:00 a.m. (St. Paul, Minnesota time) on the last day of each Interest Period that is not a Remittance Date, direct the Lender’s Bank to transfer collected funds held by the Lender’s Bank in the Collection Account on such date, to pay the Lender in payment (or partial payment) of the outstanding principal amount of all Loans allocated to such Interest Period, in an amount equal to the least of (i) the amount of such collected funds held in the Collection Account other than funds set aside pursuant to Section 2.04(a), (ii) the aggregate outstanding principal amount of Loans allocated to such Interest Period, (iii) if no Program Termination Event shall have occurred and be continuing, an amount equal to the sum of (A) the excess, if any, of the Facility Amount immediately prior to such distribution, calculated solely with respect to Loans secured by Pool A Receivables over the Pool A Borrowing Base and (B) the excess, if any, of the Facility Amount immediately prior to such distribution, calculated solely with respect to Loans secured by Pool B Receivables over the Pool B Borrowing Base (with respect to Pool A Loans and Pool B Loans collectively, after giving effect to any Borrowing made on such date and any distributions of amounts on deposit in the Collection Account made on such date) or (iv) if no Program Termination Event shall have occurred and be continuing, an amount equal to the excess, if any, of the Facility Amount immediately prior to such distribution over the lesser of (A) the Borrowing Base and (B) the Borrowing Limit (after giving effect to any Borrowing made on such date and any distributions of amounts on deposit in the Collection Account made on such date).

    (c)Remittance Date Transfers From Collection Account. The Servicer shall, and if the Servicer fails to do so the Collateral Agent shall, by 10:00 a.m. (St. Paul, Minnesota time) on

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each Remittance Date, direct the Lender’s Bank to transfer collected funds held by the Lender’s Bank in the Collection Account which were remitted to the Collection Account during the Collection Period with respect to such Remittance Date (“Available Funds”), in the following amounts and priority:

(i)to the Borrower, in an amount equal to such funds which were paid by Obligors with respect to their obligation under the related Contracts to pay any taxes (it being agreed by the Borrower that such amount shall be promptly paid to the taxing authorities entitled thereto);

(ii)to the related Qualifying Swap Counterparty under each Qualifying Interest Rate Swap, in an amount equal to (and for the payment of) all amounts which are due and payable by the Borrower to such Qualifying Swap Counterparty on such Remittance Date, pursuant to the terms of the applicable Qualifying Interest Rate Swap or this Agreement, other than any QSC Subordinated Termination Amounts which are due and payable by the Borrower pursuant to the applicable Qualifying Interest Rate Swap;

(iii)on a pro rata basis, to (x) the Backup Servicer in an amount equal to the Standby Backup Servicer’s Fee (to the extent accrued and unpaid as of the last day of the immediately preceding Fee Period) at any time prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as the Servicer hereunder and (y) the Custodian, the Custodian’s Fee and (z) the Lender’s Bank, the Lender’s Bank Fee;

(iv)at any time after the occurrence of a Servicer Default and the appointment of the Backup Servicer as the Servicer hereunder, to the Backup Servicer in an amount equal to (1) the Active Backup Servicer’s Fees which are accrued and unpaid as of the last day of the immediately preceding Fee Period plus (2) any Transition Costs not previously reimbursed to the Backup Servicer plus (3) the Active Backup Servicer’s Indemnified Amounts;

(v)to the Lender in an amount equal to (and for the pro rata payment of) (A) the Fees which are due and payable on such Remittance Date pursuant to the terms of the Fee Letter and (B) any interest on any Loan which is accrued and unpaid as of the last day of the immediately preceding Fee Period;

(vi)at any time prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as the Servicer hereunder, to the Servicer in an amount equal to the Servicing Fee which is accrued and unpaid as the last day of the immediately preceding Fee Period;

(vii)to the Lender (for application to the repayment of Loans Outstanding) in an amount equal to the sum (in the following order, if the available amount should be insufficient to pay in full such sum), without duplication, of:

    (x)any Borrowing Base Deficiency;

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(y)the excess of the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool A Receivables, over the Pool A Borrowing Base; and

(z) the excess of the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables, over the Pool B Borrowing Base;

(viii)on a pro rata basis, (A) to the Servicer in an amount equal to any Servicer Advances (and amounts to be reimbursed as Servicer Advances pursuant to Section 6.03) not previously reimbursed to the Servicer and (B) to the Lender in an amount equal to the aggregate amount of all other Obligations then due from the Borrower to the Lender or any Affected Party hereunder for the account of such parties as applicable (other than those specified in clauses (ix) through (xii) below);

(ix) on or after the occurrence of the Program Termination Date (but prior to any Program Termination Cure Event with respect to the Program Termination Event related to such Program Termination Date), to the Lender for the repayment of Loans Outstanding in an amount equal to the lesser of (A) all remaining Available Funds in the Collection Account and (B) an amount necessary to repay the outstanding principal amount of all Loans in full;

(x)on or after the occurrence of a Pool A Termination Event, to the Lender for the repayment of Pool A Loans in an amount equal to the lesser of (A) all remaining Available Funds in the Collection Account and (B) an amount necessary to repay the outstanding principal amount of all Pool A Loans in full;

(xi) on or after the occurrence of a Pool B Termination Event with respect to any Underlying Originator, to the Lender for the repayment of Pool B Loans related to such Underlying Originator in an amount equal to the lesser of (A) all remaining Available Funds in the Collection Account and (B) an amount necessary to repay the outstanding principal amount of all Pool B Loans related to such Underlying Originator in full;

(xii)to the related Qualifying Swap Counterparty under each Qualifying Interest Rate Swap in an amount equal to (and for the payment of) any QSC Subordinated Termination Payments which are due and payable by the Borrower to such Qualifying Swap Counterparty on such Remittance Date pursuant to the applicable Qualifying Interest Rate Swap; and

(xiii)to the order of the Borrower, any remaining amounts.

(d)Borrower Deficiency Payments. Notwithstanding anything to the contrary contained in this Section 2.04 or in any other provision in this Agreement, if, on any day prior to the Collection Date, the Facility Amount shall exceed the Borrowing Limit, then the Borrower shall remit to the Lender, prior to any Borrowing and in any event no later than the close of business of the Lender on such day (or if such day is not a Business Day, no later than the close of

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business of the Lender on the next succeeding Business Day), a payment (to be applied by the Lender to repay Loans selected by the Lender, in its sole discretion), in such amount as may be necessary to reduce the Facility Amount to an amount less than or equal to the Borrowing Limit. Notwithstanding anything to the contrary contained in this Section 2.04 or in any other provision in this Agreement, if, on any day prior to the Collection Date, the Facility Amount shall exceed the Borrowing Base, then the Borrower shall (X) remit to the Lender, prior to any Borrowing and in any event no later than the close of business of the Lender on such day (or if such day is not a Business Day, no later than the close of business of the Lender on the next succeeding Business Day), a payment (to be applied by the Lender to repay Loans selected by the Lender, in its sole discretion), in such amount as may be necessary to reduce the Facility Amount to an amount less than or equal to the Borrowing Base or (Y) Pledge additional Eligible Receivables hereunder, prior to any Borrowing and in any event no later than the close of business of the Lender on such day (or if such day is not a Business Day, no later than the close of business of the Lender on the next succeeding Business Day) in such amount as may be necessary to increase the Borrowing Base to an amount equal to or greater than the Facility Amount.

(e)Pool A Deficiency Payments. Notwithstanding anything to the contrary contained in this Section 2.04 or in any other provision in this Agreement, if, on any day prior to the Collection Date, the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool A Receivables, would exceed the Pool A Borrowing Base, then the Borrower shall remit to the Lender, prior to any Borrowing and in any event no later than the close of business of the Lender on such day (or if such day is not a Business Day, no later than the close of business of the Lender on the next succeeding Business Day), a payment (to be applied by the Lender to repay Loans with respect to Pool A Receivables selected by the Lender, in its sole discretion), in such amount as may be necessary to reduce such excess to zero.

(f)Pool B Deficiency Payments. Notwithstanding anything to the contrary contained in this Section 2.04 or in any other provision in this Agreement, if, on any day prior to the Collection Date, the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables, would exceed the Pool B Borrowing Base, then the Borrower shall remit to the Lender, prior to any Borrowing and in any event no later than the close of business of the Lender on such day (or if such day is not a Business Day, no later than the close of business of the Lender on the next succeeding Business Day), a payment (to be applied by the Lender to repay Loans with respect to Pool B Receivables selected by the Lender, in its sole discretion), in such amount as may be necessary to reduce such excess to zero.

(g)Instructions to the Lender’s Bank. All instructions and directions given to the Lender’s Bank by the Servicer, the Borrower or the Lender pursuant to this Section 2.04 shall be in writing (including instructions and directions transmitted to the Lender’s Bank in electronic format), and such written instructions and directions shall be delivered with a written certification that such instructions and directions are in compliance with the provisions of this Section 2.04. The Servicer and the Borrower shall immediately transmit to the Lender by telecopy a copy of all instructions and directions given to the Lender’s Bank by such party pursuant to this Section 2.04. The Lender shall immediately transmit to the Servicer and the Borrower by telecopy a copy of all instructions and directions given to the Lender’s Bank by the Lender, pursuant to this Section 2.04.

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SECTION 2.05Security Deposit Account.

(a)On or before the date hereof, the Borrower shall enter into a Security Deposit Account Agreement and open and maintain a segregated trust account (the “Security Deposit Account”) at the Lender’s Bank, for the receipt of amounts representing any Security Deposits with respect to any Pool A Contract by the related Obligor. The Servicer shall promptly deposit into the Security Deposit Account, all Security Deposits related to Pledged Pool A Receivables which are in the possession of, or come into the possession of, the Servicer or the Originator. Monies received in the Security Deposit Account shall be invested in Permitted Investments at the written direction of the Servicer or the Lender (as determined in accordance with the Security Deposit Account Agreement) during the term of this Agreement, and any income or other gain realized from such investment shall be held in the Security Deposit Account, subject to disbursement and withdrawal as herein provided. No such Permitted Investment shall mature later than the Business Day preceding the next following Remittance Date and shall not be sold or disposed of prior to its maturity. Monies shall be subject to withdrawal in accordance with Section 2.05(d) hereof.

(b)The Servicer shall provide to the Borrower monthly written confirmation of investments of funds held in the Security Deposit Account, describing the Permitted Investments in which such amounts have been invested. Any funds not so invested shall be insured by the Federal Deposit Insurance Corporation.

(c)If any amounts invested as provided in Section 2.05(a) hereof shall be subject to disbursement from the Security Deposit Account as set forth in Section 2.05(d) hereof, the Servicer shall cause such investments of such Security Deposit Account to be sold or otherwise converted to cash to the credit of such Security Deposit Account. The Servicer shall not be liable for any investment loss resulting from investment of money in the Security Deposit Account in any Permitted Investment in accordance with the terms hereof (other than in its capacity as obligor under any Permitted Investment and other than to the extent such loss results from the gross negligence or wilful misconduct of the Servicer).

(d)Disbursements from the Security Deposit Account shall be made, to the extent funds therefore are available, only as follows:

(i)for deposit in the Collection Account in accordance with the direction of the Servicer prior to 2:00 p.m. New York time on the Business Day prior to any Remittance Date to the extent that the Servicer, in accordance with the terms of a Pool A Contract, has determined that amounts in respect of a Security Deposit shall be applied as full or partial Recoveries or, in its discretion, as a full or partial Scheduled Payment under such Pool A Contract;

(ii)the Security Deposit with respect to a Pledged Pool A Receivable shall be paid to or upon the order of the Servicer at any time that the Pool A Contract with respect to which such Security Deposit has been made is no longer a Pledged Pool AReceivable, whether through maturity of such Pool A Contract or repurchase by the Servicer, for further disposition by the Servicer in accordance with the terms of the related Pool A Contract or applicable law; and

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(iii) any amounts remaining in the Security Deposit Account upon the Collection Date shall be distributed to or at the direction of the Servicer for further disposition in accordance with the terms of the related Contract or applicable law.

SECTION 2.06Cash Reserve Account.

(a)From time to time after the date hereof, the Borrower may enter into one or more Cash Reserve Account Agreements and open and maintain a segregated trust account (any such account, a “Cash Reserve Account”) at the Lender’s Bank, for the receipt of amounts representing any Cash Reserves funded with respect to any Pool B Contract. The Servicer shall promptly deposit into the Cash Reserve Account, all Cash Reserves related to Pledged Pool B Receivables which are in the possession of, or come into the possession of, the Servicer or the Originator. Monies received in any Cash Reserve Account shall be invested in Permitted Investments at the written direction of the Servicer or the Lender (as determined in accordance with the Cash Reserve Account Agreement) during the term of this Agreement, and any income or other gain realized from such investment shall be held in such Cash Reserve Account, subject to disbursement and withdrawal as herein provided. No such Permitted Investment shall mature later than the Business Day preceding the next following Remittance Date and shall not be sold or disposed of prior to its maturity. Monies shall be subject to withdrawal in accordance with Section 2.06(d) hereof.

(b)The Servicer shall provide to the Borrower monthly written confirmation of investments of funds held in each Cash Reserve Account, describing the Permitted Investments in which such amounts have been invested. Any funds not so invested shall be insured by the Federal Deposit Insurance Corporation.

(c)If any amounts invested as provided in Section 2.06(a) hereof shall be subject to disbursement from a Cash Reserve Account as set forth in Section 2.06(d) hereof, the Servicer shall cause such investments of such Cash Reserve Account to be sold or otherwise converted to cash to the credit of such Cash Reserve Account. The Servicer shall not be liable for any investment loss resulting from investment of money in the Cash Reserve Account in any Permitted Investment in accordance with the terms hereof (other than in its capacity as obligor under any Permitted Investment and other than to the extent such loss results from the gross negligence or willful misconduct of the Servicer).

(d)Disbursements from any Cash Reserve Account shall be made, to the extent funds therefore are available, only as follows:

(i)for deposit in the Collection Account in accordance with the direction of the Servicer prior to 2:00 p.m. New York time on the Business Day prior to any Remittance Date to the extent that the Servicer, in accordance with the terms of a Pool B Contract, has determined that amounts in respect of a Cash Reserve shall be applied as full or partial Recoveries or, in its discretion, as a full or partial Scheduled Payment under such Pool B Contract;

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(ii)the Cash Reserve with respect to a Pool B Contract shall be paid to or upon the order of the Servicer at any time that the related Pool B Loan has been repaid in full and the Pool B Contract with respect to which such Cash Reserve has been made is no longer a Pledged Receivable, whether through maturity of such Contract or repurchase by the Servicer, for further disposition by the Servicer in accordance with the terms of the related Pool B Contract or applicable law; and

(iii)any amounts remaining in the Cash Reserve Account upon the Collection Date shall be distributed to or at the direction of the Servicer for further disposition in accordance with the terms of the related Pool B Contract or applicable law.

SECTION 2.07Payments and Computations, Etc. ii) All amounts to be deposited or paid by the Borrower or the Servicer to the Lender hereunder shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in lawful money of the United States in immediately available funds to the Collection Account or such other account as is designated by the Lender. The Borrower shall, to the extent permitted by law, pay to the Lender interest on all amounts not paid or deposited when due hereunder (whether owing by the Borrower or the Servicer) at the Base Rate, plus 2%, payable on demand; provided, however, that such interest rate shall not at any time exceed the maximum rate permitted by applicable law. Such interest shall be for the account of the Lender. Any Obligation hereunder shall not be reduced by any distribution of any portion of Collections with respect to any Pledged Receivable if at any time such distribution is rescinded or returned by the Lender to the Borrower or any other Person for any reason. All computations of interest and all computations of Breakage Fee and other fees hereunder (including, without limitation, the Fees, the Active Backup Servicer’s Fee, the Standby Backup Servicer’s Fee, the Custodian’s Fee and the Servicing Fee) shall be made on the basis of a year of 360 days (or 365 or 366 days for interest calculated at the Base Rate) for the actual number of days (including the first but excluding the last day) elapsed.

(b)Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or any fee payable hereunder, as the case may be; provided, however, that with respect to the calculation of interest, such extension of time shall not be included in more than one Interest Period.

(c)If any Borrowing requested by the Borrower and approved by the Lender pursuant to Section 2.02 is not for any reason whatsoever, except as a result of the gross negligence or wilful misconduct of the Lender or an Affiliate thereof, made or effectuated, as the case may be, on the date specified therefor, the Borrower shall indemnify the Lender against any loss, cost or expense incurred by the Lender related thereto (other than any such loss, cost or expense solely due to the gross negligence or willful misconduct of the Lender or an Affiliate thereof), including, without limitation, any loss (including cost of funds and reasonable out-of-pocket expenses), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Lender to fund Loans or maintain Loans during such Interest Period.

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 The Lender shall provide to the Borrower documentation setting forth the amounts of any loss, cost or expense referred to in the previous sentence, such documentation to be conclusive absent manifest error.

SECTION 2.08Fees. iii) The Borrower shall pay the Lender certain fees (the “Fees”) in the amounts and on the dates set forth in a fee letter (the “Fee Letter”), dated the date hereof, among the Borrower and the Lender.

(b)All of the Fees payable pursuant to this Section 2.08 (other than Fees payable on the date hereof) shall be payable solely from amounts available for application pursuant to, and subject to the priority of, payment set forth in, Section 2.04.

SECTION 2.09Increased Costs; Capital Adequacy. iv) If, due to either (i) the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) in or in the interpretation of any law or regulation (including, without limitation, any law or regulation resulting in any interest payments paid to a Lender under this Agreement being subject to United States withholding tax) or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the Lender or any Affiliate, successor or assign or participant thereof (each of which shall be an “Affected Party”) of agreeing to make or making, funding or maintaining any Loan (or any reduction of the amount of any payment (whether of principal, interest, fee, compensation or otherwise) to any Affected Party hereunder), as the case may be, the Borrower shall, from time to time, within ten days after written demand complying with Section 2.09(c) by the Lender, on behalf of such Affected Party, pay to the Lender, on behalf of such Affected Party, additional amounts sufficient to compensate such Affected Party for such increased costs or reduced payments.

(b)If either (i) the introduction of or any change in or in the interpretation of any law, guideline, rule or regulation, directive, request or accounting principle or (ii) the compliance by any Affected Party with any law, guideline, rule, regulation, directive, request or accounting principle from any central bank, other governmental authority, agency or accounting authority (whether or not having the force of law), including, without limitation, compliance by an Affected Party with any request or directive regarding capital adequacy, has or would have the effect of reducing the rate of return on the capital of any Affected Party, as a consequence of its obligations hereunder or any related document or arising in connection herewith or therewith to a level below that which any such Affected Party could have achieved but for such introduction, change or compliance (taking into consideration the policies of such Affected Party with respect to capital adequacy), by an amount deemed by such Affected Party to be material, then, from time to time, after demand by such Affected Party (which demand shall be accompanied by a statement setting forth the basis of such demand), the Lender shall be paid, on behalf of such Affected Party (from Collections with respect to Pledged Receivables pursuant to, and subject to the priority of payment set forth in, Section 2.04), such additional amounts as will compensate such Affected Party for such reduction.

(c)In determining any amount provided for in this Section 2.09, the Affected Party may use any reasonable averaging and attribution methods. The Lender, on behalf of any Affected Party making a claim under this Section 2.09, shall submit to the Borrower a certificate setting

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forth in reasonable detail the basis for and the computations of such additional or increased costs, which certificate shall be conclusive absent demonstrable error.

(d)If, as a result of any event or circumstance similar to those described in Section 2.09(a) or 2.09(b), any Affected Party (that is a Lender) is required to compensate a bank or other financial institution (including, without limitation, any Affiliate of Morgan Stanley) providing liquidity support, credit enhancement or other similar support to such Affected Party in connection with this Agreement, then, upon demand by such Affected Party, the Borrower shall pay, in accordance with Section 2.04, to such Affected Party such additional amount or amounts as may be necessary to reimburse such Affected Party for any amounts paid by it, and shall notify each Qualified Swap Counterparty of such payment.

SECTION 2.10Collateral Assignment of Agreements. The Borrower hereby collaterally assigns to the Collateral Agent (and its successors and assigns) for the benefit of the Secured Parties, all of the Borrower’s right and title to and interest in, to and under (but not any obligations under) the Purchase and Sale Agreement, each Qualifying Interest Rate Swap, the Contract related to each Pledged Receivable, all other agreements, documents and instruments evidencing, securing or guarantying any Pledged Receivable and all other agreements, documents and instruments related to any of the foregoing (the “Assigned Documents”). Without limiting any obligation of the Servicer hereunder, the Borrower confirms and agrees that the Collateral Agent (or any designee thereof, including, without limitation, the Servicer), following an Event of Default or a Program Termination Event, shall have the right to enforce the Borrower’s rights and remedies under each Assigned Document, but without any obligation on the part of the Collateral Agent or any of its Affiliates to perform any of the obligations of the Borrower under any such Assigned Document. In addition, each of the Servicer and the Borrower confirms and agrees that the Servicer and the Borrower will, upon receipt of notice or discovery thereof, promptly send to the Collateral Agent a notice of (i) any breach of any representation, warranty, agreement or covenant under any such Assigned Document or (ii) any event or occurrence that, upon notice, or upon the passage of time or both, would constitute such a breach, in each case, immediately upon learning thereof. The parties hereto agree that such assignment to the Collateral Agent shall terminate upon the Collection Date.

SECTION 2.11Grant of a Security Interest. To secure the prompt and complete payment when due of the Obligations and the performance by the Borrower of all of the covenants and obligations to be performed by it pursuant to this Agreement, the Borrower hereby (i) collaterally assigns and pledges to the Collateral Agent (and its successors and assigns), for the benefit of the Secured Parties, and (ii) grants a security interest to the Collateral Agent (and its successors and assigns), for the benefit of the Secured Parties, in all property of the Borrower, whether tangible or intangible and whether now owned or existing or hereafter arising or acquired and wheresoever located (collectively, the “Pledged Assets”), including, without limitation, all of the Borrower’s right, title and interest in, to and under:

(a)all Pool A Receivables and Pool B Receivables purchased by (or otherwise transferred or pledged pursuant to the terms of the Purchase and Sale Agreement) to the Borrower under the Purchase and Sale Agreement from time to time (such Pool A Receivables, the “Pledged Pool A Receivables”, and such Pool B Receivables, the “Pledged Pool B Receivables”), all Other Conveyed Property related to the Pledged Receivables purchased by (or

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otherwise transferred or pledged pursuant to the terms of the Purchase and Sale Agreement) to the Borrower under the Purchase and Sale Agreement, all Related Security related to the Pledged Receivables, all interest of the Borrower in all Obligor Collateral related to the Pledged Receivables (together with all security interests in and insurance proceeds related to such Obligor Collateral and all proceeds from the disposition of such Obligor Collateral, whether by sale to the related Obligors or otherwise), any Security Deposits or Cash Reserve related to such Pledged Receivables, all Collections and other monies due and to become due under the Contracts (and, if applicable, Underlying Contracts) related to the Pledged Receivables received on or after the date such Pledged Receivables were purchased by (or purportedly purchased by) the Borrower under the Purchase and Sale Agreement;

(b)the Assigned Documents, including, in each case, without limitation, all monies due and to become due to the Borrower under or in connection therewith;

(c)the Collection Account, the Lockbox, the Lockbox Account, the Security Deposit Account, each Cash Reserve Account and all other bank and similar accounts relating to Collections with respect to Pledged Receivables (whether now existing or hereafter established) and all funds held therein, and all investments in and all income from the investment of funds in the Collection Account, the Lockbox Account, the Security Deposit Account, each Cash Reserve Account and such other accounts;

(d)the Records relating to any Pledged Receivables;

(e)all UCC financing statements filed by the Borrower against the Originator under or in connection with the Purchase and Sale Agreement;

(f)[Reserved];

(g)each Qualifying Interest Rate Swap, any other interest rate protection agreement entered into with respect to the transactions contemplated under the RLSA and, in each case, all payments thereunder;

(h)all Liquidation Proceeds relating to any Pledged Receivables; and

(i)all proceeds of the foregoing property described in clauses (a) through (g) above, including interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for or on account of the sale or other disposition of any or all of the then existing Pledged Receivables.

The Borrower hereby authorizes the Collateral Agent to file financing statements describing as the collateral covered thereby as "all of the debtor's personal property or assets" or words to that effect, notwithstanding that such wording may be broader in scope than the collateral described in this Agreement.

SECTION 2.12Evidence of Debt. The Lender shall maintain an account or accounts evidencing the indebtedness of the Borrower to the Lender resulting from each Loan owing to the Lender from time to time, including the amounts of principal and interest payable and paid to

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the Lender from time to time hereunder. The entries made in such account(s) of the Lender shall be conclusive and binding for all purposes, absent manifest error.

SECTION 2.13Release of Pledged Receivables. v) Subject to Section 2.15 hereof, upon the repayment of any Loan, the Borrower may obtain the release of any Pledged Receivable and the related Other Conveyed Property or Related Security securing such Loan (including, without limitation, the release of any security interest of the Collateral Agent or the Borrower therein) by depositing into an account designated by the Lender the Release Price therefor on the date of such repayment; provided, that the foregoing release shall only be available if, after giving effect thereto and the application of the proceeds thereof in accordance with the terms hereof, there shall not be a Borrowing Base Deficiency, Program Termination Event, Pool A Termination Event or a Pool B Termination Event (and such Pool B Termination Event is related to such Pledged Receivable), or an event that but for notice or lapse of time or both would constitute any of the foregoing events.

(b)The Borrower shall notify the Collateral Agent of any Release Price to be paid pursuant to this Section 2.13 on the Business Day on which such Release Price shall be paid specifying the Pledged Receivables to be released and the Release Price.

(c)Promptly after the Collection Date has occurred, the Collateral Agent shall re-assign and transfer to the Borrower, for no consideration but at the sole expense of the Borrower, their respective remaining interests in the Pledged Assets, free and clear of any Adverse Claim resulting solely from an act by the Collateral Agent but without any other representation or warranty, express or implied, by or recourse against the Collateral Agent.

SECTION 2.14Treatment of Amounts Paid by the Borrower. Amounts paid by the Borrower pursuant to Section 2.13 on account of Pledged Receivables shall be treated as payments on Pledged Receivables hereunder.

SECTION 2.15Prepayment; Certain Indemnification Rights; Termination. vi) The Borrower may prepay, in whole or in part, the outstanding principal amount of any Loans advanced hereunder. Any amounts so prepaid shall be applied to repay the outstanding principal amount of Loans allocated to an Interest Period or Interest Periods selected by the Lender. Amounts prepaid pursuant to this Section 2.15(a) may be reborrowed in accordance with the terms of this Agreement. If the Borrower intends to make an optional prepayment pursuant to this Section 2.15(a), the Borrower shall give five (5) Business Days' prior written notice thereof to the Lender, specifying the intended Prepayment Date, the intended Prepayment Amount, whether the Loans being prepaid are Pool A Loans or Pool B Loans, a calculation of any applicable Breakage Fee and the Pledged Receivables that the Borrower shall request to have released pursuant to Section 2.13 in connection with such prepayment (and the Discounted Balance thereof). Any such optional prepayment of the outstanding principal amount of any Loans advanced hereunder shall be accompanied by all interest accrued with respect thereto and the Prepayment Premium with respect to the applicable Prepayment Amount and Prepayment Date. If such notice is given, the principal amount specified in such notice (together with all interest accrued with respect thereto and the Prepayment Premium related thereto) shall be due and payable on the Prepayment Date specified therein. Notwithstanding the foregoing, any payment by the Borrower required pursuant to Section 2.04(c)(vii), Section 2.04(d),(e) or (f) or,

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in connection with the occurrence of an Event of Default, pursuant to Section 7.01 hereof shall not be considered an optional prepayment and no Prepayment Premium shall be required to be paid in respect thereof.

(b)Without limiting any other provision hereof, the Borrower agrees to indemnify the Lender, the Qualifying Swap Counterparty and any Affiliate thereof and to hold each such Person harmless from any cost, loss or expense which it may sustain or incur as a consequence of (i) the Borrower making any optional prepayment pursuant to Section 2.15(a) hereof, (ii) any default by the Borrower in making any optional prepayment pursuant to Section 2.15(a) hereof after notice of such prepayment has been given, (iii) any failure by the Borrower to take a Loan hereunder after notice of such Loan has been given pursuant to this Agreement, (iv) any acceleration of the maturity of any Loans by the Lender in accordance with the terms of this Agreement, including, but not limited to, any Breakage Fees, any cost, loss or expense arising related to the termination (in whole or in part) or amendment of any Qualifying Interest Rate Swap and from interest or fees payable by the Lender to lenders of funds obtained by it in order to advance or maintain the Loans hereunder. Indemnification pursuant to this Section shall survive the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation.

(c)Notwithstanding any other provision hereof, the Borrower shall not terminate or amend this Agreement or any other Transaction Document or reduce the Borrowing Limit prior to the Facility Maturity Date without the Lender’s prior written consent, which consent may be withheld in the Lender’s sole discretion.

SECTION 2.16Increase of Borrowing Limit. The Borrower may, upon 30 days’ prior written notice to the Lender (with a simultaneous copy to the Initial Qualifying Swap Counterparty), request that the Borrowing Limit be increased, which request may be granted in the sole discretion, and with the written consent, of the Lender, it being agreed that the Borrower shall pay to the Lender the fee related to such increase that is required pursuant to the terms of the Fee Letter.

ARTICLE III.

CONDITIONS OF LOANS

SECTION 3.01Conditions Precedent to Initial Borrowing. The initial Borrowing hereunder is subject to the conditions precedent that:

(a)the Arrangement Fee (as such term is defined in the Fee Letter) shall have been paid in full and all other acts and conditions (including, without limitation, the obtaining of any necessary regulatory approvals and the making of any required filings, recordings or registrations) required to be done and performed and to have happened prior to the execution, delivery and performance of this Agreement and all related documents and to constitute the same legal, valid and binding obligations, enforceable in accordance with their respective terms, shall have been done and performed and shall have happened in due and strict compliance with all applicable laws; and

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(b)the Lender shall have received on or before the date of such Borrowing the items listed in Schedule I hereto, each in form and substance satisfactory to the Lender.

SECTION 3.02Conditions Precedent to All Borrowings. Each Borrowing (including the initial Borrowing, except as explicitly set forth below) by the Borrower from the Lender shall be subject to the further conditions precedent that:

(a)With respect to any such Borrowing (other than the initial Borrowing), on or prior to the date of such Borrowing, the Servicer shall have delivered to the Lender, in form and substance satisfactory to the Lender, the most recent Monthly Remittance Report required by the terms of Section 6.10(b);

(b)After giving effect to such Borrowing requested by the Borrower the following statements shall be true (and the Borrower shall be deemed to have certified that):

(i)the Facility Amount will not exceed the lesser of the (x) Borrowing Limit and (y) the Borrowing Base;

(ii)the Facility Amount, calculated solely with respect to Loans secured by Pool A Receivables, will not exceed the Pool A Borrowing Base; and

(iii)the Facility Amount, calculated solely with respect to Loans secured by Pool B Receivables, will not exceed the Pool B Borrowing Base;

(c)On the Borrowing Date of such Borrowing, the following statements shall be true and correct, and the Borrower by accepting any amount of such Borrowing shall be deemed to have represented that:

(i)the representations and warranties contained in Section 4.01 are true and correct in all material respects, before and after giving effect to the Borrowing to take place on such Borrowing Date and to the application of proceeds therefrom, on and as of such day as though made on and as of such date;

(ii)no event has occurred and is continuing, or would result from such Borrowing, which constitutes a Program Termination Event hereunder or an event that but for notice or lapse of time or both would constitute a Program Termination Event;

(iii) with respect to any Borrowing of a Pool A Loan, no event has occurred and is continuing, or would result from such Borrowing, which constitutes a Pool A Termination Event hereunder or an event that but for notice or lapse of time or both would constitute a Pool A Termination Event;

(iv)with respect to any Borrowing of a Pool B Loan, no event has occurred and is continuing, or would result from such Borrowing, which constitutes a Pool B Termination Event with respect to the Underlying Originator related to the Pool B Receivable securing such Pool B Loan or an event that but for notice or lapse of time or both would constitute such a Pool B Termination Event;

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(v) (A) the principal amount of such Loan being advanced on such Borrowing Date is not less than $500,000, (b) on and as of such Borrowing Date, after giving effect to such Borrowing, the Facility Amount does not exceed the lesser of (A) the Borrowing Limit and (B) the Borrowing Base, (c) on and as of such Borrowing Date, after giving effect to such Borrowing, the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool A Receivables, does not exceed the Pool A Borrowing Base, and (d) on and as of such Borrowing Date, after giving effect to such Borrowing, the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables, does not exceed the Pool B Borrowing Base;

(vi) (A) the Borrower has delivered to the Lender a copy of the Notice of Borrowing and the related Notice of Pledge (together with the attached Receivables Schedule) pursuant to Section 2.02, each appropriately completed and executed by the Borrower, (B) the Borrower has delivered or caused to have been delivered to the Custodian the Notice of Pledge and each item listed in the definition of Receivable File with respect to the Receivables being Pledged hereunder three (3) or, in the case of the initial Borrowing Date hereunder, four (4) Business Days prior to such Borrowing Date, (C) the Contract related to each Receivable being Pledged hereunder on such Borrowing Date has been duly assigned by the Originator to the Borrower and duly assigned by the Borrower to the Collateral Agent and (D) by 2:00 P.M. (New York City time) on the Business Day immediately preceding such Borrowing Date, a Collateral Receipt from the Custodian confirming that, interalia, the Receivable Files received on or before such Business Day conform with the Receivables Schedule delivered to the Custodian and the Lender pursuant to Section 2.02;

(vii)all terms and conditions of the Purchase and Sale Agreement required to be satisfied in connection with the assignment of each Receivable being Pledged hereunder on such Borrowing Date (and the Other Conveyed Property and Related Security related thereto), including, without limitation, the perfection of the Borrower’s interests therein (other than with respect to Equipment which has a value of less than $25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under FMV Contracts), shall have been satisfied in full, and all filings (including, without limitation, UCC filings) required to be made by any Person and all actions required to be taken or performed by any Person in any jurisdiction to give the Collateral Agent a first priority perfected security interest in such Receivables, Related Security and the Other Conveyed Property related thereto and the proceeds thereof shall have been made, taken or performed;

(viii) (A) the initial Servicer shall have taken or caused to be taken all steps necessary under all applicable law (including the filing of an Obligor Financing Statement) in order to cause a valid, subsisting and enforceable perfected, first priority security interest to exist in Originator’s favor in the Obligor Collateral securing each Receivable being Pledged hereunder on such Borrowing Date (other than with respect to Equipment which has a value of less than $25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under

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        FMV Contracts), (B) the Originator shall have assigned the perfected, first priority security interest in the Obligor Collateral to the Borrower pursuant to the Purchase and Sale Agreement and (C) the Borrower shall have assigned the perfected, first priority security interest in the Obligor Collateral (and the proceeds thereof) referred to in clause (A) above to the Collateral Agent, pursuant to Section 2.11 hereof;

(ix)if the Obligor Collateral related to any Receivable (other than a Vehicle Sublimit Pledged Receivable) securing such Borrowing is a Vehicle, the Borrower shall have delivered to the applicable Registrar of Titles an application for a Certificate of Title for such Vehicle which such Certificate of Title shall indicate the Borrower as the owner of the related Vehicle and indicate “Morgan Stanley Bank” as the sole lienholder with respect to such Vehicle; and

(x)the Borrower shall have taken all steps necessary under all applicable law in order to cause to exist in favor of the Collateral Agent a valid, subsisting and enforceable first priority perfected security interest in the Borrower’s interest in the Obligor Collateral related to each Receivable being Pledged hereunder on such Borrowing Date (other than with respect to Underlying Equipment which has a value of less than $25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under FMV Contracts);

(d)No law or regulation shall prohibit, and no order, judgment or decree of any federal, state or local court or governmental body, agency or instrumentality shall prohibit or enjoin, the making of such Loans by the Lender in accordance with the provisions hereof; and

(e)The Lender shall have received and found to be satisfactory with respect to Pledged Receivables being Pledged in connection with such Borrowing, which have been previously pledged to any lender by the Originator, the Borrower or any Affiliate thereof under any other financing facility, evidence of the release of any liens granted in connection with such financing with respect to any such Pledged Receivables.

(f)Unless a credit agreement and/or security agreement, including but not limited to any such agreement with National City Bank, as agent, related to Receivables being Pledged by the Borrower in connection with such Borrowing, shall have provided for an automatic release of the Agent’s or Collateral Agent’s, as applicable, lien and security interest in such Receivables granted thereunder, the applicable agent or lender shall have executed and delivered to the Borrower and the Collateral Agent a partial release letter and the Borrower shall have duly filed with the appropriate filing office a UCC-3 partial release evidencing the release contained in such release letter, in each case in a form satisfactory to the Collateral Agent.

SECTION 3.03Advances Do Not Constitute a Waiver. No advance of a Loan hereunder shall constitute a waiver of any condition to the Lender’s obligation to make such an advance unless such waiver is in writing and executed by the Lender.

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ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

SECTION 4.01Representations and Warranties of the Borrower. The Borrower hereby represents and warrants, as of the date hereof, on each Borrowing Date and on the first day of each Rollover Interest Period, as follows:

(a)Each Receivable designated as an Eligible Receivable on any Borrowing Base Certificate or Monthly Remittance Report is an Eligible Receivable. Each Receivable included as an Eligible Receivable in any calculation of the Borrowing Base or the Eligible Receivables Balance is an Eligible Receivable.

(b)The Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has the power and all licenses necessary to own its assets and to transact the business in which it is engaged and is duly qualified and in good standing under the laws of each jurisdiction where the transaction of such business or its ownership of the Pledged Receivables requires such qualification.

(c)The Borrower has the power, authority and legal right to make, deliver and perform this Agreement and each of the Transaction Documents to which it is a party and all of the transactions contemplated hereby and thereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement and each of the Transaction Documents to which it is a party, and to grant to the Collateral Agent a first priority perfected security interest in the Pledged Assets on the terms and conditions of this Agreement. This Agreement and each of the Transaction Documents to which the Borrower is a party constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with their respective terms, except as the enforceability hereof and thereof may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws of general application affecting creditors’ rights generally and by general principles of equity (whether such enforceability is considered in a proceeding in equity or at law). No consent of any other party and no consent, license, approval or authorization of, or registration or declaration with, any governmental authority, bureau or agency is required in connection with the execution, delivery or performance by the Borrower of this Agreement or any Transaction Document to which it is a party or the validity or enforceability of this Agreement or any such Transaction Document or the Pledged Receivables, other than such as have been met or obtained.

(d)The execution, delivery and performance of this Agreement and all other agreements and instruments executed and delivered or to be executed and delivered pursuant hereto or thereto in connection with the Pledge of the Pledged Assets will not (i) create any Adverse Claim on the Pledged Assets or (ii) violate any provision of any existing law or regulation or any order or decree of any court, regulatory body or administrative agency or the certificate of formation or limited liability company agreement of the Borrower or any contract or other agreement to which or the Borrower is a party or by which the Borrower or any property or assets of the Borrower may be bound.

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(e)No litigation or administrative proceeding of or before any court, tribunal or governmental body is presently pending or, to the knowledge of the Borrower, threatened against the Borrower or any properties of Borrower or with respect to this Agreement, which, if adversely determined, could have a Material Adverse Effect.

(f)In selecting the Receivables to be Pledged pursuant to this Agreement, no selection procedures were employed which are intended to be adverse to the interests of the Lender.

(g)The grant of the security interest in the Pledged Assets by the Borrower to the Collateral Agent pursuant to this Agreement, is in the ordinary course of business for the Borrower and is not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction. No such Pledged Assets have been sold, transferred, assigned or pledged by the Borrower to any Person, other than the Pledge of such Assets to the Collateral Agent pursuant to the terms of this Agreement.

(h)The Borrower has no Debt or other indebtedness which, in the aggregate, exceeds $10,000, other than Debt incurred under the terms of the Transaction Documents.

(i)The Borrower has been formed solely for the purpose of engaging in the transactions contemplated by this Agreement and the other Transaction Documents.

(j)No injunction, writ, restraining order or other order of any nature adversely affects the Borrower’s performance of its obligations under this Agreement or any Transaction Document to which the Borrower is a party.

(k)The Borrower has filed (on a consolidated basis or otherwise) on a timely basis all tax returns (including, without limitation, all foreign, federal, state, local and other tax returns) required to be filed, is not liable for taxes payable by any other Person and has paid or made adequate provisions for the payment of all taxes, assessments and other governmental charges due from the Borrower except for those taxes being contested in good faith by appropriate proceedings and in respect of which no penalty may be assessed from such contest and it has established proper reserves on its books. No tax lien or similar adverse claim has been filed, and no claim is being asserted, with respect to any such tax, assessment or other governmental charge. Any taxes, fees and other governmental charges payable by the Borrower, as applicable, in connection with the execution and delivery of this Agreement and the other Transaction Documents and the transactions contemplated hereby or thereby have been paid or shall have been paid if and when due.

(l)The chief executive office of the Borrower (and the location of the Borrower’s records regarding the Pledged Receivables (other than those delivered to the Custodian)) is located at 1818 Market Street, 9th Floor, Philadelphia, PA 19103.

(m)The Borrower’s legal name is as set forth in this Agreement; other than as disclosed on Schedule II hereto (as such schedule may be updated from time to by the Lender upon receipt of a notice delivered to the Lender pursuant to Section 6.18), the Borrower has not changed its name since its formation; the Borrower does not have tradenames, fictitious names, assumed names or “doing business as” names other than as disclosed on Schedule II hereto (as such

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schedule may be updated from time to by the Lender upon receipt of a notice delivered to the Lender pursuant to Section 6.18).

(n)The Borrower is solvent and will not become insolvent after giving effect to the transactions contemplated hereby; the Borrower is paying its debts as they become due; and the Borrower, after giving effect to the transactions contemplated hereby, will have adequate capital to conduct its business.

(o)The Borrower has no subsidiaries.

(p)The Borrower has given fair consideration and reasonably equivalent value in exchange for the sale of the Pledged Receivables by the Originator under the Purchase and Sale Agreement.

(q)No Monthly Remittance Report or Borrowing Base Certificate (each if prepared by the Borrower or to the extent that information contained therein is supplied by the Borrower), information, exhibit, financial statement, document, book, record or report furnished or to be furnished by the Borrower to the Lender in connection with this Agreement is or will be inaccurate in any material respect as of the date it is or shall be dated or (except as otherwise disclosed in writing to the Lender, as the case may be, at such time) as of the date so furnished, and no such document contains or will contain any material misstatement of fact or omits or shall omit to state a material fact or any fact necessary to make the statements contained therein not misleading.

(r)No proceeds of any Loans will be used by the Borrower to acquire any security in any transaction, which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.

(s)There are no agreements in effect adversely affecting the rights of the Borrower to make, or cause to be made, the grant of the security interest in the Pledged Assets contemplated by Section 2.10.

(t)The Borrower is not an “investment company” or an “affiliated person” of or “promoter” or “principal underwriter” for an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended, nor is the Borrower otherwise subject to regulation thereunder.

(u)No Event of Default or Unmatured Event of Default has occurred and is continuing.

(v)Each of the Pledged Receivables was underwritten and is being serviced in conformance with Originator’s standard underwriting, credit, collection, operating and reporting procedures and systems (including, without limitation, the Credit and Collection Policy).

(w)The Borrower is in compliance with ERISA in all material respects. No steps have been taken to terminate any Borrower Pension Plan which could result in material liability, and no contribution failure has occurred with respect to any Borrower Pension Plan sufficient to give rise to a lien under section 302(f) of ERISA. No condition exists or event or transaction has

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occurred with respect to any Borrower Pension Plan which could result in the Borrower or any ERISA Affiliate of Borrower incurring any material liability, fine or penalty.

(x)There is not now, nor will there be at any time in the future, any agreement or understanding between the Servicer and the Borrower (other than as expressly set forth herein), providing for the allocation or sharing of obligations to make payments or otherwise in respect of any taxes, fees, assessments or other governmental charges.

SECTION 4.02Representations and Warranties of the Servicer. The Servicer (so long as the Servicer is not the Backup Servicer as successor Servicer) hereby represents and warrants, as of the date hereof, on each Borrowing Date, on each Remittance Date and on the first day of each Rollover Interest Period, as follows:

(a)Each Receivable designated as an Eligible Receivable on any Borrowing Base Certificate or Monthly Remittance Report is an Eligible Receivable. Each Receivable included as an Eligible Receivable in any calculation of the Borrowing Base or the Eligible Receivables Balance is an Eligible Receivable.

(b)The Servicer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the power and all licenses necessary to own its assets and to transact the business in which it is engaged (which includes servicing Receivables on behalf of third parties and itself) and is duly qualified and in good standing under the laws of each jurisdiction where its servicing of the Pledged Receivables requires such qualification.

(c)The Servicer has the power, authority and legal right to make, deliver and perform this Agreement and each of the Transaction Documents to which it is a party and all of the transactions contemplated hereby and thereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement and each of the Transaction Documents to which it is a party. This Agreement and each of the Transaction Documents to which the Servicer is a party constitutes the legal, valid and binding obligation of the Servicer, enforceable against it in accordance with their respective terms, except as the enforceability hereof and thereof may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws of general application affecting creditors’ rights generally and by general principles of equity (whether such enforceability is considered in a proceeding in equity or at law). No consent of any other party and no consent, license, approval or authorization of, or registration or declaration with, any governmental authority, bureau or agency is required in connection with the execution, delivery or performance by the Servicer of this Agreement or any Transaction Document to which it is a party or the validity or enforceability of this Agreement or any such Transaction Document, other than such as have been met or obtained.

(d)The execution, delivery and performance of this Agreement by the Servicer and all other agreements and instruments executed and delivered or to be executed and delivered by the Servicer pursuant hereto or thereto in connection with the Pledge of the Pledged Assets will not (i) create any Adverse Claim on the Pledged Assets or (ii) violate any provision of any existing law or regulation or any order or decree of any court, regulatory body or administrative agency or the certificate of incorporation or bylaws of the Servicer or any material contract or other

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agreement to which the Servicer is a party or by which the Servicer or any of its property or assets may be bound.

(e)No litigation or administrative proceeding of or before any court, tribunal or governmental body is presently pending or, to the knowledge of the Servicer, threatened against the Servicer or any properties of the Servicer or with respect to this Agreement, which, if adversely determined, could have a Material Adverse Effect.

(f)No injunction, writ, restraining order or other order of any nature adversely affects the Servicer’s performance of its obligations under this Agreement or any Transaction Document to which the Servicer is a party.

(g)The Servicer has filed (on a consolidated basis or otherwise) on a timely basis all tax returns (including, without limitation, all foreign, federal, state, local and other tax returns) required to be filed, is not liable for taxes payable by any other Person and has paid or made adequate provisions for the payment of all taxes, assessments and other governmental charges due from the Servicer except for those taxes being contested in good faith by appropriate proceedings and in respect of which it has established proper reserves on its books. No tax lien or similar adverse claim has been filed, and no claim is being asserted, with respect to any such tax, assessment or other governmental charge. Any taxes, fees and other governmental charges payable by the Servicer in connection with the execution and delivery of this Agreement and the other Transaction Documents to which it is a party and the transactions contemplated hereby or thereby have been paid or shall have been paid if and when due.

(h)The chief executive office of the Servicer (and the location of the Servicer’s records regarding the Pledged Receivables (other than those delivered to the Custodian)) is located at 1818 Market Street, 9th Floor, Philadelphia, PA 19103.

(i)The Servicer’s legal name is as set forth in this Agreement; other than as disclosed on Schedule II hereto (as such schedule may be updated from time to by the Lender upon receipt of a notice delivered to the Lender pursuant to Section 6.18), the Servicer has not changed its name since its formation; the Servicer does not have tradenames, fictitious names, assumed names or “doing business as” names other than as disclosed on Schedule II hereto (as such schedule may be updated from time to by the Lender upon receipt of a notice delivered to the Lender pursuant to Section 6.18).

(j)The Servicer is solvent and will not become insolvent after giving effect to the transactions contemplated hereby; the Servicer is paying its debts as they become due; and the Servicer, after giving effect to the transactions contemplated hereby, will have adequate capital to conduct its business.

(k)As of the date hereof and as of the date of delivery of any Monthly Remittance Report or Borrowing Base Certificate, no Monthly Remittance Report or Borrowing Base Certificate (each if prepared by the Servicer or to the extent that information contained therein is supplied by the Servicer), information, exhibit, financial statement, document, book, record or report furnished or to be furnished by the Servicer to the Lender in connection with this Agreement is or will be inaccurate in any material respect, and no such document contains or will contain any

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material misstatement of fact or omits or shall omit to state a material fact or any fact necessary to make the statements contained therein not misleading.

(l)The Servicer is not an “investment company” or an “affiliated person” of or “promoter” or “principal underwriter” for an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended, nor is the Servicer otherwise subject to regulation thereunder.

(m)No Event of Default or Unmatured Event of Default has occurred and is continuing.

(n)Each of the Pledged Receivables was underwritten and is being serviced in conformance with Originator’s and the Servicer’s standard underwriting, credit, collection, operating and reporting procedures and systems (including, without limitation, the Credit and Collection Policy).

(o)Any Computer Tape or Listing made available by the Servicer to the Lender was complete and accurate in all material respects as of the date on which such Computer Tape or Listing was made available.

(p)The Servicer is in compliance with ERISA in all material respects. No steps have been taken to terminate any Servicer Pension Plan which could result in material liability, and no contribution failure has occurred with respect to any Servicer Pension Plan sufficient to give rise to a lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Servicer Pension Plan which could result in the Servicer or any ERISA Affiliate of Servicer incurring any material liability, fine or penalty.

(q)There is not now, nor will there be at any time in the future, any agreement or understanding between the Servicer and the Borrower (other than as expressly set forth herein), providing for the allocation or sharing of obligations to make payments or otherwise in respect of any taxes, fees, assessments or other governmental charges.

SECTION 4.03Resale of Receivables Upon Breach of Covenant or Representation and Warranty by Borrower. The Borrower or the Servicer, as the case may be, shall inform the other parties to this Agreement and the Qualifying Swap Counterparty promptly, in writing, upon the discovery of any breach of the representations, warranties and/or covenants contained in Section 4.01, Section 4.02 or Section 5.01; provided, however, that the failure to provide any such notice shall not diminish, in any manner whatsoever, any obligation of the Borrower under this Section 4.03 to sell any Pledged Receivable. Upon the discovery by or notice to the Borrower of any such breach that also constitutes a LEAF Purchase Event under and as defined in the Purchase and Sale Agreement, the Borrower shall have an obligation to, and the Borrower shall, resell to the Originator pursuant to the Purchase and Sale Agreement (and the Collateral Agent may enforce such obligation of the Borrower to sell) any Pledged Receivable adversely affected by any such breach. The Servicer shall notify the Collateral Agent promptly, in writing, of any failure by the Borrower to so resell any such Pledged Receivable. In connection with the resale of such Pledged Receivable, the Borrower shall remit funds in an amount equal to the Release Price for such Pledged Receivable to the Collection Account on the date of such resale. It is understood and agreed that the obligation of the Borrower to resell to the Originator, and the

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obligation of the Originator to purchase, any Receivables which are adversely effected by a LEAF Purchase Event is not intended to, and shall not, constitute a guaranty of the collectibility or payment of any Receivable which is not collected, not paid or uncollectible on account of the insolvency, bankruptcy, or financial inability to pay of the related Obligor.

SECTION 4.04Representations and Warranties of the Lender. The Lender hereby represents and warrants, as of the date hereof, on each Borrowing Date and on the first day of each Rollover Interest Period, that it is a “qualified purchaser” within the meaning of Section 3(c)(7) of the Investment Company Act.

ARTICLE V.

GENERAL COVENANTS OF THE BORROWER AND THE SERVICER

SECTION 5.01General Covenants. vii) The Borrower will observe all corporate procedures required by its certificate of formation, limited liability company agreement and the laws of its jurisdiction of formation. The Borrower will maintain its limited liability company existence in good standing under the laws of its jurisdiction of formation and will promptly obtain and thereafter maintain qualifications to do business as a foreign limited liability company in any other state in which it does business and in which it is required to so qualify under applicable law.

(b)The Borrower will at all times ensure that (i) its members act independently and in its interests and in the interests of its creditors, (ii) it shall at all times maintain at least one independent manager who (A) is not currently and has not been during the five years preceding the date of this Agreement an officer, director or employee of the Borrower or an Affiliate thereof (other than acting as independent manager or in a similar capacity) and (B) is not a member of the Borrower or an Affiliate thereof (other than a special independent member of the Borrower or a limited purpose corporation, business trust, partnership or other entity organized for the purpose of acquiring, financing or otherwise investing, directly or indirectly, in assets or receivables originated, owned or serviced by Originator or an Affiliate of any of them), (iii) its assets are not commingled with those of Originator or any other Affiliate of the Borrower, (iv) its members duly authorize all of its limited liability company actions, (v) it maintains separate and accurate records and books of account and such books and records are kept separate from those of Originator and any other Affiliate of the Borrower and (vi) it maintains minutes of the meetings and other proceedings of the members. Where necessary, the Borrower will obtain proper authorization from its members for limited liability company action.

(c)The Borrower will pay its operating expenses and liabilities from its own assets.

(d)The Borrower will not have any of its indebtedness guaranteed by Originator or any Affiliate thereof. Furthermore, the Borrower will not hold itself out, or permit itself to be held out, as having agreed to pay or as being liable for the debts of Originator, and the Borrower will not engage in business transactions with Originator, except on an arm’s-length basis. The Borrower will not hold Originator out to third parties as other than an entity with assets and liabilities distinct from the Borrower. The Borrower will cause any of its financial statements consolidated with those of Originator to state that the Borrower is a separate corporate entity

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with its own separate creditors who, in any liquidation of the Borrower, will be entitled to be satisfied out of the Borrower’s assets prior to any value in the Borrower becoming available to the Borrower’s equity holders. The Borrower will not act in any other matter that could foreseeably mislead others with respect to the Borrower’s separate identity.

(e)In its capacity as Servicer, LEAF Financial will, to the extent necessary, maintain separate records on behalf of and for the benefit of the Lender, act in accordance with instructions and directions, delivered in accordance with the terms hereof, from the Borrower, and/or the Lender in connection with its servicing of the Pledged Receivables hereunder, and will ensure that, at all times when it is dealing with or in connection with the Pledged Receivables in its capacity as Servicer, it holds itself out as Servicer, and not in any other capacity.

(f)The Servicer (if LEAF Financial or an Affiliate thereof) shall, to the extent required by applicable law, disclose all material transactions associated with this transaction in appropriate regulatory filings and public announcements. The annual financial statements of Resource America (including any consolidated financial statements) shall disclose the effects of the transactions contemplated by the Purchase and Sale Agreement as a sale of Receivables, Related Security and Other Conveyed Property to the Borrower, and the annual financial statements of the Borrower shall disclose the effects of the transactions contemplated by this Agreement as a loan to the extent required by and in accordance with GAAP, it being understood that the Loans to the Borrower under this Agreement will be treated as debt on the consolidated financial statements of Resource America.

(g)The Borrower shall take all other actions necessary to maintain the accuracy of the factual assumptions set forth in the legal opinions of Thacher Proffitt & Wood LLP, as special counsel to the Originator and the Borrower, issued in connection with the Purchase and Sale Agreement and relating to the issues of substantive consolidation and true conveyance of the Pledged Receivables.

(h)Except as otherwise provided herein or in any other Transaction Document, neither the Borrower nor the Servicer shall sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or (if the Servicer is LEAF Financial or an Affiliate thereof) suffer to exist any Adverse Claim upon or with respect to, any Pledged Receivable, any Collections related thereto or any other Pledged Assets related thereto, or upon or with respect to any account to which any Collections of any Receivable are sent, or assign any right to receive income in respect thereof. Except as otherwise provided herein or in any other Transaction Document, the Borrower shall not create or suffer to exist any Adverse Claim upon or with respect to any of the Borrower’s assets. Except as otherwise provided herein or in any other Transaction Document, the Servicer shall not create, or (if the Servicer is LEAF Financial or an Affiliate thereof) permit any action to be taken by any Person to create, any Adverse Claim upon or with respect to any of the Borrower’s assets.

(i)The Borrower will not merge or consolidate with, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions), all or substantially all of its assets (whether now owned or hereafter acquired) other than with respect to asset dispositions in connection with an optional prepayment pursuant to Section 2.15(a)

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hereof, or acquire all or substantially all of the assets or capital stock or other ownership interest of any Person without the prior written consent of the Lender.

(j)The Borrower will not account for or treat (whether in financial statements or otherwise) the transactions contemplated by the Purchase and Sale Agreement in any manner other than a sale and absolute assignment of Receivables, Related Security and Other Conveyed Property by Originator to the Borrower constituting a “true conveyance” for bankruptcy purposes.

(k)The Borrower will not amend, modify, waive or terminate any terms or conditions of the Purchase and Sale Agreement without the written consent of the Lender, and shall perform its obligations thereunder.

(l)The Borrower will not make any amendment, modification or other change to its certificate of formation or limited liability company agreement that would materially and adversely affect the Lender without the Lender’s prior written consent, and shall notify the Lender prior to making any amendment, modification or other change to its certificate of formation or limited liability company agreement prior to the effectiveness thereof.

(m)Neither the Borrower nor (if the Servicer is LEAF Financial or an Affiliate thereof) the Servicer will make or allow to be made any material amendment to the Credit and Collection Policy without the prior written consent of the Lender (and the Lender hereby agrees to take commercially reasonable efforts to respond to any request for such consent in a timely manner). Neither the Borrower nor (if the Servicer is LEAF Financial or an Affiliate thereof) the Servicer will make or allow to be made any non-material amendment to the Credit and Collection Policy without the prior written consent of the Lender; provided, that if the Lender has not responded to a written request for such consent within ten (10) Business Days of receipt thereof, the Lender shall be deemed to have consented to such request.

(n)If the Borrower or the Servicer receives any Collections with respect to any Pledged Receivable, the Borrower or the Servicer, as applicable, will remit such Collections to the Collection Account within one (1) Business Day of the Borrower’s or the Servicer’s identification thereof.

(o)The Servicer shall cause:

(i)the Obligor under each Contract to remit all payments owed or otherwise payable (including, without limitation, amounts payable by the Obligor in its role as a servicer of Underlying Contracts sold to the Originator) by such Obligor under such Contract (or any servicer on its behalf) to the Lockbox or by wire transfer to the Lockbox Account;

(ii)the Lockbox Bank to deposit all Collections with respect to any Pledged Receivable in the Lockbox into the Lockbox Account on each Business Day; and

(iii)the Lockbox Bank to remit all Collections with respect to any Pledged Receivable on deposit in the Lockbox Account (or any sub-account thereof or any related account) to the Collection Account on each Business Day.

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    (p)The Borrower shall deliver or cause to be delivered to the Custodian four (4) Business Days prior to the initial Borrowing Date hereunder and three (3) Business Days prior to any other Borrowing Date hereunder a Notice of Pledge and each item listed   in the definition of Receivable File with respect to the Receivables being Pledged hereunder on such Borrowing Date.

(q)The Borrower shall deliver to the Lender on each Purchase Date a copy of the Assignment delivered to it on such Purchase Date.

(r)Each of the Servicer (and, if the Servicer is not LEAF Financial or an Affiliate thereof, upon the Servicer gaining knowledge thereof) and the Borrower shall promptly notify the Lender of the occurrence of any Servicer Default, Event of Default, Program Termination Event, Pool A Termination Event or Pool B Termination Event (any event that, if it continues uncured, would, with lapse of time or notice or lapse of time and notice, constitute any Servicer Default, Event of Default, Program Termination Event, Pool A Termination Event or Pool B Termination Event).

(s)Each of the Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and the Borrower shall take all actions (in the case of Obligor Collateral with an original cost over $100,000) and all commercially reasonable actions (in the case of Obligor Collateral with an original cost of $100,000 or less) necessary to ensure that the Originator is at all times named as loss payee under each Insurance Policy with respect to Obligor Collateral related to a Pledged Receivable.

(t)On each Borrowing Date, a Qualifying Interest Rate Swap, in form and substance satisfactory to the Lender, shall be duly executed by the Borrower and a Qualifying Swap Counterparty, and any amounts required to have been paid thereunder as of such Remittance Date shall have been paid and any obligations required to have been performed thereunder as of such Remittance Date shall have been performed.

(u)Each of the Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and the Borrower shall take all actions necessary to ensure that each Pool B Contract purchased by the Borrower under the Purchase and Sale Agreement contains “Seller Events of Default” or similar events of default (“Parallel Defaults”) which (i) would occur if a Pool B Termination Event with respect to the related Underlying Originator occurred, (ii) would entitle the Borrower, as assignee of the Originator’s rights under such Contract, to deliver, or cause the delivery of, redirection notices which would require all Underlying Obligors to make all payments under Underlying Contracts sold or pledged to the Originator under such Contract to the Lockbox Account or an account designated by the Borrower or such Servicer and (iii) would entitle the Borrower, as assignee of the Originator’s rights under the Contract, to receive 100% of all payments under the Underlying Contracts sold or pledged to the Originator under such Contract in the event of such a Parallel Default. If a Parallel Default or any “Seller Events of Default” or similar events of default under a Pool B Contract related to the financial condition of the applicable Underlying Originator, the tangible net worth of the applicable Underlying Originator or any cross default (a Parallel Default or any such “Seller Events of Default” or similar events of default being referred to herein as “Critical Defaults”) shall occur, then each of the Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and the Borrower shall take all actions

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necessary to ensure (x) that no such Critical Default is waived and (y) the prompt delivery to all related Underlying Obligors of a redirection notice which would require such Underlying Obligors to make all payments under Underlying Contracts sold or pledged to the Originator under such Contract to the Lockbox Account. Each of the Servicer and the Borrower shall notify the Lender promptly upon learning of the occurrence of any “Seller Event of Default” or similar event of default under any Pool B Contract.

(v)The Borrower shall not acquire any debt obligation or interest therein if, after giving effect to such acquisition, more than 40 percent of the debt obligations or interests therein held by the Borrower (as determined under the rules of Treasury Regulation 301.7701(i)-1(c)) would consist of real estate mortgages or interests therein (as defined in Treasury Regulation 301.7701(i)-1(d)).

ARTICLE VI.

ADMINISTRATION AND SERVICING; CERTAIN COVENANTS

SECTION 6.01Appointment and Designation of the Servicer. viii) The Borrower and the Lender hereby appoint the Person designated by the Lender from time to time, pursuant to this Section 6.01 (the “Servicer”), as their agent to service, administer and collect the Pledged Receivables and otherwise to enforce their respective rights and interests in and under the Pledged Receivables and the other Pledged Assets. The Servicer shall collect such Pledged Receivables under the conditions referred to above by means of the collection procedures as set forth in the Credit and Collection Policy, to the extent consistent with the provisions of this Article VI. Unless otherwise specified by the Borrower, the Servicer’s authorization under this Agreement shall terminate on the Collection Date. Until the Lender gives notice to the Borrower of a designation of a new Servicer upon the occurrence and during the continuance of any Servicer Default, or consents in writing to the appointment by the Borrower of a new Servicer, LEAF Financial is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer, pursuant to the terms hereof at all times until the earlier of the Lender’s designation of the Backup Servicer or any other Person as the new Servicer (upon the occurrence and during the continuance of any Servicer Default), the delivery by the Lender of its written consent to the appointment by the Borrower of a new Servicer or the Collection Date. Upon the occurrence and during the continuance of any Servicer Default, the Lender may at any time designate as Servicer the Backup Servicer, or any other Person with demonstrated experience in servicing equipment leases and loans, to succeed LEAF Financial or any successor Servicer, on the condition in each case that any such Person so designated shall agree to perform the duties and obligations of the Servicer pursuant to the terms hereof. Each of the Borrower and LEAF Financial hereby grants to any successor Servicer an irrevocable power of attorney to take any and all steps in the Borrower’s, LEAF Financial’s or the Servicer’s name, as applicable, and on behalf of the Borrower or LEAF Financial, necessary or desirable, in the determination of such successor Servicer, to service, administer or collect any and all Pledged Receivables including, without limitation, to make withdrawals from the Security Deposit Account pursuant to Section 2.05 and any Cash Reserve Account pursuant to Section 2.06.

(b)The Servicer is hereby authorized to act for the Borrower and the Lender and, in such capacity, shall manage, service, administer and arrange collections on the Pledged Receivables

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and perform the other actions required by the Servicer under this Agreement for the benefit of the Lender. The Servicer agrees that its servicing of the Pledged Receivables shall be carried out in accordance with customary and usual procedures of institutions which service equipment lease and loan contracts and receivables and, to the extent more exacting, the degree of skill and attention that the Servicer exercises from time to time, with respect to all comparable equipment lease and loan contracts and receivables that it services for itself or others in accordance with the Credit and Collection Policy (or if the Backup Servicer has been appointed as Servicer, the Backup Servicer’s customary collection policies) and, to the extent more exacting, the requirements of this Article VI. The Servicer’s duties shall include, without limitation, collecting and posting of all Collections with respect to any Pledged Receivable, responding to inquiries of Obligors on the Pledged Receivables, investigating delinquencies, sending invoices, payment statements or payment books to Obligors, reporting any required tax information to Obligors, policing the collateral, enforcing the terms of the Contracts (and any documents related thereto) related to any Pledged Receivables, complying with the terms of the Lockbox Agreement, accounting for Collections with respect to any Pledged Receivable, furnishing monthly and annual statements to the Lender with respect to distributions and performing the other duties specified herein.

(c)The Servicer will require each Underlying Originator to (i) service all Underlying Contracts in a manner consistent with the applicable Underlying Originator Credit and Collection Policy (which the Servicer has reviewed and approved in accordance with the Credit and Collection Policy) and (ii) provide to the Servicer a monthly data feed, which shall be in form and content satisfactory to the Servicer. The Servicer shall, or shall cause a third party servicer appointed by the Servicer and approved by the Lender (such approval not to be unreasonably withheld) to, provide servicing similar to the servicing that the Servicer is obligated to provide hereunder with respect to any Underlying Contracts to the extent that the related Underlying Originator fails to service such Underlying Contracts in a manner consistent with the applicable Underlying Originator Credit and Collection Policy.

(d)To the extent consistent with the standards, policies and procedures otherwise required hereby, the Servicer shall have full power and authority, acting alone, to do any and all things in connection with such managing, servicing, administration and collection that it may deem necessary or desirable. The Servicer is authorized to release liens on Obligor Collateral in order to collect insurance proceeds with respect thereto and to liquidate such Obligor Collateral in accordance with its customary standards, policies and procedures; provided, however, that, notwithstanding the foregoing, the Servicer shall not, (i) except pursuant to an order from a court of competent jurisdiction, release an Obligor from payment of any unpaid amount under any Pledged Receivable or (ii) waive the right to collect the unpaid balance of any Pledged Receivable from such Obligor, except that, subject to Section 6.02(a), the Servicer may forego collection efforts if the amount which the Servicer, in its reasonable judgment, expects to realize in connection with such collection efforts is determined by the Servicer, in its reasonable judgment, to be less than the reasonably expected costs of pursuing such collection efforts and if the Servicer would forego such collection efforts in accordance with its customary procedures. The Servicer is hereby authorized to commence, in its own name (in its capacity as Servicer), if possible, or in the name of the Borrower or the Lender (provided that if the Servicer is acting in the name of the Borrower or the Lender, the Servicer shall have obtained the Borrower’s or the Lender’s consent, as the case may be, which consent shall not be unreasonably withheld), a legal

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proceeding to enforce any Pledged Receivable (or any terms or provisions of the related Contract) or to commence or participate in any other legal proceeding (including, without limitation, a bankruptcy proceeding) relating to or involving a Pledged Receivable or any related Contract, Obligor or Obligor Collateral. If the Servicer commences or participates in such a legal proceeding in its own name, the Borrower or the Lender, as the case may be, shall thereupon be deemed to have automatically assigned such Pledged Receivable to the Servicer solely for purposes of commencing or participating in any such proceeding as a party or claimant, and the Servicer is authorized and empowered by the Borrower or the Lender, as the case may be, to execute and deliver in the Servicer’s name any notices, demands, claims, complaints, responses, affidavits or other documents or instruments in connection with any such proceeding. The Borrower or the Lender, as the case may be, shall furnish the Servicer with any powers of attorney and other documents which the Servicer may reasonably request in writing and which the Servicer deems necessary or appropriate and take any other steps which the Servicer may deem necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties under this Agreement. If, however, in any suit or legal proceeding it is held that the Servicer may not prosecute such suit or legal proceeding on the grounds that it is not an actual party in interest or a holder entitled to enforce such suit or legal proceeding, the Borrower shall take such steps as the Servicer deems necessary to prosecute such suit or legal proceeding, including bringing suit in its name.

SECTION 6.02Collection of Receivable Payments; Modification and Amendment of Receivables; Lockbox Agreements. ix) Consistent with and subject to the standards, policies and procedures required by this Agreement, the Servicer shall collect all payments called for under the terms and provisions of the Contracts related to the Pledged Receivables (and the terms and provisions of any documents related thereto) as and when the same shall become due and shall follow such collection procedures with respect to the Pledged Receivables and the related Contracts and Insurance Policies as will, in the reasonable judgment of the Servicer, maximize the amount to be received by the Borrower and the Lender with respect thereto.

(b)The Servicer shall remit all payments by or on behalf of the Obligors received directly by the Servicer to the Collection Account, without deposit into any intervening account as soon as practicable, but in no event later than the end of business on the Business Day of identification thereof as payments by or on behalf of the Obligors.

SECTION 6.03Realization Upon Receivables. Consistent with the standards, policies and procedures required by this Agreement, the Servicer shall use its best efforts to repossess (or otherwise comparably convert the ownership of) and liquidate any Obligor Collateral securing a Pledged Receivable within a number of days consistent with the Credit and Collection Policy of an uncured failure of the related Obligor to make any payment which it is obligated to make under the related Contract or an earlier date that would be customary under the circumstances involved (as determined in accordance with the Credit and Collection Policy) and, in any case, in a manner as will, in the reasonable judgment of the Servicer, maximize the amount to be received by the Borrower and the Lender with respect thereto; provided, however, that the Servicer need not repossess (or otherwise comparably convert the ownership of) and liquidate the Obligor Collateral securing such a Pledged Receivable if, in the reasonable opinion of the Servicer, the value of such Obligor Collateral does not exceed by more than an insignificant amount the cost to repossess (or otherwise comparably convert the ownership of) and liquidate

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such Obligor Collateral. The Servicer is authorized to follow such customary practices and procedures as it shall deem necessary or advisable, consistent with the standard of care required by Section 6.01, which practices and procedures may include reasonable efforts to realize upon any guaranties, selling the related Obligor Collateral at public or private sale, the submission of claims under an Insurance Policy and other actions by the Servicer in order to realize upon such Pledged Receivable. The foregoing is subject to the provision that, in any case in which the Obligor Collateral shall have suffered damage, the Servicer shall not expend funds in connection with any repair or towards the repossession of such Obligor Collateral, unless it shall determine in its discretion that such repair and/or repossession shall increase the proceeds of liquidation of the related Pledged Receivable by an amount greater than the amount of such expenses. All Liquidation Proceeds shall be remitted directly by the Servicer to the Collection Account without deposit into any intervening account as soon as practicable, but in no event later than one (1) Business Day after identification thereof as Liquidation Proceeds. The Servicer shall pay on behalf of the Borrower any personal property taxes assessed on repossessed Obligor Collateral, and the Servicer shall be entitled to reimbursement of any such tax as a Servicer Advance.

SECTION 6.04Insurance Regarding Equipment. x) At the time of the Pledge of any Receivable hereunder, the Servicer shall require each Obligor to obtain and maintain (or with respect to an Underlying Originator, cause the Underlying Obligor to obtain and maintain) Insurance Policies in accordance with the terms of the Credit and Collection Policy and its customary servicing procedures and shall furnish evidence of such insurance (except if the Equipment or Underlying Equipment relating to such Obligor or Underlying Obligor, as applicable, has an aggregate original cost of $100,000 or less) to the Lender.

(b)The Servicer may, and upon the request of the Lender shall, sue to enforce or collect upon the Insurance Policies, in its own name (but in its capacity as Servicer), if possible, or as agent of the Borrower and the Lender. If the Servicer elects to commence a legal proceeding to enforce an Insurance Policy, the act of commencement shall be deemed to be an automatic assignment of the rights of the Borrower and the Lender under such Insurance Policy to the Servicer for purposes of collection only. If, however, in any enforcement suit or legal proceeding it is held that the Servicer may not enforce an Insurance Policy on the grounds that it is not an actual party in interest or a holder entitled to enforce the Insurance Policy, the Borrower shall take such steps as the Servicer deems necessary to enforce such Insurance Policy, including bringing suit in its name.

SECTION 6.05Maintenance of Security Interests in Obligor Collateral. xi) The initial Servicer and the Borrower shall take all steps necessary, under all applicable law, in order to (i) cause a valid, subsisting and enforceable first priority perfected security interest to exist in favor of the Collateral Agent in the Borrower’s interests in the Obligor Collateral, all Other Conveyed Property and all Related Security related to each Receivable (and the proceeds thereof) being Pledged hereunder, to secure a Loan on the Borrowing Date thereof including (A) the filing of a UCC financing statement in the applicable jurisdiction adequately describing the Obligor Collateral, Other Conveyed Property and all Related Security and naming the Borrower as debtor and the Collateral Agent as the secured party, (B) filing Obligor Financing Statements against all Obligors purchasing or leasing Obligor Collateral, (C) other than with respect to an Underlying Lease Contract related to Equipment which has an original cost of less than $25,000 if such Underlying Lease Contract is a Dollar Purchase Option Contract or $50,000

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if such Underlying Lease Contract is a FMV Contract, causing the filing of UCC-3 assignment statements in the applicable jurisdictions adequately describing the Underlying Originator Loan Collateral being transferred thereunder and naming the applicable Underlying Originator as the assignor and Originator as the assignee, and (D) other than with respect to an Underlying Lease Contract related to Equipment which has an original cost of less than $25,000 if such Underlying Lease Contract is a Dollar Purchase Option Contract or $50,000 if such Underlying Lease Contract is a FMV Contract, causing the filing of UCC-3 assignment statements in the applicable jurisdictions adequately describing the Underlying Originator Loan Collateral being transferred thereunder and naming the applicable Underlying Originator as the assignor and Originator as the assignee (ii) ensure that such security interest is and shall be prior to all other liens upon and security interests in the Borrower’s interests in such Obligor Collateral, Other Conveyed Property and Related Security (and the proceeds thereof) that now exist, or may hereafter arise or be created other than Permitted Liens, and (iii) ensure that immediately prior to the Pledge of such Receivable by the Borrower to the Collateral Agent, such Obligor Collateral, Other Conveyed Property and Related Security is free and clear of all Adverse Claims other than Permitted Liens; and

(b)The initial Servicer shall take all steps, as are necessary (subject to Section 6.05(a)), to maintain perfection of the security interest in the Borrower’s interests in the Obligor Collateral, Other Conveyed Property and Related Security related to each Pledged Receivable (and the proceeds thereof) in favor of the Collateral Agent including but not limited to, obtaining the execution by the Borrower and the recording, registering, filing, rerecording, refiling, and reregistering of all security agreements, financing statements and continuation statements as are necessary to maintain and/or perfect such security interests granted by the Borrower and the recordation of the Collateral Agent’s lien on such Obligor Collateral’s Certificate of Title (if such Obligor Collateral is a Vehicle and the related Receivable is not a Vehicle Sublimit Pledged Receivable). Without limiting the generality of the foregoing, the Borrower and the Lender each hereby authorizes the initial Servicer, and the initial Servicer agrees, to take any and all steps necessary (subject to Section 6.05(a)) to re-perfect the security interest in the Borrower’s interests in any Obligor Collateral (and the Borrower’s interests therein), Other Conveyed Property and Related Security related to each Pledged Receivable (and the proceeds thereof) in favor of the Collateral Agent as may be necessary, due to the relocation of such Obligor Collateral or for any other reason.

(c)In the event that the combination of the sale of a Receivable by Originator to the Borrower under the Purchase and Sale Agreement and the Pledge of such Receivable by the Borrower to the Collateral Agent hereunder are insufficient, without a notation on a related Vehicle’s Certificate of Title, or without fulfilling any additional administrative requirements under the laws of the state in which such Vehicle is located, to assign the ownership of such Vehicle to the Borrower or to perfect a security interest in such Vehicle (and the proceeds thereof) in favor of the Collateral Agent, the parties hereto agree that Originator’s designation, if any, as the owner on the Certificate of Title with respect to such Vehicle is in its capacity as agent of the Borrower and the Collateral Agent as their interests may appear, until such notations are made or additional administrative requirements are fulfilled, and the Servicer (if the Servicer is LEAF Funding) shall take all steps necessary to ensure that the Originator acts in such capacity.

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(d)The initial Servicer shall promptly (or, if the initial Servicer is unable or refuses to act, the Lender may) take all steps as are necessary to evidence the Borrower’s ownership in any Vehicle related to each Pledged Receivable other than a Vehicle Sublimit Pledged Receivable (which is a lease or secured by lease payments) and to create and maintain perfection of the security interest of the Collateral Agent in any Vehicle related to each Pledged Receivable other than a Vehicle Sublimit Pledged Receivable (and the proceeds of such Vehicle), including, if required by applicable law, having a notation of the Borrower’s ownership (in the case of a Vehicle which is subject to a lease), and the Collateral Agent’s security interest, recorded on such Vehicle’s certificate of title.

SECTION 6.06Pledged Receivable Receipts. The Servicer shall make a deposit into the Collection Account in an amount equal to the Collections with respect to any Pledged Receivable received, or made by, or on behalf of it, within one Business Day of such Collections being received, or made by, or on behalf of it.

SECTION 6.07No Rights of Withdrawal. Until the Collection Date, the Borrower shall have no rights of direction or withdrawal, with respect to amounts held in the Collection Account or the Lockbox Account, except with respect to funds not related to any Pledged Assets, which were incorrectly deposited into any such account.

SECTION 6.08Permitted Investments. The Borrower shall, pursuant to written instruction, direct the Lender’s Bank (and if the Borrower fails to do so, the Lender may, pursuant to written instruction, direct the Lender’s Bank) to invest, or cause the investment of, funds on deposit in the Collection Account in Permitted Investments, from the date of this Agreement until the Collection Date. Absent any such written instruction, the Lender’s Bank shall invest, or cause the investment of, such funds in Permitted Investments described in clause (v) of the definition thereof. A Permitted Investment acquired with funds deposited in the Collection Account shall mature not later than the Business Day immediately preceding any Remittance Date, and shall not be sold or disposed of prior to its maturity. All such Permitted Investments shall be registered in the name of the Securities Intermediary (as defined in the Securities Account Agreement) or its nominee for the benefit of the Lender, and otherwise comply with assumptions of the legal opinion of Thacher Proffitt & Wood LLP, delivered in connection with this Agreement. All income and gain realized from any such investment, as well as any interest earned on deposits in the Collection Account, shall be distributed in accordance with the provisions of Article II hereof. The Borrower shall deposit in the Collection Account, as the case may be (with respect to investments made hereunder of funds held therein), an amount equal to the amount of any actual loss incurred, in respect of any such investment, immediately upon realization of such loss. None of the Lender’s Bank or the Lender shall be liable for the amount of any loss incurred, in respect of any investment, or lack of investment, of funds held in the Collection Account.

SECTION 6.09Servicing Compensation. As compensation for its activities hereunder, the Servicer shall be entitled to be paid the Servicing Fee from the Collection Account as provided in Section 2.04(c). The Servicer shall be required to pay all expenses incurred by it in connection with its servicing activities hereunder and shall not be entitled to reimbursement therefor, except with respect to reasonable expenses of the Servicer incurred in connection with the repossession and disposition of any Obligor Collateral (which the Servicer may retain from the proceeds of

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the disposition of such Obligor Collateral) and any Servicer Advances made by the Servicer pursuant hereto. The Servicing Fee may not be transferred in whole, or in part, except in connection with the transfer of all the Servicer’s responsibilities and obligations under this Agreement. At any time after the occurrence of a Servicer Default and the appointment of the Backup Servicer as the Servicer hereunder, the Backup Servicer shall be entitled to receive an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to expenses incurred by the Backup Servicer, acting in its capacity as the Servicer, in connection with its obligations under Sections 6.05(a), (b) and (d) hereof (such expenses, the “Active Backup Servicer’s Indemnified Amounts”).

SECTION 6.10Reports to the Lender; Account Statements; Servicing Information. xii) The Borrower will deliver to the Lender and each Qualifying Swap Counterparty, (i) on the Program Termination Date, a report identifying the Pledged Receivables (and any information with respect thereto requested by the Lender) on the day immediately preceding the Program Termination Date, and (ii) upon the Lender’s reasonable request and upon reasonable notice, on any other Business Day, a report identifying the Pledged Receivables (and any information with respect thereto, reasonably requested by the Lender) as of such day.

(b)At least four (4) Business Days prior to each Remittance Date, the Servicer shall prepare and deliver, or have delivered to the Lender and each Qualifying Swap Counterparty, (i) a Monthly Remittance Report and any other information reasonably requested by the Lender, relating to all Pledged Receivables (including, if requested, a Computer Tape or Listing), all information in the Monthly Remittance Report and all other such information to be accurate as of the last day of the immediately preceding Collection Period, and (ii) in an electronic format mutually acceptable to the Servicer and the Lender, all information reasonably requested by the Lender relating to all Pledged Receivables. If any Monthly Remittance Report indicates the existence of a Borrowing Base Deficiency, the Borrower shall, on the date of delivery of such Monthly Remittance Report, prepay to the Lender, for the account of the Lender, a portion of the Loans as is necessary to cure such Borrowing Base Deficiency (or otherwise cure such Borrowing Base Deficiency).

(c)By no later than 12:00 noon (New York City time) on the third Business Day immediately preceding a Borrowing, the Borrower (or the initial Servicer on its behalf) shall also prepare and deliver to the Lender a Borrowing Base Certificate containing information accurate as of the date of delivery of such Borrowing Base Certificate. If any Borrowing Base Certificate indicates the existence of a Borrowing Base Deficiency, the Borrower shall on the date of delivery of such Borrowing Base Certificate prepay to the Lender, for the account of the Lender, a portion of the Loans or Pledge additional Eligible Receivables, in either case, to the extent necessary to cure such Borrowing Base Deficiency.

(d)At least four (4) Business Days prior to each Remittance Date (each such day, a “Backup Servicer Delivery Date”), the Servicer shall prepare and deliver, or have delivered, to the Backup Servicer (i) a Monthly Remittance Report in respect of the immediately-preceding Collection Period and (ii) a computer tape or a diskette or any other electronic transmission in a format acceptable to the Backup Servicer containing the information with respect to the Pledged

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Receivables during such Collection Period which was necessary for preparation of such Monthly Remittance Report or is reasonably requested by the Backup Servicer.

(e)The Borrower shall deliver to the Lender all reports it receives pursuant to the Purchase and Sale Agreement within one Business Day of the receipt thereof.

SECTION 6.11Statements as to Compliance; Financial Statements. xiii) The Servicer shall deliver to the Backup Servicer, the Borrower and the Lender on or before March 31st of each year, beginning with 2007, an Officers’ Certificate stating, as to each signatory thereof, that (x) a review of the activities of the Servicer during the preceding calendar year (or the portion of the preceding calendar year commencing on the date of this Agreement and ending December 31, 2006 in the case of the first such review) and of its performance under this Agreement has been made under such officer’s supervision, and (y) to the best of such officers’ knowledge, based on such review, the Servicer has fulfilled all of its obligations under this Agreement throughout such calendar year (or portion thereof, as the case may be) or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officers and the nature and status thereof and the action being taken to cure such default.

(b)The Servicer (if LEAF Financial or an Affiliate thereof) shall, at its expense, cause a firm of nationally recognized independent certified public accountants acceptable to the Lender (the “Independent Accountants”), who may also render other services to the Servicer, the Backup Servicer or to the Borrower, to deliver to the Borrower and the Lender, on or before March 31st of each year, beginning 2007, with respect to the twelve (12) months ended the immediately preceding December 31, a statement (the “Accountant’s Report”) addressed to the Board of Directors of the Servicer and to the Lender, to the effect that such firm has examined such Borrowing Base Certificates and Monthly Remittance Reports prepared by the Servicer during the twelve (12) months ended the immediately preceding December 31 as it deemed necessary in order to issue the Accountants’ Report and issued its report thereon, and that such examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as such firm considered necessary in the circumstances. The Accountants’ Report shall further state that (i) a review in accordance with agreed upon procedures was made; and (ii) except as disclosed in the Accountant’s Report, no exceptions or errors in the Borrowing Base Certificates and Monthly Remittance Reports examined were found except for (A) such exceptions as the Independent Accountants believe to be immaterial and (B) such other exceptions as shall be set forth in the Accountants’ Report. The Accountants’ Report shall also indicate that the firm is independent of the Borrower and the Servicer within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants.

(c)As soon as available and no later than forty-five (45) days after the end of each calendar quarter in each fiscal year of the Borrower or Resource America, the Borrower shall deliver to the Lender two copies of:

(i)a balance sheet of the Borrower and Resource America as of the end of such calendar quarter, setting forth in comparative form the corresponding figures for the most recent year-end for which an audited balance sheet has been prepared, which balance sheet shall be prepared and presented in accordance with,

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        and provide all necessary disclosure required by, GAAP and shall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of the Borrower or Resource America, as applicable, stating that such balance sheet presents fairly the financial condition of the Borrower or Resource America, as the case may be, and has been prepared in accordance with GAAP consistently applied; and

(ii) statements of income, stockholders’ equity and cash flow of the Borrower and Resource America for such calendar quarter setting forth in comparative form the corresponding figures for the comparable period one year prior thereto (subject to normal year-end adjustments), which such statements shall be prepared and presented in accordance with, and provide all necessary disclosure required by, GAAP and shall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of the Borrower or Resource America, as applicable, stating that such financial statements present fairly the financial condition and results of operations of the Borrower or Resource America, as the case may be, and have been prepared in accordance with GAAP consistently applied.

(d)As soon as available and no later than forty-five (45) days after the end of each calendar quarter in each fiscal year of Resource America, LEAF Financial shall deliver to the Lender two copies of:

(i)a consolidated balance sheet of Resource America and its consolidated subsidiaries (including Originator and Servicer) as of the end of such calendar quarter, setting forth in comparative form the corresponding figures for the most recent year-end for which an audited balance sheet has been prepared, which such balance sheet shall be prepared and presented in accordance with, and provide all necessary disclosure required by, GAAP and shall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of Resource America stating that such balance sheet presents fairly the financial condition of the companies being reported upon and has been prepared in accordance with GAAP consistently applied; and

(ii)consolidated statements of income, stockholders’ equity and cash flow of Resource America and its consolidated subsidiaries (including Originator and Servicer) for such calendar quarter, in each case, setting forth in comparative form the corresponding figures for the comparable period one year prior thereto (subject to normal year-end adjustments), which such statements shall be prepared and presented in accordance with, and provide all necessary disclosure required by, GAAP and shall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of Resource America stating that such financial statements present fairly the financial condition and results of operations of the companies being reported upon and have been prepared in accordance with GAAP consistently applied.

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     (e)  As soon as available and no later than ninety (90) days after the end of each fiscal year of the Borrower or Resource America, LEAF Financial shall deliver to the Lender two copies of:

(i)a balance sheet of the Borrower and Resource America as of the end of the fiscal year, setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion of a firm of independent certified public accountants of nationally recognized standing acceptable to the Lender stating that such balance sheet presents fairly the financial condition of the Borrower or Resource America, as applicable, and has been prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur); and

(ii)statements of income, stockholders’ equity and cash flow of the Borrower and Resource America for such fiscal year, setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion of a firm of independent certified public accountants of nationally recognized standing acceptable to the Lender stating that such financial statements present fairly the financial condition of the Borrower or Resource America, as applicable, and have been prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur).

(f)As soon as available and no later than ninety (90) days after the end of each fiscal year of Resource America, LEAF Financial shall deliver to the Lender two copies of:

(i)a consolidated and consolidating balance sheet of Resource America and its consolidated subsidiaries (including Originator and Servicer) as of the end of the fiscal year, setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion of a firm of independent certified public accountants of nationally recognized standing acceptable to the Lender stating that such balance sheet presents fairly the financial condition of the companies being reported upon and has been prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur); and

(ii)consolidated and consolidating statements of income, stockholders’ equity and cash flow of Resource America and its consolidated subsidiaries (including Originator) for such fiscal year; in each case setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion of a firm of independent certified public accountants of nationally recognized standing acceptable to the Lender stating that such financial statements present fairly the financial condition of the companies being reported upon and have been prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur).

SECTION 6.12Access to Certain Documentation; Obligors; Background Check. xiv) The Lender (and its agents or professional advisors) shall at the expense of the Borrower, have the

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right under this Agreement, once during each calendar quarter until the first anniversary of the date hereof, and semi-annually thereafter, to examine and audit, during business hours or at such other times as might be reasonable under applicable circumstances, any and all of the books, records, financial statements or other information of the Servicer and the Borrower, or held by another for the Servicer or the Borrower or on its behalf, concerning this Agreement, provided, that, prior to the occurrence of an Event of Default, the Borrower shall not be responsible for the expenses of the Lender to the extent that such expenses exceed $25,000 in the aggregate in any calendar year. The Lender (and its agents or professional advisors) shall, at the expense of the Borrower and as frequently as the Lender may desire, have the right under this Agreement after the occurrence and during the continuance of an Event of Default, to examine and audit, during business hours or at such other times as might be reasonable under applicable circumstances, any and all of the books, records or other information of the Servicer or the Borrower, or held by another for the Servicer or the Borrower or on its behalf, concerning this Agreement. The Lender (and its agents and professional advisors) shall coordinate examinations and audits under this Section 6.12(a) in order to minimize expense and inconvenience to the Borrower. The Lender (and its agents and professional advisors) shall treat as confidential any information obtained during the aforementioned examinations which is not already publicly known or available; provided, however, that the Lender may disclose such information if required to do so by law or by any regulatory authority.

(b)The Lender (and its agents or professional advisors) shall, at its own expense, have the right under this Agreement to contact Pool A Obligors and Pool B Obligors once with respect to any Receivable which is Pledged hereunder to request that each such Obligor verify and confirm by return letter the existence and amount of such Receivable, the type of Equipment leased under or securing the related Contract and such other information as the Lender deems reasonable under the circumstances (each such return letter to be mailed to a post office box established by the Lender). The Servicer and the Borrower hereby agree to cooperate with the Lender (and its agents or professional advisors) in connection with any attempt thereby to contact any such Obligor and shall provide to the Lender such information as is needed in order to facilitate such contact. The Lender (and its agents and professional advisors) shall treat as confidential any information obtained during any such contact with any such Obligor which is not already publicly known or available; provided, however, that the Lender (and its agents or professional advisors) may disclose such information if required to do so by law or by any regulatory authority.

(c)The Lender (or its agents and/or third party professional advisors) may, from time to time, cause comprehensive background checks on newly-hired senior management, key employees and principals of each of Resource Capital Corp., the initial Servicer and Originator to be completed by an investigation service acceptable to the Lender, at the Borrower’s expense.

SECTION 6.13Backup Servicer. If a Servicer Default shall occur, then the Lender may, by notice to the Servicer, the Borrower and the Backup Servicer, terminate all of the rights and obligations of the Servicer under this Agreement. Upon the delivery to the Servicer of such notice, all authority and power of the Servicer under this Agreement, whether with respect to the Pledged Assets or otherwise, shall pass to and be vested in the Backup Servicer pursuant to and under this Section (unless the Lender shall have appointed a different successor Servicer pursuant to Section 6.01 hereof or the Backup Servicer is unable to act as Servicer and a

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successor is appointed as provided in the fourth paragraph of this Section 6.13), and, without limitation, the Backup Servicer is hereby authorized and empowered to 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 notice of termination or to perform the duties of the Servicer under this Agreement including, without limitation, to make withdrawals from the Security Deposit Account pursuant to Section 2.05 and any Cash Reserve Account pursuant to Section 2.06. The Servicer agrees to cooperate with the Lender and the Backup Servicer in effecting the termination of the Servicer’s responsibilities and rights hereunder, including, without limitation, providing notification to the Obligors of the assignment of the servicing function, providing notification to the Lender’s Bank of the Backup Servicer’s right to make withdrawals from the Security Deposit Account pursuant to Section 2.05 and any Cash Reserve Account pursuant to Section 2.06, providing the Backup Servicer, at the Servicer's expense, with all records, in electronic or other form, reasonably requested by the Backup Servicer, in such form as the Backup Servicer may reasonably request and at such times as the Backup Servicer may reasonably request, to enable the Backup Servicer to assume the servicing functions hereunder and the transfer to the Backup Servicer for administration by it of all cash amounts which at the time should be or should have been deposited by the Servicer in the Collection Account or thereafter be received by the Servicer with respect to the Pledged Receivables. Additionally, the Servicer agrees to cooperate in providing, at the Servicer’s expense, the Backup Servicer as successor Servicer, with reasonable access (including at the premises of the Servicer) to Servicer’s employees and any and all books, records or other information reasonably requested by it to enable the Backup Servicer, as successor Servicer, to assume the servicing functions hereunder. Neither the Lender nor the Backup Servicer shall be deemed to have breached any obligation hereunder as a result of a failure to make or delay in making any distribution as and when required hereunder caused by the failure of the Servicer to remit any amounts received by it or to deliver any documents held by it with respect to the Pledged Assets. The Backup Servicer (including as successor Servicer) undertakes to perform only such duties and obligations as are specifically set forth in this Agreement, it being understood by all parties hereto that there are no implied duties or obligations of the Backup Servicer hereunder.

The Active Backup Servicer’s Fees and Transition Costs shall be paid out of Collections with respect to any Pledged Receivable as set forth in Section 2.04(c) on and after the date, if any, that the Backup Servicer assumes the responsibilities of the Servicer pursuant to this Section. The Standby Backup Servicer’s Fees and Transition Costs shall be paid out of Collections with respect to any Pledged Receivable as set forth in Section 2.04(c) prior to the date, if any, that the Backup Servicer assumes the responsibilities of the Servicer pursuant to this Section.

Any obligations of LEAF Financial under any Transaction Document other than in its capacity as Servicer shall continue in effect notwithstanding LEAF Financial’s termination as Servicer.

On and after the time the Servicer receives a notice of termination pursuant to this Section 6.13, the Backup Servicer shall be (and the Backup Servicer hereby agrees to be) the successor in all respects to the Servicer in its capacity as Servicer under this Agreement and the transactions set forth or provided for herein and shall have all the rights and powers and be

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subject thereafter to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof; provided, however, that any failure to perform such duties or responsibilities caused by the Servicer’s failure to provide information required by this Section 6.13 shall not be considered a default by the Backup Servicer hereunder; provided, further, however, that the Backup Servicer, as successor Servicer, shall have (i) no liability with respect to any obligation which was required to be performed by the terminated Servicer prior to the date that the Backup Servicer becomes the successor to the Servicer or any claim of a third party based on any alleged action or inaction of the terminated Servicer, (ii) no obligation to perform any repurchase or advancing obligations, if any, of the Servicer, (iii) no obligation to pay any taxes required to be paid by the Servicer (provided that the Backup Servicer shall pay any income taxes for which it is liable), (iv) no obligation to pay any of the fees and expenses of any other party to the transactions contemplated hereby, and (v) no liability or obligation with respect to any Servicer indemnification obligations of any prior Servicer, including the original Servicer. The indemnification obligations of the Backup Servicer, upon becoming a successor Servicer, are expressly limited to those arising on account of its failure to act in good faith and with reasonable care under the circumstances. In addition, the Backup Servicer shall have no liability relating to the representations and warranties of the Servicer contained in Article IV. Notwithstanding the above, the Lender may, or shall, if the Backup Servicer is unable to so act, appoint itself, or appoint any other established servicing institution acceptable to the Lender in its sole discretion, as the successor to the Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Servicer hereunder. Pending appointment of a successor to the Servicer hereunder, and after the Lender notifies the Servicer to discontinue performing servicing functions under this Agreement, the Backup Servicer (or the Lender if there is no Backup Servicer) shall act in such capacity as hereinabove provided. In connection with such appointment and assumption, the Lender may make such arrangements for the compensation of such successor out of payments on Pledged Receivables as it and such successor shall agree; provided, however, that, except as provided herein, no such compensation shall be in excess of that permitted the Servicer hereunder, unless (i) agreed to by the Lender and (ii) such compensation shall be on commercially competitive terms and rates. The Borrower, the Lender and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. The parties hereto agree that in no event will the Backup Servicer be liable for any special, indirect or consequential damages.

The Backup Servicer hereby agrees that it shall, and shall take all actions necessary so that it shall at all times be ready to, assume all the rights and powers and all of the responsibilities, obligations and duties of the Servicer hereunder, within ten (10) Business Days of receiving from the Lender a notice requesting the Backup Servicer to do so.

Notwithstanding anything contained in this Agreement to the contrary, absent specific knowledge by any Lyon Financial Services, Inc. account representative assigned to this transaction from time to time, or written notice detailing specific Errors (as defined below) or other deficiencies, Lyon Financial Services, Inc., as successor Servicer, is authorized to accept and rely on all accounting records (including computer records) and work product of the prior Servicer hereunder relating to the Contracts (collectively, the “Predecessor Servicer Work Product”) without any audit or other examination thereof, and Lyon Financial Services, Inc. shall have no duty, responsibility, obligation or liability for the acts and omissions of the prior Servicer. If any error, inaccuracy, commission or incorrect or nonstandard practice or procedure

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(collectively, “Errors”) exists in any Predecessor Servicer Work Product and such Errors cause Lyon Financial Services, Inc. to make or continue any errors (collectively, “Continued Errors”), Lyon Financial Services, Inc. shall have no liability for such Continued Errors; provided, however, that Lyon Financial Services, Inc. agrees to use its best efforts to prevent Continued Errors. In the event that Lyon Financial Services, Inc. becomes aware of Errors or Continued Errors, Lyon Financial Services, Inc. shall, with the prior consent of the Lender, use its best efforts to reconstruct and reconcile any affected data as is commercially reasonable to correct such Errors and Continued Errors and to prevent future Continued Errors. Lyon Financial Services, Inc. shall be entitled to recover its costs thereby expended as Servicer Advances in accordance with Section 2.04(c) hereof.

Within four (4) Business Days after each Remittance Date, provided that the Backup Servicer shall have received the information specified in Section 6.10(d) within the time specified therein, the Backup Servicer shall compare the information on the computer tape or diskette (or other means of electronic transmission acceptable to the Backup Servicer) most recently delivered to the Backup Servicer by the Servicer pursuant to Section 6.10(d) with respect to such Remittance Date to the corresponding Monthly Remittance Report delivered to the Backup Servicer by the Servicer pursuant to Section 6.10(d) and shall:

(a)confirm that such Monthly Remittance Report is complete on its face;

(b)confirm the distributions to be made on such Remittance Date pursuant to Section 2.04(c) hereof to the extent the Backup Servicer is able to do so given the information provided to it by the Servicer (it being hereby agreed that the Backup Servicer shall promptly notify the Servicer and the Lender if such information is insufficient and that the Servicer shall promptly provide to the Backup Servicer any additional information required by the Backup Servicer);

(c)confirm the mathematical computations of information in such Monthly Remittance Report; and

(d)confirm such other information as the Backup Servicer and the Lender may agree;

In the event of any discrepancy between the information set forth in subparagraphs (b) or (c) above as calculated by the Servicer and that determined or calculated by the Backup Servicer, the Backup Servicer shall promptly report such discrepancy to the Servicer and the Lender. In the event of a discrepancy as described in the preceding sentence, the Servicer and the Backup Servicer shall attempt to reconcile such discrepancy within five (5) Business Days after reporting such discrepancy, but in the absence of a reconciliation, distributions on the related Remittance Date shall be made consistent with the information calculated by the Servicer, the Servicer and the Backup Servicer shall attempt to reconcile such discrepancy prior to the next Remittance Date, and the Servicer shall promptly report to the Lender regarding the progress, if any, which shall have been made in reconciling such discrepancy. If the Backup Servicer and the Servicer are unable to reconcile such discrepancy with respect to such Monthly Remittance Report by the next Remittance Date that falls in April, July, October or January, the Servicer shall cause independent accountants acceptable to the Lender, at the Servicer’s expense, to examine such Monthly Remittance Report and attempt to reconcile such discrepancy at the earliest possible

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date (and the Servicer shall promptly provide the Lender with a report regarding such event). The effect, if any, of such reconciliation shall be reflected in the Monthly Remittance Report for the next succeeding Remittance Date.

Other than as specifically set forth in this Agreement, the Backup Servicer shall have no obligation to supervise, verify, monitor or administer the performance of the Servicer and shall have no liability for any action taken or omitted by the Servicer.

The Backup Servicer may allow a subservicer to perform any and all of its duties and responsibilities hereunder, including but not limited to its duties as successor Servicer hereunder, should the Backup Servicer become the successor Servicer pursuant to the terms of this Agreement; provided, however, that the Backup Servicer shall remain liable for the performance of all of its duties and obligations hereunder to the same extent as if no such subservicing had occurred.

In no event shall the Backup Servicer (either prior to or after its appointment hereunder as Servicer) be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation, acts of terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God.

SECTION 6.14Additional Remedies of Lender Upon Event of Default. During the continuance of any Event of Default, the Lender, in addition to the rights specified in Section 7.01, shall have the right to take all actions now or hereafter existing at law, in equity or by statute to protect its interests and enforce its rights and remedies (including the institution and prosecution of all judicial, administrative and other proceedings and the filings of proofs of claim and debt in connection therewith). Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Event of Default.

SECTION 6.15Waiver of Defaults. The Lender may waive any default by the Servicer in the performance of its obligations hereunder and its consequences. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall be effective unless it shall be in writing and signed by the Lender and no such waiver shall extend to any subsequent or other default or impair any right consequent thereon except to the extent expressly so waived.

SECTION 6.16Maintenance of Certain Insurance. On the date hereof the Servicer shall obtain, and at all times thereafter during the term of its service as Servicer the Servicer shall maintain, in force an “errors and omissions” insurance policy in an amount not less than $1,000,000 naming the Lender as loss payee and with an insurance company reasonably acceptable to the Lender.

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       The Servicer shall deliver a copy of the insurance policy required under this Section 6.16 to the Lender on the date hereof together with a certification from the applicable insurance company that such policy is in force on the date hereof.

The Servicer shall prepare and present, on behalf of itself and the Lender, claims under any such policy in a timely fashion in accordance with the terms of such policy, and upon, the filing of any claim on any policy described in this Section, the Servicer shall promptly notify the Lender of such claim.

SECTION 6.17Segregation of Collections. The Servicer shall not commingle funds constituting Collections with respect to any Pledged Receivable with any other funds of the Servicer; provided, that such commingling may occur in the Lockbox Account so long as the Lockbox Intercreditor Agreement is in full force and effect.

SECTION 6.18UCC Matters; Protection and Perfection of Pledged Assets. The Borrower will not change the jurisdiction of its formation, make any change to its corporate name or use any tradenames, fictitious names, assumed names, “doing business as” names or other names (other than those listed on Schedule II hereto, as such schedule may be revised from time to time to reflect name changes and name usage permitted under the terms of this Section 6.18 after compliance with all terms and conditions of this Section 6.18 related thereto) unless, prior to the effective date of any such jurisdiction change, name change or use, the Borrower notifies the Collateral Agent of such change in writing and delivers to the Collateral Agent such executed financing statements as the Collateral Agent may request to reflect such jurisdiction, name change or use, together with such other documents and instruments as the Collateral Agent may request in connection therewith. The Borrower will not change the location of its chief executive office or the location of its records regarding the Pledged Receivables unless, prior to the effective date of any such change of location, the Borrower notifies the Collateral Agent of such change of location in writing and delivers to the Collateral Agent such executed financing statements as the Collateral Agent may reasonably request to reflect such change of location, together with such Opinions of Counsel, documents and instruments as the Collateral Agent may request in connection therewith. The Borrower agrees that from time to time, at its expense, it will promptly execute and deliver all further instruments and documents, and take all further action that the Collateral Agent may reasonably request in order to perfect, protect or more fully evidence the Collateral Agent’s interest in the Pledged Assets acquired hereunder, or to enable the Collateral Agent to exercise or enforce any of its respective rights hereunder. Without limiting the generality of the foregoing, the Borrower will, upon the request of the Collateral Agent: (i) execute (if necessary) and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate or as the Collateral Agent may request, and (ii) mark its master data processing records evidencing such Pledged Receivables with a legend acceptable to the Collateral Agent, evidencing that the Collateral Agent has acquired an interest therein as provided in this Agreement. The Collateral Agent shall be entitled to conclusively rely on the filings or registrations made by or on behalf of the Borrower without any independent investigation and the Borrower’s obligation to make such filings as evidence that such filings have been made. The Borrower hereby authorizes the Collateral Agent to file one or more financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of the Pledged Receivables and the Other Conveyed Property and the Related

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Security related thereto and the proceeds of the foregoing now existing or hereafter arising, without the signature of the Borrower where permitted by law. The Borrower hereby ratifies and authorizes the filing by the Collateral Agent of any such financing statement made prior to the date hereof. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Pledged Receivables, or any part thereof, shall be sufficient as a financing statement. The Borrower shall, upon the request of the Collateral Agent at any time after the occurrence of an Event of Default and at the Borrower’s expense, notify the Obligors obligated to pay any Pledged Receivables, or any of them, of the security interest of the Collateral Agent in the Pledged Assets. If the Borrower fails to perform any of its agreements or obligations under this Section 6.18, the Collateral Agent may (but shall not be required to) itself perform, or cause performance of, such agreement or obligation, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by the Borrower upon the Collateral Agent’s demand therefor. For purposes of enabling the Collateral Agent to exercise its rights described in the preceding sentence and elsewhere in this Article VI, the Borrower hereby authorizes the Collateral Agent and its successors and assigns to take any and all steps in the Borrower’s name and on behalf of the Borrower necessary or desirable, in the determination of the Collateral Agent, to collect all amounts due under any and all Pledged Receivables, including, without limitation, endorsing the Borrower’s name on checks and other instruments representing Collections with respect to any Pledged Receivable and enforcing such Pledged Receivables and the related Contracts and, if any, the related guarantees.

SECTION 6.19Servicer Advances. The Servicer may, in its sole discretion, make an advance in respect of any payment due on a Pledged Receivable (other than a Defaulted Receivable) to the extent such payment has not been received by the Servicer as of its due date and the Servicer reasonably expects such payment will be ultimately recoverable (a “Servicer Advance”). The Servicer shall deposit into the Collection Account in immediately available funds the aggregate of all Servicer Advances to be made during a Fee Period on or prior to the Business Day immediately preceding the related Remittance Date. The Servicer shall be entitled to reimbursement for such Servicer Advances from monies in the Collection Account as provided in Section 2.04(c) hereof.

SECTION 6.20Repurchase of Receivables Upon Breach of Covenant or Representation and Warranty by Servicer. The Borrower or the Servicer, as the case may be, shall inform the other parties to this Agreement and the Initial Qualifying Swap Counterparty promptly, in writing, upon the discovery of any breach of the Servicer’s representations, warranties and/or covenants pursuant to Section 4.02, Section 6.05 or Article V; provided, however, that the failure to provide any such notice shall not diminish, in any manner whatsoever, any obligation of the Servicer hereunder to repurchase any Pledged Receivable. Unless such breach shall have been cured by the last day of the first full calendar month following the discovery by or notice to the Servicer of such breach (and provided that a Borrowing Base Deficiency exists on such last day), the Servicer (if LEAF Financial or an Affiliate thereof) shall have an obligation, and the Borrower shall and the Collateral Agent may, enforce such obligation of the Servicer (if LEAF Financial or an Affiliate thereof), to repurchase any Pledged Receivable materially and adversely affected by such breach. The Borrower shall notify the Collateral Agent promptly, in writing, of any failure by the Servicer to so repurchase any such Pledged Receivable. In consideration of the repurchase of such Pledged Receivable, the Servicer shall remit funds in an amount equal to the Release Price for such Pledged Receivable to the Collection Account on the date of such

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repurchase. The obligations of the Servicer under this Section 6.20 are in addition to, and in no way limit, any obligations of the Servicer in its individual capacity under the Purchase and Sale Agreement. It is understood and agreed that the obligation of the Servicer to purchase any Receivables is not intended to, and shall not, constitute a guaranty of the collectibility or payment of any Receivable which is not collected, not paid or uncollectible on account of the insolvency, bankruptcy, or financial inability to pay of the related Obligor.

SECTION 6.21Compliance with Applicable Law. The Servicer and the Borrower shall at all times comply in all material respects with all requirements of applicable federal, state and local laws, and regulations thereunder (including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations “B” and “Z”, the Soldiers’ and Sailors’ Civil Relief Act of 1940 and state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code and all other consumer credit laws and equal credit opportunity and disclosure laws) in the conduct of its business.

SECTION 6.22Receipt of Certificates of Title. Any Receivable (other than a Vehicle Sublimit Pledged Receivable) with respect to which the Obligor Collateral includes a Vehicle and for which the Servicer shall not have (i) received a Certificate of Title indicating the Borrower as the owner of the related Vehicle and “Morgan Stanley Bank” as the sole lienholder with respect to such Vehicle from the applicable Registrar of Titles and (ii) delivered such Certificate of Title to the Custodian within 90 days of the first day of inclusion of such Pledged Receivable in the calculation of the Eligible Receivables Balance, shall no longer be deemed to be an Eligible Receivable and, therefore, shall no longer be included in the calculation of the Eligible Receivables Balance. In the case of any Receivable excluded from the calculation of the Eligible Receivables Balance pursuant to the previous sentence, the Receivable so excluded from the calculation of the Eligible Receivables Balance may at a later time be included in the calculation of the Eligible Receivables Balance, provided, that (i) the Custodian shall have received the Certificate of Title described above with respect to such Receivable from the applicable Registrar of Titles and delivered such Certificate of Title to the Custodian and (ii) such Receivable is otherwise an Eligible Receivable at such time.

SECTION 6.23Lender’s Bank Limitation of Liability. xv) The Lender’s Bank undertakes to perform only such duties and obligations as are specifically set forth in this Agreement, it being expressly understood by the parties hereto that there are no implied duties or obligations under this Agreement. Neither the Lender’s Bank nor any of its officers, directors, employees or agents shall be liable, directly or indirectly, for any damages or expenses arising out of the services performed under this Agreement other than damages which result from the gross negligence or willful misconduct of it or them. In no event will the Lender’s Bank or any of its officers, directors, employees or agents be liable for any consequential, indirect or special damages.

(b)The Lender’s Bank shall not be liable for any error of judgment, or for any act done or step taken or omitted by it, in good faith, or for any mistakes of fact or law, or for anything which it may do or refrain from doing in connection herewith.

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(c)The Lender’s Bank may rely on and shall be protected in acting upon any certificate, instrument, opinion, notice, letter, telegram or other document delivered to it by any other Person and which in good faith it believes to be genuine and which has been signed by the proper party or parties. The Lender’s Bank may rely on and shall be protected in acting upon the written instructions of any designated officer of the Borrower, the Servicer or the Lender.

(d)The Lender’s Bank may consult with counsel reasonably satisfactory to it and the opinion of such counsel 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 accordance with the opinion of such counsel.

(e)The Lender’s Bank shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder, or in the exercise of its rights or powers, if the Lender’s Bank believes that repayment of such funds (repaid in accordance with the terms of this Agreement) or adequate indemnity against such risk or liability is not reasonably assured to it.

(f)The Lender’s Bank shall not be deemed to be a fiduciary of any party hereto.

(g)The parties hereto agree that in no event will the Lender’s Bank be liable for special, indirect or consequential damages.

ARTICLE VII.

EVENTS OF DEFAULT

SECTION 7.01Events of Default. If any of the following events (“Events of Default”) shall occur:

(a)the occurrence of any Bankruptcy Event with respect to the Borrower, Owner, Resource America, the Originator or the Servicer; or

(b)any representation or warranty made or deemed to be made by the Borrower or the Servicer (or any of its officers) under or in connection with this Agreement (or any remittance report or other information or report delivered pursuant hereto) or any other Transaction Document shall prove to be false or incorrect in any respect and shall remain false or incorrect for a period fifteen (15) Business Days after the Servicer or the Borrower become aware, or are notified by the Lender, the Custodian or any other Person, that such representation or warranty is false or incorrect; provided, however, that if any breach described above is cured by the repurchase of Receivables pursuant to Article VI of the Purchase and Sale Agreement or by a repayment hereunder, or repurchase pursuant to Sections 4.03 or 6.20 hereof, such breach shall cease to constitute an Event of Default; or

(c)(i) the Borrower or the Servicer shall fail to perform or observe any term, covenant or agreement hereunder or under any other Transaction Document (other than described in clause (ii) below) in any material respect and such failure remains unremedied for fifteen (15) Business Days or (ii) either the Servicer or the Borrower shall fail to make any payment or

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deposit to be made by it when due hereunder or under any other Transaction Document and such failure remains unremedied for two (2) Business Days; or

(d)the Borrower, Owner, Resource America or the Servicer shall fail to pay (and such failure remains unremedied for two (2) Business Days) any principal of or premium or interest on any Debt in an amount in excess of $10,000,000, when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); or any other default under any agreement or instrument relating to any Debt of the Borrower or the Servicer or any other event, shall occur if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof; or

(e)the Originator, the Borrower or any of their respective subsidiaries shall have suffered any material adverse change to its business, financial condition or any other condition which, in Lender’s sole discretion, constitutes a material impairment of the Originator or the Borrower’s ability to perform its Obligations; or

(f)(i) the Collateral Agent shall at any time fail to have a valid, perfected, first priority security interest in any of the Pledged Assets (other than Equipment which has a value of less than (x) $25,000 if such Equipment is leased under Dollar Purchase Option Contracts or (y) $50,000 if such Equipment is leased under FMV Contracts) or (ii) any purchase by the Borrower of a Receivable and the Collections, Related Security and Other Conveyed Property with respect thereto under the Purchase and Sale Agreement shall, for any reason, cease to create in favor of the Borrower a perfected ownership interest in such Receivable and the Collections, Related Security and the Other Conveyed Property with respect thereto; provided, however, that if an event described in the foregoing clause (i) or (ii) is cured by the repurchase of Receivables pursuant to Article VI of the Purchase and Sale Agreement or by a repayment hereunder or repurchase pursuant to Sections 4.03 or 6.20 hereof, within five Business Days, such event shall cease to constitute an Event of Default; or

(g)the Borrower or the Servicer shall have suffered any material adverse change to its financial condition or operations which would affect the collectibility of the Pledged Receivables or the Borrower’s or the Servicer’s ability to conduct its business or fulfill its obligations hereunder or under any other Transaction Document; or

(h)the Servicer’s or the Borrower’s activities are terminated for any reason, including any termination thereof by a regulatory, tax or accounting body; or

(i)the occurrence of a Change of Control; or

(j)the Purchase and Sale Agreement or any other Transaction Document or any material provision of any of them shall cease to be in full force and effect and enforceable in accordance with its terms, or the Servicer, the Borrower, or any Affiliate of the Servicer or the Borrower shall so assert in writing; or

(k)the occurrence of a Servicer Default; or

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(l)(i) the Facility Amount exceeds the lesser of (x) the Borrowing Limit and such event shall remain unremedied for one Business Day or (y) the Borrowing Base and such event shall remain unremedied for two Business Days; (ii) the aggregate Facility Amount hereunder, calculated solely with respect to Loans made with respect to Pool A Receivables, exceeds the Pool A Borrowing Base and such event shall remain unremedied for two Business Days or (iii) the aggregate Facility Amount hereunder, calculated solely with respect to Loans made with respect to Pool B Receivables, exceeds the Pool B Borrowing Base and such event shall remain unremedied for two Business Days; or

(m)the auditor’s opinion accompanying the audited annual financial statements of the Servicer or the Borrower is qualified in any manner; or

(n)(i) any Qualifying Interest Rate Swap shall cease to be in full force and effect, (ii) the Borrower or the Servicer fail to comply with any hedging requirement hereunder or (iii) the counterparty under any Qualifying Interest Rate Swap or former or purported Qualifying Interest Rate Swap fails to qualify as a Qualifying Swap Counterparty and does not post cash collateral in a manner satisfactory to the Lender is not replaced by a Qualifying Swap Counterparty within 45 days of such counterparty’s failure to so qualify, (iv) the occurrence of any default by the Borrower or Servicer in the observance or performance of any of the terms or provisions of any Qualifying Interest Rate Swap or (v) any interest rate swap agreement represented by the Borrower or the Servicer to be a Qualifying Interest Rate Swap shall fail to be, or cease to be, a Qualifying Interest Rate Swap; or

(o)Resource America shall, at any time, permit its Tangible Net Worth to be less than the Minimum Tangible Net Worth; or

(p)either (i) the provisions of the Transaction Documents relating to the Backup Servicer or its duties under any of the Transaction Documents cease to be in full force and effect and enforceable in accordance with their terms, or the Backup Servicer shall so assert in writing, (ii) Lyon Financial Services, Inc. or any successor Backup Servicer resigns, is removed by the Lender, or otherwise ceases to act as the Backup Servicer, and such Backup Servicer is not replaced by a new Backup Servicer satisfactory to the Lender within 45 days of such resignation, removal or other event;

then the Lender may, by notice to the Borrower and each Qualifying Swap Counterparty, declare the Program Termination Date to have occurred; provided, that, in the case of any event described in Section 7.01(a) above, the Program Termination Date shall be deemed to have occurred automatically upon the occurrence of such event. Upon any such declaration or automatic occurrence, (i) the Borrower shall cease purchasing Receivables from Originator under the Purchase and Sale Agreement, (ii) at the option of the Lender in its sole discretion, the Lender may declare the Loans made to the Borrower hereunder and all interest and all Fees accrued on such Loans and any other Obligations to be immediately due and payable (and the Borrower shall pay such Loans and all such amounts and Obligations immediately), (iii) the Lender, in its sole discretion, may direct the Obligors to make all payments under the Pledged Receivables directly to the Backup Servicer, the Lender or any lockbox or account established by any of such parties. Any Collections received in any such account (or received directly by the Lender) shall be applied to the Obligations in accordance with the priority of payments set forth

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in Section 2.04(c). In addition, upon any such declaration or upon any such automatic occurrence, the Lender and the Collateral Agent shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction and other applicable laws, which rights shall be cumulative. If any Event of Default shall have occurred, the Interest Rate shall be increased to the Default Funding Rate, effective as of the date of the occurrence of such Event of Default, and shall remain at the Default Funding Rate.

SECTION 7.02Additional Remedies of the Lender. xvi) If, (i) upon the Lender’s declaration that the Loans made to the Borrower hereunder are immediately due and payable pursuant to Section 7.01 or (ii) on the Facility Maturity Date, the aggregate outstanding principal amount of the Loans, all accrued Fees and interest and any other Obligations are not immediately paid in full, then the Collateral Agent, in addition to all other rights specified hereunder, shall have the right to immediately sell in a commercially reasonable manner, in a recognized market (if one exists) at such price or prices as the Collateral Agent may reasonably deem satisfactory, any or all Pledged Assets and shall apply the proceeds thereof to the Obligations in accordance with the priority of payments set forth in Section 2.04(c).

(b)The parties recognize that it may not be possible to sell all of the Pledged Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Pledged Assets may not be liquid. Accordingly, the Collateral Agent may elect, in its sole discretion, the time and manner of liquidating any Pledged Assets, and nothing contained herein shall obligate the Collateral Agent to liquidate any Pledged Assets on the date the Lender declares the Loans made to the Borrower hereunder to be immediately due and payable pursuant to Section 7.01 or to liquidate all Pledged Assets in the same manner or on the same Business Day.

(c)Any amounts received from any sale or liquidation of the Pledged Assets pursuant to this Section 7.02 in excess of the Obligations will be returned to the Borrower, its successors or assigns, or to whosoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may otherwise direct.

(d)Each of the Lender, Collateral Agent and the Initial Qualifying Swap Counterparty shall have, in addition to all the rights and remedies provided herein and provided by applicable federal, state, foreign, and local laws (including, without limitation, the rights and remedies of a secured party under the Uniform Commercial Code of any applicable state, to the extent that the Uniform Commercial Code is applicable, and the right to offset any mutual debt and claim), all rights and remedies available to such Person at law, in equity or under any other agreement between such Person and the Borrower.

(e)Except as otherwise expressly provided in this Agreement, no remedy provided for by this Agreement shall be exclusive of any other remedy, each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall be deemed to be a waiver of any Program Termination Event or Event of Default.

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ARTICLE VIII.

INDEMNIFICATION

SECTION 8.01Indemnities by the Borrower. Without limiting any other rights which the Lender, the Collateral Agent, the Backup Servicer (whether in its capacity as Backup Servicer or successor Servicer), the Lender’s Bank, the Custodian, the Initial Qualifying Swap Counterparty or any of their respective Affiliates may have hereunder or under applicable law, the Borrower hereby agrees to indemnify the Lender, the Collateral Agent, the Custodian, the Backup Servicer, the Lender’s Bank, the Initial Qualifying Swap Counterparty and each of their respective Affiliates (each, an “Indemnified Party” for purposes of this Article VIII) from and against any and all damages, losses, claims, liabilities and related costs and expenses, including reasonable attorneys’ fees and disbursements (all of the foregoing being collectively referred to as “Indemnified Amounts”), awarded against or incurred by any of them arising out of or as a result of this Agreement or in respect of any Pledged Assets, excluding, however, (A) Indemnified Amounts to the extent resulting solely from gross negligence, bad faith or willful misconduct on the part of an Indemnified Party, (B) taxes (including interest and penalties imposed thereon) imposed by the jurisdiction in which such Indemnified Party’s principal executive office is located, on or measured by the overall net income of such Indemnified Party or (C) Indemnified Amounts to the extent that they are or result from lost profits (other than principal, interest and Fees with respect to the Loans). Without limiting the foregoing, the Borrower shall indemnify each Indemnified Party for Indemnified Amounts relating to or resulting from any of the following (to the extent not resulting solely from gross negligence, bad faith or willful misconduct on the part of an Indemnified Party):

(i)any Pledged Receivable treated as or represented by the Borrower to be an Eligible Receivable which is not at the applicable time an Eligible Receivable;

(ii)reliance on any representation or warranty made or deemed made by the Borrower or any of its officers under or in connection with this Agreement, which shall have been false or incorrect in any material respect when made or deemed made or delivered;

(iii) the failure by the Borrower to comply with any term, provision or covenant contained in this Agreement or any agreement executed in connection with this Agreement, or with any applicable law, rule or regulation with respect to any Pledged Assets, or the nonconformity of any Pledged Assets with any such applicable law, rule or regulation;

(iv)the failure to vest and maintain vested in the Collateral Agent or to transfer to the Collateral Agent a first priority perfected security interest in the Receivables which are, or are purported to be, Pledged Receivables, together with all related Other Conveyed Property, Collections, Related Security and other Pledged Assets related thereto (including, without limitation, the Borrower’s interest in and to any and all Obligor Collateral with respect to such Receivables), free and clear of any Adverse Claim whether existing at the time of the related Borrowing or at any time thereafter;

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(v)the failure to maintain, as of the close of business on each Business Day prior to the Collection Date, a Facility Amount which is less than or equal to the lesser of (x) the Borrowing Limit on such Business Day and (y) the Borrowing Base on such Business Day;

(vi)the failure to maintain, as of the close of business on each Business Day prior to the Collection Date, a Facility Amount, calculated solely with respect to Loans secured by Pool A Receivables, which is less than or equal to the Pool A Borrowing Base;

(vii)the failure to maintain, as of the close of business on each Business Day prior to the Collection Date, a Facility Amount, calculated solely with respect to Loans secured by Pool B Receivables, which is less than or equal to the Pool B Borrowing Base;

(viii)the failure to file, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivables which are, or are purported to be, Pledged Receivables or the other Pledged Assets related thereto, whether at the time of any Borrowing or at any subsequent time;

(ix)any dispute, claim, offset or defense (other than the discharge in bankruptcy of an Obligor) to the payment of any Receivable which is, or is purported to be, a Pledged Receivable (including, without limitation, a defense based on such Receivable (or the Contract evidencing such Receivable) not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms);

(x)any failure of the Borrower to perform its duties or obligations in accordance with the provisions of this Agreement or any other Transaction Document;

(xi) the failure of the Borrower to pay when due any taxes payable in connection with the Pledged Receivables or the Pledged Assets related thereto;

(xii)any repayment by the Lender of any amount previously distributed in payment of Loans or payment of interest or Fees or any other amount due hereunder, in each case which amount the Lender believes in good faith is required to be repaid;

(xiii)the commingling by the Borrower of Collections of Pledged Receivables at any time with other funds;

(xiv)any investigation, litigation or proceeding related to this Agreement or the use of proceeds of Loans or the Pledged Assets;

(xv)any failure by the Borrower to give reasonably equivalent value to Originator in consideration for the transfer by Originator to the Borrower of any

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  Receivable or any attempt by any Person to void or otherwise avoid any such transfer under any statutory provision or

        common law or equitable action, including, without limitation, any provision of the Bankruptcy Code;

(xvi)[Reserved];

(xvii)any failure of the Borrower or any of its agents or representatives to remit to the Collection Account, Collections of Pledged Receivables remitted to the Borrower or any such agent or representative;

(xviii)any failure on the part of the Borrower duly to observe or perform in any material respect any covenant or agreement under any Qualifying Interest Rate Swap; and/or

(xix) any Contract related to any Pledged Receivable being rejected by an Obligor under Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect to such Obligor.

Any amounts subject to the indemnification provisions of this Section 8.01 shall be paid by the Borrower to the Lender on behalf of the applicable Indemnified Party within two (2) Business Days following the Lender’s written demand therefor on behalf of the applicable Indemnified Party (and the Lender shall pay such amounts to the applicable Indemnified Party promptly after the receipt by the Lender of such amounts). The Lender, on behalf of any Indemnified Party making a request for indemnification under this Section 8.01, shall submit to the Borrower a certificate setting forth in reasonable detail the basis for and the computations of the Indemnified Amounts with respect to which such indemnification is requested, which certificate shall be conclusive absent demonstrable error.

If the Borrower has made any payments in respect of Indemnified Amounts to the Lender, on behalf of an Indemnified Party pursuant to this Section 8.01 and such Indemnified Party thereafter collects any of such amounts from others, such Indemnified Party will promptly repay such amounts collected to the Borrower, without interest.

SECTION 8.02Indemnities by Servicer. xvii) Without limiting any other rights which any Indemnified Party may have hereunder or under applicable law, the Servicer (if LEAF Financial or one of its Affiliates) hereby agrees to indemnify each Indemnified Party from and against any and all damages, losses, claims, liabilities and related costs and expenses (including reasonable attorneys’ fees and disbursements) (all of the foregoing being collectively referred to as “Servicer Indemnified Amounts”) suffered or sustained by any Indemnified Party as a consequence of any of the following, excluding, however, Servicer Indemnified Amounts resulting solely from (A) any gross negligence, bad faith or willful misconduct of any Indemnified Party claiming indemnification hereunder, (B) taxes (including interest and penalties imposed thereon) imposed by the jurisdiction in which such Indemnified Party’s principal executive office is located, on or measured by the overall net income of such Indemnified Party; (C) Indemnified Amounts to the extent that they are or result from lost profits (other than principal, interest and Fees with respect to the Loans); and (D) Indemnified Amounts to the extent the same includes losses that arise solely due to Receivables being uncollectible on

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account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or would constitute recourse to Servicer for such losses:

(i)the inclusion, in any computations made by it in connection with any Borrowing Base Certificate or Monthly Remittance Report or other report prepared by it hereunder, of any Pledged Receivables which were not Eligible Receivables as of the date of any such computation;

(ii)reliance on any representation or warranty made by the Servicer (if LEAF Financial or one of its Affiliates) or any of its officers under or in connection with this Agreement, which shall have been false or incorrect in any material respect when made or delivered;

(iii)the failure by the Servicer (if LEAF Financial or any of its Affiliates) to comply with (A) any term, provision or covenant contained in this Agreement, or any agreement executed in connection with this Agreement, or (B) any applicable law, rule or regulation applicable to it with respect to any Pledged Assets;

(iv)any action or inaction by the Servicer (if LEAF Financial or one of its Affiliates) that causes the Collateral Agent not to have a first priority perfected security interest in the Receivables that are, or are purported to be, Pledged Receivables, together with all related Other Conveyed Property, Collections, Related Security and other Pledged Assets related thereto (including without limitation, the Borrower’s interest in and to any and all Obligor Collateral with respect to such Receivables), free and clear of any Adverse Claim whether existing at the time of the related Borrowing or any time thereafter;

(v)the commingling by the Servicer (if LEAF Financial or one of its Affiliates) of the Collections of Pledged Receivables at any time with any other funds;

(vi)any failure of the Servicer (if LEAF Financial or one of its Affiliates) or any of its agents or representatives (including, without limitation, agents, representatives and employees of the Servicer acting pursuant to authority granted under Section 6.01 hereof) to remit to Collection Account, Collections of Pledged Receivables remitted to the Servicer or any such agent or representative;

(vii)the failure by the Servicer (if LEAF Financial or any of its Affiliates) to perform any of its duties or obligations in accordance with the provisions of this Agreement or errors or omissions related to such duties; and/or

(viii)notwithstanding whether any Pledged Receivable shall have been repurchased by the Servicer pursuant to Section 6.20, any of the events or facts giving rise to a breach of any of the Servicer’s representations, warranties, agreements and/or covenants set forth in Article V or Article VI.

(b)Any Servicer Indemnified Amounts shall be paid by the Servicer (if LEAF Financial or one of its Affiliates) to the Lender, for the benefit of the applicable Indemnified Party, within

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two (2) Business Days following receipt by the Servicer of the Lender’s written demand therefor (and the Lender shall pay such amounts to the applicable Indemnified Party promptly after the receipt by the Lender of such amounts).

(c)If the Servicer has made any indemnity payments to the Lender, on behalf of an Indemnified Party pursuant to this Section 8.02 and such Indemnified Party thereafter collects any of such amounts from others, such Indemnified Party will promptly repay such amounts collected to the Servicer, without interest.

Each applicable Indemnified Party shall deliver to the indemnifying party under Section 8.01 and Section 8.02, within a reasonable time after such Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by such Indemnified Party relating to the claim giving rise to the Indemnified Amounts.

ARTICLE IX.

MISCELLANEOUS

SECTION 9.01Amendments and Waivers. xviii) Except as provided in Section 9.01(b), no amendment or modification of any provision of this Agreement shall be effective without the written agreement of the Borrower, the Servicer, the Lender and, to the extent any of their rights or obligations hereunder are adversely affected thereby, the Backup Servicer, the Custodian, the Lender’s Bank, and/or each Qualifying Swap Counterparty, and no termination or waiver of any provision of this Agreement or consent to any departure therefrom by the Borrower or the Servicer shall be effective without the written concurrence of the Backup Servicer and the Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b)Notwithstanding the provisions of Section 9.01(a), in the event that there is more than one Lender, the written consent of each Lender shall be required for any amendment, modification or waiver (i) reducing any outstanding Loans, or the interest thereon, (ii) postponing any date for any payment of any Loan, or the interest thereon, (iii) modifying the provisions of this Section 9.01, or (iv) increasing the Borrowing Base or the Borrowing Limit.

SECTION 9.02Notices, Etc. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including telex communication, communication by facsimile copy or electronic mail) and mailed, telexed, transmitted or delivered, as to each party hereto, at its address set forth on Schedule VI hereto or specified in such party’s Assignment and Acceptance or at such other address (including, without limitation, an electronic mail address) as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, upon receipt, or in the case of  notice by facsimile copy or electronic mail, when verbal communication of receipt is obtained, except that notices and communications pursuant to Article II shall not be effective until received.

SECTION 9.03No Waiver; Remedies. No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any

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single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 9.04Binding Effect; Assignability; Multiple Lenders. xix) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Servicer, the Lender, the Backup Servicer, the Custodian, the Lender’s Bank and their respective successors and permitted assigns. This Agreement and the Lender’s rights and obligations hereunder and interest herein shall be assignable in whole or in part (including by way of the sale of participation interests therein) by the Lender and its successors and assigns. None of the Borrower, the Servicer or the Backup Servicer may assign any of its rights and obligations hereunder or any interest herein without the prior written consent of the Lender. The parties to each assignment or participation made pursuant to this Section 9.04 shall execute and deliver to the Lender, for its acceptance and recording in its books and records, an assignment and acceptance agreement (an “Assignment and Acceptance”) or a participation agreement or other transfer instrument reasonably satisfactory in form and substance to the Lender and the Borrower. Each such assignment or participation shall be effective as of the date specified in the applicable Assignment and Acceptance or other agreement or instrument only after the execution, delivery, acceptance and recording thereof as described in the preceding sentence. The Lender shall notify the Borrower of any assignment or participation thereof made pursuant to this Section 9.04. The Lender may, in connection with any assignment or participation or any proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower and the Pledged Assets furnished to the Lender by or on behalf of the Borrower or the Servicer; provided, however, that the Lender shall not disclose any such information until it has obtained an agreement from such assignee or participant or proposed assignee or participant that it shall treat as confidential (under terms mutually satisfactory to the Lender, the Borrower, the Servicer and such assignee or participant or proposed assignee or participant) any information obtained which is not already publicly known or available.

(b)Whenever the term “Lender” is used herein, it shall mean Morgan Stanley and/or any other Person which shall have executed an Assignment and Acceptance; provided, however, that each such party shall have a pro rata share of the rights and obligations of the Lender hereunder in such percentage amount (the “Commitment Percentage”) as shall be obtained by dividing such party’s commitment to fund Loans hereunder by the total commitment of all parties to fund Loans hereunder. Unless otherwise specified herein, any right at any time of the Lender to enforce any remedy, shall be exercised by the Lender only upon direction by such parties that hold a majority of the Commitment Percentages at such time.

(c)Subject to Section 9.04(a), each of the parties hereto hereby agrees to execute any amendment to this Agreement that is required in order to facilitate the addition of any new Lender hereunder as contemplated by this Section 9.04 and which does not have any adverse effect on the Borrower, the Originator, the Servicer or any Affiliate thereof.

SECTION 9.05Term of This Agreement. This Agreement including, without limitation, the Borrower’s obligation to observe its covenants set forth in Articles V and VI and the Servicer’s obligation to observe its covenants set forth in Articles V and VI, shall remain in full

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force and effect until the Collection Date; provided, however, that the rights and remedies with respect to any breach of any representation and warranty made or deemed made by the Borrower or the Servicer pursuant to Articles III and IV and the indemnification and payment provisions of Article VIII and Article IX and the provisions of Section 9.08 and Section 9.09 shall be continuing and shall survive any termination of this Agreement.

SECTION 9.06GOVERNING LAW; JURY WAIVER; CONSENT TO JURISDICTION. xx) THIS AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE LENDER IN THE PLEDGED RECEIVABLES, OR REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

(b)EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.

(c)ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

SECTION 9.07Costs, Expenses and Taxes. xxi) In addition to the rights of indemnification granted to the Backup Servicer (whether in its capacity as Backup Servicer or successor Servicer), the Custodian, the Lender’s Bank, the Lender and its Affiliates under Section 8.01 hereof, the Borrower agrees to pay on demand all reasonable (and reasonably documented) costs and expenses of the Backup Servicer, the Custodian, the Lender’s Bank and the Lender incurred in connection with the preparation, execution or delivery of, or any waiver or consent issued or amendment prepared in connection with, this Agreement, the other Transaction Documents and the other documents to be delivered hereunder or in connection herewith or therewith or incurred in connection with any amendment, waiver or modification of this Agreement, any other

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Transaction Document, and any other documents to be delivered hereunder or thereunder or in connection herewith or therewith that is necessary or requested (and, with respect to the Lender, actually entered into) by any of the Borrower, the Servicer, the Lender or made necessary or desirable as a result of the actions of any regulatory, tax or accounting body affecting the Lender and its Affiliates, or which is related to an Event of Default, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Backup Servicer, the Custodian, the Lender’s Bank and the Lender with respect thereto and with respect to advising the Backup Servicer, the Custodian, the Lender’s Bank and the Lender as to their respective rights and remedies under this Agreement and the other documents to be delivered hereunder or in connection herewith, and all costs and expenses, if any (including reasonable counsel fees and expenses), incurred by the Backup Servicer, the Custodian, the Lender’s Bank or the Lender in connection with the enforcement of this Agreement and the other documents to be delivered hereunder or in connection herewith.

(b)The Borrower shall pay on demand any and all stamp, sales, excise and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the other documents to be delivered hereunder or any agreement or other document providing liquidity support, credit enhancement or other similar support to the Lender which is specific to this Agreement or the funding or maintenance of Loans hereunder.

(c)The Borrower shall pay on demand all other costs, expenses and taxes (excluding franchise and income taxes) incurred by the Lender or the Initial Qualifying Swap Counterparty or any shareholder thereof related to this Agreement, any other Transaction Document or any Qualifying Interest Rate Swap or similar interest rate cap agreement (“Other Costs”), including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Lender or the Initial Qualifying Swap Counterparty with respect to (i) advising such Person as to its rights and remedies under this Agreement and the other documents to be delivered hereunder or in connection herewith and (ii) the enforcement of this Agreement and the other documents to be delivered hereunder or in connection herewith; provided, however, that the Borrower shall have no obligation to pay the fees and out-of-pocket expenses of counsel to the Initial Qualifying Swap Counterparty related to the initial negotiation, execution and delivery of any Qualifying Interest Rate Swap.

(d)Without limiting any other provision hereof, the Borrower shall pay on demand all costs, expenses and fees of the Backup Servicer prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder related to its duties under this Agreement.

(e)Any Person making a claim under this Section 9.07 shall submit to the Borrower a notice setting forth in reasonable detail the basis for and the computations of the applicable costs, expenses, taxes or similar items.

SECTION 9.08No Proceedings. The Servicer, the Backup Servicer, the Custodian, the Lender and the Lender’s Bank each hereby agree that it will not institute against, or join any other Person in instituting against, the Borrower any proceedings of the type referred to in the definition of Bankruptcy Event prior to the Collection Date.

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SECTION 9.09Recourse Against Certain Parties. No recourse under or with respect to any obligation, covenant or agreement (including, without limitation, the payment of any fees or any other obligations) of the Lender as contained in this Agreement or any other agreement, instrument or document entered into by the Borrower or the Lender pursuant hereto or in connection herewith shall be had against any administrator of the Borrower or the Lender or any incorporator, affiliate, stockholder, officer, employee or director of the Borrower or the Lender or of any such administrator, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; itbeingexpresslyagreedandunderstood that the agreements of each party hereto contained in this Agreement and all of the other agreements, instruments and documents entered into by the Borrower or the Lender pursuant hereto or in connection herewith are, in each case, solely the corporate obligations of such party (and nothing in this Section 9.09 shall be construed to diminish in any way such corporate obligations of such party), and that no personal liability whatsoever shall attach to or be incurred by any administrator of the Borrower or the Lender or any incorporator, stockholder, affiliate, officer, employee or director of the Borrower or the Lender or of any such administrator, as such, or any of them, under or by reason of any of the obligations, covenants or agreements of the Borrower or the Lender contained in this Agreement or in any other such instruments, documents or agreements, or which are implied therefrom, and that any and all personal liability of every such administrator of the Borrower or the Lender and each incorporator, stockholder, affiliate, officer, employee or director of the Borrower or the Lender or of any such administrator, or any of them, for breaches by the Borrower or the Lender of any such obligations, covenants or agreements, which liability may arise either at common law or in equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of and in consideration for the execution of this Agreement. The provisions of this Section 9.09 shall survive the termination of this Agreement.

SECTION 9.10Execution in Counterparts; Severability; Integration. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement. In the event that any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. This Agreement contains the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings other than the Fee Letter.

SECTION 9.11Tax Characterization. Notwithstanding any provision of this Agreement, the parties hereto intend that the Loans advanced hereunder shall constitute indebtedness of the Borrower for federal income tax purposes.

SECTION 9.12Calculation of Performance Triggers. Notwithstanding anything to the contrary herein, Included Repurchased Receivables shall be treated as Pool Receivables for purposes of each calculation of the Annualized Default Rate, Annualized Net Loss Rate,

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Delinquency Rate, Pool A Annualized Net Loss Rate and the Pool B Annualized Net Loss Rate required to be made hereunder (but for no other purpose).

ARTICLE X.

THE COLLATERAL AGENT

SECTION 10.01No Implied Duties. The Collateral Agent shall be obligated to perform only the duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Collateral Agent.

SECTION 10.02Limits on Liability. The Collateral Agent shall not be liable for any acts, omissions, errors of judgment or mistakes of fact or law made, taken or omitted to be made or taken by it in accordance with this Agreement and the other Transaction Documents (including acts, omissions, errors or mistakes with respect to the Collateral), except for those arising out of or in connection with the Collateral Agent’s gross negligence or willful misconduct. The Collateral Agent may consult with counsel, accountants and other experts, and any opinion or advice of any such counsel, any such accountant and any such other expert shall be full and complete authorization and protection in respect of any action taken or suffered by the Collateral Agent hereunder in accordance therewith. The Collateral Agent shall have the right at any time to seek instructions concerning the administration of the Pledged Assets from any court of competent jurisdiction. The Collateral Agent may conclusively rely, and shall be fully protected in acting, upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document which it has no reasonable reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies and telexes, to have been sent by the proper party or parties. Absent its gross negligence or willful misconduct, the Collateral Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Collateral Agent and conforming to the requirements of this Agreement and the other Transaction Documents, if any.

SECTION 10.03Acknowledgement. The Lender hereby acknowledges and agrees that its rights and obligations as “Lender” under the Collection Account Agreement, Security Deposit Account Agreement and each Cash Reserve Account Agreement are being held in its capacity as Collateral Agent for the benefit of the Secured Parties.

[Signature page to follow.]

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

THE BORROWER:	RESOURCE CAPITAL FUNDING II, LLC By:_____             Name:         Title:
THE SERVICER:	LEAF FINANCIAL CORPORATION By:_________________________        Name:        Title:
THE LENDER:	MORGAN STANLEY BANK By:_________________________        Name:        Title:
THE CUSTODIAN AND THE LENDER’S BANK:	U.S. BANK NATIONAL ASSOCIATION By:_________________________        Name:        Title:
THE BACKUP SERVICER	LYON FINANCIAL SERVICES, INC. (D/B/A U.S. BANK PORTFOLIO SERVICES) By:_________________________        Name:        Title:

S-1

BACKUP SERVICER LYON FINANCIAL SERVICES, INC. (D/B/A   U.S. BANK PORTFOLIO SERVICES)   By:_________________________        Name:        Title:  

S-2

SCHEDULE I

CONDITION PRECEDENT DOCUMENTS

As required by Section 3.01 of the Agreement, each of the following items must be delivered to the Lender prior to the date of the initial Borrowing:

(a)A copy of this Agreement duly executed by each of the parties hereto;

(b)A certificate of the Secretary or Assistant Secretary of each of the Borrower, the Originator and the Servicer, dated the date of this Agreement, certifying (i) the names and true signatures of the incumbent officers authorized to sign on behalf of the such Person each Transaction Document to which it is a party (on which certificate the Lender may conclusively rely until such time as the Lender shall receive from such Person a revised certificate meeting the requirements of this paragraph (b)), (ii) that the copy of the certificate of incorporation or formation of each such Person attached thereto is a complete and correct copy and that such certificate of incorporation or formation has not been amended, modified or supplemented and is in full force and effect, (iii) that the copy of the organizational documents of such Person attached thereto is a complete and correct copy, and that such organizational documents have not been amended, modified or supplemented and is in full force and effect, and (iv) the resolutions of the board of directors or members of such Person approving and authorizing the execution, delivery and performance by such Person of each Transaction Document to which it is a party;

(c)Good standing certificate, dated as of a recent date for each of the Borrower, the Originator and the Servicer, issued by its jurisdiction of organization;

(d)Executed, original copies of proper financing statements (the “Facility Financing Statements”) describing the Pledged Receivables, Other Conveyed Property, Related Security and other Pledged Assets, and (a) filed against Originator in favor of the Borrower as assignor secured party and naming the Collateral Agent as total assignee and (b) filed against the Borrower and in favor of the Collateral Agent, as secured party, and other, similar instruments or documents, as may be necessary or, in the opinion of the Collateral Agent, desirable under the UCC of all appropriate jurisdictions or any comparable law to perfect the Collateral Agent’s interests in all Pledged Receivables, Other Conveyed Property, Related Security and other Pledged Assets;

(e)Executed, original copies of proper financing statements, if any, necessary to release all security interests and other rights of any Person in the Pledged Receivables, Other Conveyed Property, Related Security and other Pledged Assets previously granted by Originator or the Borrower;

(f)Certified copies of requests for information or copies (or a similar UCC search report certified by a party acceptable to the Lender), dated a date reasonably near to the date of the initial Borrowing, listing all effective financing statements (including the Facility Financing Statements), which name any of the Borrower or the Originator (under such party’s present name and any previous name) as debtor and which are filed in the jurisdictions in which the Facility

Sch. I-1

Financing Statements were filed, together with copies of such financing statements (none of which, other than the Facility Financing Statements, shall cover any Pledged Assets);

(g)One or more favorable Opinions of Counsel, of counsel to the Originator and the Borrower, with respect to such matters as the Lender may reasonably request (including an opinion, with respect to the creation, perfection and first priority of the security interest of the Borrower and the Collateral Agent in the property described in such Opinion of Counsel);

(h)One or more favorable Opinions of Counsel, of counsel to the Originator and the Borrower, with respect to the true conveyance of the Receivables under the Purchase and Sale Agreement, and issues of substantive consolidation;

(i)One or more favorable Opinions of Counsel, of counsel to the Originator, the Borrower, the Custodian and the Backup Servicer with respect to, among other things, the due authorization, execution and delivery of, and enforceability of, this Agreement and the other Transaction Documents;

(j)A favorable Opinion of Counsel of counsel to the Borrower, with respect to the first priority perfected security interest of the Collateral Agent in the Collection Account, the Security Deposit Account and the Cash Reserve Account and the funds therein;

(k)Any necessary third party consents to the closing of the transactions contemplated hereby;

(l)A copy of each of the other Transaction Documents duly executed by the parties thereto;

(m)A copy of the fidelity insurance policy referred to in Section 6.16 hereof together with a certification from the applicable insurance company that such policy is in full force and effect on the date hereof; and

(n)The results of comprehensive background checks (completed by an investigation service acceptable to the Lender) on the senior management, key employees and principals of each of Resource America and LEAF Financial.

Sch. I-2

SCHEDULE II

PRIOR NAMES, TRADENAMES, FICTITIOUS NAMES

AND “DOING BUSINESS AS” NAMES

1.Borrower: None

2.Servicer: LEAF Financial Corp.

LEAF Financial Corporation was previously named Fidelity Leasing Corporation. Effective February 28, 1996, Fidelity Leasing Corporation changed its name to F.L. Partnership Management, Inc. Effective May 1, 2000, F.L. Partnership Management, Inc. and FL Financial Services, Inc. merged, with F.L. Partnership Management, Inc. as the surviving entity. Effective December 13, 2001, F.L. Partnership Management, Inc. changed its name to LEAF Financial Corporation. Effective June 29, 2004, LEAF Asset Management, Inc. and LEAF Financial Corp. merged, with LEAF Financial Corp. as the surviving entity. None

Sch. II-1

SCHEDULE III-A

REPRESENTATIONS AND WARRANTIES WITH

RESPECT TO ELIGIBLE POOL A RECEIVABLES

The following representations and warranties are made by the Borrower with respect to the Pool A Contracts related to Pledged Pool A Receivables which are designated as being Eligible Pool A Receivables on a Borrowing Base Certificate or a Monthly Remittance Report, or are otherwise represented to the Lender as being Eligible Pool A Receivables, or are included as Eligible Pool A Receivables in any calculation set forth herein.

1.Each such Contract represents the genuine, legal, valid, binding and full recourse payment obligation of the Obligor thereunder, enforceable by the Borrower in accordance with its terms and the Obligor, with respect to such Contract (and any guarantor of the Obligor’s obligations thereunder), had full legal capacity to execute and deliver such Contract and any other documents related thereto.

2.[Intentionally omitted.]

3.To the extent that such Contract consists of a “Term Note (Level Payments)” or “Term Note (Step Payments)” or similar promissory note, together with the “Master Loan and Security Agreement” or similar agreement related thereto and incorporated by reference therein, each other “Term Note (Level Payments)” or “Term Note (Step Payments)” or similar promissory note related to the same “Master Loan and Security Agreement” or similar agreement is also a Contract related to a Pledged Receivable. To the extent that such Contract consists of a “Master Lease Schedule” or similar agreement together with a “Master Lease Agreement” or similar agreement which is related to, and incorporated by reference therein, each other “Master Lease Schedule” or similar agreement related to the same “Master Lease Agreement” or similar agreement is also a Contract related to a Pledged Receivable

4.Each such Contract, at the time of origination and at all times thereafter, conformed to all requirements of the Credit and Collection Policy applicable to such Contract and, in any case, no such Contract would be required to be written off pursuant to the Credit and Collection Policy.

5.Each such Contract (i) was (a) originated by Originator in the ordinary course of Originator’s business and Originator had all necessary licenses and permits to originate Contracts in the State where the related Obligor and the related Obligor Collateral were located or (b) purchased by Originator, in a transaction that would constitute a “true sale” for bankruptcy purposes, from a Person (a “Seller”) who originated such Contract in the ordinary course of Seller’s business and who had all necessary licenses and permits to originate Contracts in the State where the related Obligor and the related Obligor Collateral were located, (ii) was sold by Originator to the Borrower under the Purchase and Sale Agreement and the Borrower has all necessary licenses and permits to own Receivables and enter into Contracts in the state where the related Obligor and the related Obligor Collateral are located, (iii) contains customary and enforceable provisions, such as to render the rights and remedies of the Borrower (and any

Sch.III-A-1

assignee thereof) adequate for realization against the collateral security related thereto and (iv) provides for level Scheduled Payments during the term of such Contract or such Contract is a Non-Level Payment Contract.

6.Each such Contract was originated by Originator or the Seller without any fraud or material misrepresentation on the part of the related Obligor or Originator or the Seller. Each such Contract was sold by Originator to the Borrower without any fraud or material misrepresentation on the part of Originator.

7.No such Contract is the subject of any litigation, nor is it subject to any right of rescission, setoff, counterclaim or defense on the part of the Obligor thereunder.

8.Each such Contract has had no provision thereof waived, amended, altered or modified in any respect since its origination except in conformity with the Credit and Collection Policy.

9.The Obligor, with respect to each such Contract, has a billing address in the United States and, except as otherwise permitted in writing by the Lender from time to time, the Equipment which is the subject of each such Contract and all other Obligor Collateral with respect thereto is located in the United States.

10.Each such Contract (i) is calculated at a fixed yield, (ii) is fully amortizing in periodic installments over its remaining term (which may include a Balloon Payment or Put Payment not in excess of 45% of the Discounted Balance of such Contract at the time of origination), (iii) has a remaining term of 180 months or less and does not permit renewal or extension, (iv) provides for acceleration of the Scheduled Payments thereunder if the related Obligor is in default under or has otherwise violated or breached any material provision of such Contract, (v) prohibits the related Obligor from applying any part of the Security Deposit or cash collateral paid under such Contract to the Scheduled Payments due under such Contract (and neither the Originator, the Servicer, the Borrower or any other Person has applied any part of the Security Deposit or cash collateral paid under such Contract to any of the Scheduled Payments due under such Contract) and (vi) has not been assigned by the related Obligor nor has there been any sub-lease of the Obligor Collateral.

11.[Intentionally omitted.]

12.Each such Contract (i) is payable by a single Obligor, that is a corporate Person, or, if the collateral is Equipment used in a business, an individual and (ii) provides for the financing or lease of Obligor Collateral to be used in the business of the related Obligor.

13.Each such Contract was originated in the United States and is denominated and payable solely in United States Dollars.

14.Each such Contract (i) if a Lease Contract, contains “hell or high water” provisions, (ii) requires the related Obligor to assume all risk of loss or malfunction of the related Obligor Collateral; (iii) requires the related Obligor to pay all maintenance, repair, insurance and taxes, together with all other ancillary costs and expenses, with respect to the related Obligor

Sch.III-A-2

Collateral; and (iv) requires the related Obligor to pay, in full, when due, all Scheduled Payments notwithstanding any casualty, loss or other damage to the related Obligor Collateral.

15.Each such Contract is by its terms an absolute and unconditional obligation of the related Obligor and is non-cancelable (in the case of a Lease Contract) and non-cancelable and non-prepayable without the payment in full of principal and accrued interest and finance charges prior to the expiration of the term of such Contract; such Contract does not provide for the substitution, exchange or addition of any other items of Obligor Collateral related to such Contract if the effect thereof would be to reduce or extend the Scheduled Payments related thereto; and the rights with respect to such Contract are assignable by Originator (and its successors and assigns, including the Borrower) without the consent of or notice to any Person.

16.Each such Contract is in the form of one of the form contracts attached hereto as Exhibit D-1, Exhibit D-2 or Exhibit D-3 or in a form otherwise approved by the Servicer in compliance with the Credit and Collection Policy.

17.The Security Deposit, if any, related to such Contract has been deposited into the Security Deposit Account within ten Business Days of the Pledge of the related Receivable.

18.All material requirements of applicable federal, state and local laws, and regulations thereunder in respect of each such Contract, the origination thereof, and the Obligor Collateral related thereto, have been complied with in all respects.

19.The applicable Obligor (other than a lessee under a Lease Contract that is a “true lease”) has good and marketable title to the Equipment which is the subject of each such Contract and such Equipment is free and clear of all Adverse Claims.

20.Each such Contract constitutes either an “Instrument” or “Chattel Paper” or a “Payment Intangible” within the meaning of the UCC.

21.Each such Contract contains language by which the related Obligor grants a security interest to Originator in the Obligor Collateral which is the subject of each such Contract.

22.(A) The Originator shall have taken or caused to be taken all steps necessary under all applicable law (including the filing of an Obligor Financing Statement with respect to each such Contract) in order to cause a valid, subsisting and enforceable perfected, first priority security interest to exist in Originator’s favor in the Obligor Collateral securing each such Contract (other than with respect to Equipment which has a value of less than $25,000 if such Equipment is leased under Dollar Purchase Option Contracts or $50,000 if such Equipment is leased under FMV Contracts), (B) Originator shall have assigned the perfected, first priority security interest in the Obligor Collateral referred to in clause (A) above to the Borrower pursuant to the Purchase and Sale Agreement and (C) the Borrower shall have assigned the perfected, first priority security interest in the Obligor Collateral referred to in clause (A) above to the Collateral Agent pursuant to Section 2.11 hereof.

23.The Borrower has taken all steps necessary under all applicable law in order to perfect the security interest of the Collateral Agent in (i) the Borrower’s interest in the Obligor

Sch.III-A-3

Collateral related to each such Contract (other than Equipment which has a value of less than $25,000 if such Equipment is leased under Dollar Purchase Option Contracts or $50,000 if such Equipment is leased under FMV Contracts) and (ii) each such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof), and there exists in favor of the Collateral Agent as secured party, a valid, subsisting and enforceable first priority perfected security interest in (i) the Borrower’s interest in such Obligor Collateral and (ii) such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof) and such security interest is and shall be prior to all other liens upon and security interests in (i) the Borrower’s interest in such Obligor Collateral and (ii) such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof) that now exist or may hereafter arise or be created (other than Permitted Liens).

24.If the Obligor Collateral related to such Contract (other than a Contract related to a Vehicle Sublimit Pledged Receivable) includes a Vehicle, the Borrower or the Servicer shall have delivered to the applicable Registrar of Titles an application for a Certificate of Title for such Vehicle which such Certificate of Title shall indicate the Borrower as the owner of the related Vehicle and indicate “Morgan Stanley Bank” as the sole lienholder with respect to such Vehicle.

25.No such Contract is a Defaulted Receivable or, at the time of its Pledge hereunder, a Delinquent Receivable.

26.Each such Contract is payable by an Obligor which is not subject to any bankruptcy, insolvency, reorganization or similar proceeding.

27.The information pertaining to each such Contract set forth in the Schedule of Contracts (as defined in the Purchase and Sale Agreement), the related Assignment and each Borrowing Base Certificate and Monthly Remittance Report is true and correct in all respects.

28.With respect to each such Contract, by the Borrowing Date on which such Contract is Pledged hereunder and on each relevant date thereafter, Originator will have caused its master computer records relating to such Contract to be clearly and unambiguously marked to show that such Contract has been Pledged under this Agreement.

29.With respect to each such Contract there exists a Receivable File and such Receivable File contains each item listed in the definition of Receivable File with respect to such Contract and such Receivable File has been delivered to the Custodian.

30.No such Contract has been repaid, prepaid, satisfied, subordinated or rescinded, and the Obligor Collateral securing such Contract has not been released from the lien of the Lender in whole or in part (except for releases of Equipment from a Contract prior to the date of the Pledge thereof and which releases have been noted in the Collateral Receipt related to such document).

31.No such Contract was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer, pledge and/or assignment of such Contract under this Agreement or the Purchase and Sale Agreement, and

Sch.III-A-4

Originator has not entered into any agreement with any Obligor that prohibits, restricts or conditions the sale, transfer, pledge and/or assignment of such Contract.

32.[Intentionally Omitted].

33.No such Contract has been sold, transferred, assigned or pledged by Originator to any Person other than the Borrower. Borrower has not taken any action to convey any right to any Person that would result in such Person having a right to payments due under any such Contract or payments received under the related Insurance Policy or otherwise to impair the rights of the Borrower or the Lender in such Contract, the related Insurance Policy or any proceeds thereof. There is an Insurance Policy in full force and effect with respect to the Equipment related to such Contract if such Equipment had an original cost over $100,000.

34.No such Contract is assumable by another Person in a manner which would release the Obligor thereof from such Obligor’s obligations to Originator or the Borrower.

35.There has been no default, breach, violation or event permitting acceleration under the terms of any such Contract, and no condition exists or event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of any such Contract, and there has been no waiver of any of the foregoing.

36.No selection procedures adverse to the Borrower or the Lender have been utilized in selecting any such Contract from all other similar Contracts originated or purchased by Originator.

37.The Obligor Collateral related to any such Contract is not subject to any tax or mechanic’s lien or any other Adverse Claim.

38.[Intentionally omitted.]

39.The Borrower has delivered to the Custodian the sole original counterpart of each such Contract (or a true and correct copy thereof) and such document constitutes the entire agreement between the parties thereto in respect of the related Obligor Collateral.

40.Each such Contract is in full force and effect in accordance with its terms and neither the Borrower nor the Obligor has or will have suspended or reduced any payments or obligations due or to become due thereunder by reason of a default by any other party to such Contract; there are no proceedings pending or threatened asserting insolvency of such Obligor; there are no proceedings pending or threatened wherein such Obligor, any other obligated party or any governmental agency has alleged that such Contract is illegal or unenforceable.

41.The origination and collection practices used by the Servicer with respect to each such Contract have been in all respects customary in the equipment financing and servicing business.

42.The Obligor Collateral related to each such Contract was properly delivered to the Obligor in good repair and is in proper working order. Each Obligor has accepted the related

Sch.III-A-5

Equipment. The related Obligor is the end user of the Equipment that is the subject of any such Contract and no Obligor has sublet the Equipment to any other party.

43.The Obligor with respect to any such Contract is not a merchant with respect to the Equipment related to such Contract.

44.Except with respect to a breach of an Obligor’s right of quiet enjoyment of the related Equipment, neither the operation of any of the terms of any such Contract nor the exercise by the Borrower, the Servicer or the Obligor of any right under any such Contract will render such Contract unenforceable in whole or in part nor subject to any right of rescission, setoff, claim, counterclaim or defense, and no such right of rescission, set-off, claim, counterclaim or defense, including a defense arising out of a breach of the Obligor’s right of quiet enjoyment of the Equipment, has been asserted with respect thereto.

45.The Borrower and the Servicer have duly fulfilled all obligations on their part to be fulfilled under or in connection with the origination, acquisition and assignment of such Contract, including, without limitation, giving any notices and obtaining any consents necessary to effect the acquisition of such Contract by the Borrower, and have done nothing to impair the rights of the Borrower or the Lender in the Contract or payments with respect thereto.

46.Originator and the Servicer have duly fulfilled all obligations on their part to be fulfilled under or in connection with the origination, acquisition and assignment of such Contract, and have done nothing to impair the rights of the Borrower in such Contract or payments with respect thereto. Originator, the Servicer and Borrower have duly fulfilled all continuing obligations on their part to be fulfilled under or in connection with such Contract.

47.[Intentionally Omitted].

48.The sale from the Originator to the Borrower of each such Contract and the Other Conveyed Property and Related Security related thereto does not violate the terms or provisions of any agreement to which the Borrower is a party or by which it is bound.

49.The transfer, assignment and conveyance of the Contract and the related Related Security and Other Conveyed Property from the Originator to the Borrower pursuant to the Purchase and Sale Agreement is not subject to nor will result in any tax, fee or governmental charge payable by the Borrower or any other Person to any federal, state or local government.

50.No such Contract (other than a “true lease”) may be (i) an executory contract or (ii) in any event, deemed to be an executory contract or unexpired lease subject to rejection by an Obligor under Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect to such Obligor.

51.Each such Contract contains enforceability provisions (i) permitting the acceleration of the payments thereunder if the Obligor is in default under such Contract and (ii) sufficient to enable the Borrower to repossess or foreclose upon the Obligor Collateral related thereto.

Sch.III-A-6

52.Each such Contract generally contains provisions requiring the payment of both interest and principal (or, in the case of a Lease Contract, lease payments) in each calendar month or quarter during the term of such Contract.

53.The promissory note, if any, related to each such Contract (i) was payable to the Originator immediately prior to its transfer to the Borrower under the Purchase and Sale Agreement, and (ii) was payable to the Borrower immediately prior to its Pledge hereunder and has not been endorsed by Originator to any Person other than the Borrower.

54.The final Scheduled Payment required by each such Contract is less than or equal to the Discounted Balance of such Contract at the time of origination.

55.The Obligor Collateral related to such Contract is not one or more Vehicles regularly engaged in the long-haul transportation of goods.

56.The Obligor with respect to any such Contract which is a lease of, or is secured by, Equipment related to the practice of dentistry, medicine or veterinary medicine is a dentist, doctor or veterinarian.

57.The vendor of the Equipment relating to such Receivable has received payment in full from the Obligor prior to the Pledge of such Receivable hereunder and has no remaining obligations with respect to such Equipment except for any applicable warranty.

Sch.III-A-7

SCHEDULE III-B

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO

ELIGIBLE POOL B RECEIVABLES

The following representations and warranties are made by the Borrower with respect to the Pool B Contracts related to Pledged Pool B Receivables which are designated as being Eligible Pool B Receivables on a Borrowing Base Certificate or a Monthly Remittance Report, or are otherwise represented to the Lender as being Eligible Pool B Receivables, or are included as Eligible Pool B Receivables in any calculation set forth herein.

1.Each such Contract represents the genuine, legal, valid, binding and full recourse payment obligation of the Obligor thereunder, enforceable by the Borrower in accordance with its terms and the Obligor, with respect to such Contract (and any guarantor of the Obligor’s obligations thereunder), had full legal capacity to execute and deliver such Contract and any other documents related thereto.

2.[Intentionally omitted.]

3.The Obligor under such Contract has been continuously originating lease or loan agreements related to equipment with an original cost of less than $100,000 for at least three (3) complete calendar years unless such Obligor is Pentech Financial Services, Inc.

4.Each such Contract, at the time of origination and at all times thereafter, conformed to all requirements of the Credit and Collection Policy applicable to such Contract and, in any case, no such Contract would be required to be written off pursuant to the Credit and Collection Policy.

5.Each such Contract (i) was originated by Originator in the ordinary course of Originator’s business and Originator had all necessary licenses and permits to originate Contracts in the State where the related Obligor and the related Obligor Collateral were located, (ii) was sold by Originator to the Borrower under the Purchase and Sale Agreement and the Borrower has all necessary licenses and permits to own Receivables and enter into Contracts in the state where the related Obligor and the related Obligor Collateral are located, (iii) contains customary and enforceable provisions, such as to render the rights and remedies of the Borrower (and any assignee thereof) adequate for realization against the collateral security related thereto and (iv) provides for level Scheduled Payments during the term of such Contract or such Contract is a Non-Level Payment Contract.

6.Each such Contract was originated by Originator without any fraud or material misrepresentation on the part of the related Obligor or Originator. Each such Contract was sold by Originator to the Borrower without any fraud or material misrepresentation on the part of Originator.

7.No such Contract is the subject of any litigation, nor is it subject to any right of rescission, setoff, counterclaim or defense on the part of the Obligor thereunder.

Sch.III-B-1

8.Each such Contract has had no provision thereof waived, amended, altered or modified in any respect since its origination except in conformity with the Credit and Collection Policy.

9.The Obligor with respect to each such Contract has a billing address in the United States and, except as otherwise permitted in writing by the Lender from time to time, all Obligor Collateral with respect thereto is located in the United States.

10.Each such Contract (i) is calculated at a fixed yield, (ii) is fully amortizing in periodic installments over its remaining term (which amortization may include a Balloon Payment or Put Payment not in excess of 10% of the aggregate original cost of the related Underlying Equipment), (iii) has a remaining term of 120 months or less and does not permit renewal or extension, (iv) provides for acceleration of the Scheduled Payments thereunder if the related Obligor is in default under or has otherwise violated or breached any material provision of such Contract, (v) prohibits the related Obligor from applying any part of the Cash Reserve (if any) paid under such Contract to the Scheduled Payments due under such Contract (and neither the Originator, the Servicer, the Borrower or any other Person has applied any part of the Cash Reserve paid under such Contract to any of the Scheduled Payments due under such Contract) and (vi) has not been assigned by the related Obligor nor has there been any sub-lease of the Obligor Collateral.

11.The obligations of the Obligor under each such Contract are secured by Underlying Originator Loan Collateral which includes Eligible Pool B Underlying Lease Contracts and Eligible Pool B Underlying Loan Contracts with aggregate Discounted Balances equal to or greater than the Discounted Balance of such Contract.

12.Each such Contract (i) is payable by a single Obligor, that is a corporate Person or, if the collateral is Equipment used in a business, an individual and (ii) provides for the financing or lease of Obligor Collateral to be used in the business of the related Obligor.

13.Each such Contract was originated in the United States and is denominated and payable solely in United States Dollars.

14.[Intentionally omitted.]

15.Each such Contract is by its terms an absolute and unconditional obligation of the related Obligor and is non-cancelable and non-prepayable without the payment in full of principal and accrued interest and finance charges prior to the expiration of the term of such Contract; such Contract does not provide for the substitution, exchange or addition of any other items of Underlying Originator Loan Collateral related to such Contract if the effect thereof would be to reduce or extend the Scheduled Payments related thereto; and the rights with respect to such Contract are assignable by Originator (and its successors and assigns, including the Borrower) without the consent of or notice to any Person.

16.Each such Contract conforms with the criteria set forth in Exhibit D-4 hereto.

17.The Cash Reserve, if any, related to such Contract has been deposited into a Cash Reserve Account within ten Business Days of the Pledge of the related Receivable.

Sch.III-B-2

18.All material requirements of applicable federal, state and local laws, and regulations thereunder in respect of each such Contract, the origination thereof, and the Obligor Collateral related thereto, have been complied with in all respects.

19.The applicable Underlying Obligor (other than a lessee under an Underlying Lease Contract that is a “true lease”) has good and marketable title to Underlying Originator Loan Collateral related to such Contract and such Underlying Originator Loan Collateral is free and clear of all Adverse Claims.

20.Each such Contract constitutes either an “Instrument” or “Chattel Paper” or a “Payment Intangible” within the meaning of the UCC.

21.Each such Contract contains language by which the related Obligor grants a security interest to Originator in the Obligor Collateral which is the subject of each such Contract.

22.(A) The Originator shall have taken or caused to be taken all steps necessary under all applicable law (including the filing of an Obligor Financing Statement with respect to each such Contract) in order to cause a valid, subsisting and enforceable perfected, first priority security interest to exist in Originator’s favor in the Obligor Collateral securing each such Contract (other than with respect to Underlying Equipment relating to such Contract which has an original value of less than $25,000 if such Underlying Equipment is leased under Dollar Purchase Option Contracts or $50,000 if such Underlying Equipment is leased under FMV Contracts), (B) Originator shall have assigned the perfected, first priority security interest in the Obligor Collateral referred to in clause (A) above to the Borrower pursuant to the Purchase and Sale Agreement and (C) the Borrower shall have assigned the perfected, first priority security interest in the Obligor Collateral referred to in clause (A) above to the Collateral Agent pursuant to Section 2.13 hereof.

23.The Borrower has taken all steps necessary under all applicable law in order to perfect the security interest of the Collateral Agent in (i) the Borrower’s interest in the Obligor Collateral related to each such Contract (other than with respect to Underlying Equipment relating to such Contract which has an original value of less than $25,000 if such Underlying Equipment is leased under Dollar Purchase Option Contracts or $50,000 if such Underlying Equipment is leased under FMV Contracts) and (ii) each such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof), and there exists in favor of the Collateral Agent as secured party, a valid, subsisting and enforceable first priority perfected security interest in (i) the Borrower’s interest in such Obligor Collateral and (ii) such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof) and such security interest is and shall be prior to all other liens upon and security interests in (i) the Borrower’s interest in such Obligor Collateral and (ii) such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof) that now exist or may hereafter arise or be created (other than Permitted Liens).

24.[Intentionally omitted.]

Sch.III-B-3

25.No such Contract is a Defaulted Receivable or, at the time of its Pledge hereunder, a Delinquent Receivable.

26.Each such Contract is payable by an Obligor which is not subject to any bankruptcy, insolvency, reorganization or similar proceeding.

27.The information pertaining to each such Contract set forth in the Schedule of Contracts (as defined in the Purchase and Sale Agreement), the related Assignment and each Borrowing Base Certificate and Monthly Remittance Report is true and correct in all respects.

28.With respect to each such Contract, by the Borrowing Date on which such Contract is Pledged hereunder and on each relevant date thereafter, Originator will have caused its master computer records relating to such Contract to be clearly and unambiguously marked to show that such Contract has been Pledged under this Agreement.

29.With respect to each such Contract there exists a Receivable File and such Receivable File contains each item listed in the definition of Receivable File with respect to such Contract and such Receivable File is in the possession of the Custodian.

30.No such Contract has been repaid, prepaid, satisfied, subordinated or rescinded, and the Obligor Collateral securing such Contract has not been released from the lien of the Lender in whole or in part.

31.No such Contract was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer, pledge and/or assignment of such Contract under this Agreement or the Purchase and Sale Agreement, and the Originator has not entered into any agreement with any Obligor that prohibits, restricts or conditions the sale, transfer, pledge and/or assignment of such Contract.

32.[Intentionally Omitted].

33.No such Contract has been sold, transferred, assigned or pledged by the Originator to any Person other than the Borrower. Borrower has not taken any action to convey any right to any Person that would result in such Person having a right to payments due under any such Contract or payments received under the related Insurance Policy or otherwise to impair the rights of the Borrower or the Lender in such Contract, the related Insurance Policy or any proceeds thereof.

34.No such Contract is assumable by another Person in a manner which would release the Obligor thereof from such Obligor’s obligations to Originator or the Borrower.

35.There has been no default, breach, violation or event permitting acceleration under the terms of any such Contract, and no condition exists or event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of any such Contract, and there has been no waiver of any of the foregoing.

Sch.III-B-4

36.No selection procedures adverse to the Borrower or the Lender have been utilized in selecting any such Contract from all other similar Contracts originated or purchased by Originator.

37.The Obligor Collateral related to any such Contract is not subject to any Adverse Claim.

38.[Intentionally omitted.]

39.The Borrower has delivered to the Custodian the sole original counterpart (or a true and correct copy) of each such Contract and such document constitutes the entire agreement between the parties thereto in respect of the related Obligor Collateral.

40.Each such Contract is in full force and effect in accordance with its terms and neither the Borrower nor the Obligor has or will have suspended or reduced any payments or obligations due or to become due thereunder by reason of a default by any other party to such Contract; there are no proceedings pending or threatened asserting insolvency of such Obligor; there are no proceedings pending or threatened wherein such Obligor, any other obligated party or any governmental agency has alleged that such Contract is illegal or unenforceable.

41.The origination and collection practices used by the Servicer with respect to each such Contract have been in all respects customary in the equipment financing and servicing business.

42.[Intentionally omitted.]

43.[Intentionally omitted.]

44.Neither the operation of any of the terms of any such Contract nor the exercise by the Borrower, the Servicer or the Obligor of any right under any such Contract will render such Contract unenforceable in whole or in part nor subject to any right of rescission, setoff, claim, counterclaim or defense, and no such right of rescission, set-off, claim, counterclaim or defense has been asserted with respect thereto.

45.The Borrower and the Servicer have duly fulfilled all obligations on their part to be fulfilled under or in connection with the origination, acquisition and assignment of the Contract, including, without limitation, giving any notices and obtaining any consents necessary to effect the acquisition of the Contract by the Borrower, and have done nothing to impair the rights of the Borrower or the Lender in the Contract or payments with respect thereto.

46.The Originator and the Servicer have duly fulfilled all obligations on their part to be fulfilled under or in connection with the origination, acquisition and assignment of the Contract, including, without limitation, giving any notices and obtaining any consents necessary to effect the acquisition of the Contract by the Borrower pursuant to the Purchase and Sale Agreement, and have done nothing to impair the rights of the Borrower in the Contract or payments with respect thereto. Originator, the Servicer and Borrower have duly fulfilled all continuing obligations on their part to be fulfilled under or in connection with such Contract.

Sch.III-B-5

47.The sale from the Originator to the Borrower of each such Contract and the Other Conveyed Property and Related Security related thereto does not violate the terms or provisions of any agreement to which the Borrower is a party or by which it is bound.

48.The transfer, assignment and conveyance of the Contract and the related Related Security and Other Conveyed Property from Originator to the Borrower pursuant to the Purchase and Sale Agreement is not subject to nor will result in any tax, fee or governmental charge payable by the Borrower or any other Person to any federal, state or local government.

49.No such Contract may be (i) an executory contract or (ii) in any event, deemed to be an executory contract or unexpired lease subject to rejection by an Obligor under Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect to such Obligor.

50.Each such Contract contains enforceability provisions (i) permitting the acceleration of the payments thereunder if the Obligor is in default under such Contract and (ii) sufficient to enable the Borrower to repossess or foreclose upon the Obligor Collateral related thereto.

51.[Intentionally omitted.]

52.The promissory note, if any, related to each such Contract (i) was payable to the Originator immediately prior to its transfer to the Borrower under the Purchase and Sale Agreement, and (ii) was payable to the Borrower immediately prior to its Pledge hereunder and has not been endorsed by Originator to any Person other than the Borrower.

53.The final Scheduled Payment required by each such Contract is less than or equal to the Discounted Balance of such Contract at the time of origination.

54.[Intentionally omitted.]

55.[Intentionally omitted.]

56.Such Contract contains “Seller Events of Default” or similar events of default which (i) would occur if a Pool B Termination Event with respect to the related Underlying Originator occurred, (ii) would entitle the Borrower, as assignee of the Originator’s rights under the Contract, to deliver, or cause the delivery of, a redirection notice which would require all Underlying Obligors to make all payments under Underlying Contracts sold or pledged to the Originator under such Contract to Lockbox Account or an account designated by the Borrower or the Servicer and (iii) would entitle the Borrower, as assignee of the Originator’s rights under the Contract, to receive 100% of all payments under the Underlying Contracts sold or pledged to the Originator under such Contract.

57.Each such Contract shall require all amounts payable thereunder to be paid before the return to the applicable Obligor of, and without setoff with respect to, the amount of any loan principal or purchase price which would otherwise have been advanced by the Originator to the applicable Obligor pursuant to the terms of such Contract, but which was held back by the Originator as a liquidity reserve or similar reserve.

Sch.III-B-6

SCHEDULE III-C

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO

ELIGIBLE POOL B UNDERLYING CONTRACTS

The following representations and warranties are made by the Borrower with respect to the Underlying Contracts related to Pledged Pool B Receivables, which are designated as being Eligible Pool B Receivables on a Borrowing Base Certificate or a Monthly Remittance Report, or are otherwise represented to the Lender as being Eligible Pool B Receivables, or are included as Eligible Pool B Receivables in any calculation set forth herein.

1.Each such Underlying Contract represents the genuine, legal, valid, binding and full recourse payment obligation of the Underlying Obligor thereunder, enforceable by the Underlying Originator in accordance with its terms and the Underlying Obligor, with respect to such Underlying Contract (and any guarantor of the Underlying Obligor’s obligations thereunder), had full legal capacity to execute and deliver such Underlying Contract and any other documents related thereto.

2.[Intentionally omitted.]

3.[Intentionally omitted.]

4.Each such Underlying Contract at the time of origination and at all times thereafter, conformed to all requirements of the credit and collection policy of the applicable Underlying Originator applicable to such Underlying Contract and, in any case, no such Underlying Contract would be required to be written off pursuant to such credit and collection policy.

5.Each such Underlying Contract (i) was originated by an Eligible Underlying Originator in the ordinary course of its business and such Underlying Originator had all necessary licenses and permits to originate Underlying Contracts in the State where the related Underlying Obligor and the related Underlying Collateral were located, (ii) was pledged by such Underlying Originator to the Originator under the applicable Pool B Contract and (iii) contains customary and enforceable provisions, such as to render the rights and remedies of such Underlying Originator (and any assignee thereof, including, without limitation, the Borrower) adequate for realization against the collateral security related thereto.

6.Each such Underlying Contract was originated by the applicable Underlying Originator without any fraud or material misrepresentation on the part of the related Underlying Obligor or Underlying Originator. Each such Underlying Contract was pledged by such Underlying Originator to Originator without any fraud or material misrepresentation on the part of such Underlying Originator or Originator, as applicable.

7.No such Underlying Contract is the subject of any litigation, nor is it subject to any right of rescission, setoff, counterclaim or defense on the part of the Underlying Obligor thereunder.

Sch.III-C-1

8.Each such Underlying Contract has had no provision thereof waived, amended, altered or modified in any respect since its origination except in conformity with the credit and collection policy of the applicable Underlying Originator.

9.The Underlying Obligor, with respect to each such Underlying Contract, has a billing address in the United States and, except as otherwise permitted in writing by the Lender from time to time, the Underlying Equipment which is the subject of each such Underlying Contract and all other Obligor Collateral with respect thereto is located in the United States.

10.Each such Underlying Contract (i) is calculated at a fixed yield, (ii) is fully amortizing in periodic installments over its remaining term (which may include a Balloon Payment or Put Payment not in excess of  10% of the original cost of the related Underlying Equipment), (iii) has an remaining term of 120 months or less and does not permit renewal or extension, (iv) provides for acceleration of the Underlying Scheduled Payments thereunder if the related Underlying Obligor is in default under or has otherwise violated or breached any material provision of such Underlying Contract, (v) prohibits the related Underlying Obligor from applying any part of the Underlying Security Deposit (if any) paid under such Underlying Contract to the Underlying Scheduled Payments due under such Underlying Contract (and neither the Underlying Originator, the Originator, the Servicer, the Borrower or any other Person has applied any part of the Underlying Security Deposit paid under such Underlying Contract to any of the Underlying Scheduled Payments due under such Underlying Contract) and (vi) has not been assigned by the related Underlying Obligor nor has there been any sub-lease of the Underlying Obligor Collateral.

11.Such Underlying Contract has a Discounted Balance of not greater than $800,000.

12.Each such Underlying Contract (i) is payable by a single Underlying Obligor, that is a corporate Person or, if the collateral is Equipment used in a business, an individual and (ii) provides for the financing or lease of Underlying Collateral to be used in the business of the related Underlying Obligor.

13.Each such Underlying Contract was originated in the United States and is denominated and payable solely in United States Dollars.

14.Each such Underlying Contract (i) if an Underlying Lease Contract, contains “hell or high water” provisions, (ii) requires the related Underlying Obligor to assume all risk of loss or malfunction of the related Underlying Collateral; (iii) requires the related Underlying Obligor to pay all maintenance, repair, insurance and taxes, together with all other ancillary costs and expenses, with respect to the related Underlying Collateral; and (iv) requires the related Underlying Obligor to pay, in full, when due, all Underlying Scheduled Payments notwithstanding any casualty, loss or other damage to the related Underlying Collateral.

15.Each such Underlying Contract is by its terms an absolute and unconditional obligation of the related Underlying Obligor and is non-cancelable (in the case of an Underlying Lease Contract) and non-cancelable and non-prepayable without the payment in full of principal and accrued interest and finance charges prior to the expiration of the term of such Underlying Contract; such Underlying Contract does not provide for the substitution, exchange or addition of

Sch.III-C-2

any other items of Underlying Collateral related to such Underlying Contract if the effect thereof would be to reduce or extend the Underlying Scheduled Payments related thereto; and the rights with respect to such Underlying Contract are assignable by the applicable Underlying Originator (and its successors and assigns, including Originator and the Borrower) without the consent of or notice to any Person.

16.[Intentionally omitted.]

17.[Intentionally omitted.]

18.All material requirements of applicable federal, state and local laws, and regulations thereunder in respect of each such Underlying Contract, the origination thereof, and the Underlying Collateral related thereto, have been complied with in all respects.

19.The applicable Underlying Obligor (other than a lessee under an Underlying Lease Contract that is a “true lease”) has good and marketable title to the Underlying Equipment which is the subject of each such Underlying Contract and such Underlying Equipment is free and clear of all Adverse Claims.

20.Each such Underlying Contract constitutes either an “Instrument” or “Chattel Paper” or a “Payment Intangible” within the meaning of the UCC.

21.Each such Underlying Contract contains language by which the related Underlying Obligor grants a security interest to the related Underlying Originator in the Underlying Collateral which is the subject of each such Underlying Contract.

22.(A) The applicable Underlying Originator shall have taken or caused to be taken all steps necessary under all applicable law (including the filing of a sufficient UCC-1 Financing Statement with respect to each such Underlying Contract) in order to cause a valid, subsisting and enforceable perfected, first security interest to exist in such Underlying Contract’s favor in the Underlying Collateral securing each such Underlying Contract (other than with respect to Equipment which has a value of less than $25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under FMV Contracts) and (B) such Underlying Originator shall have assigned the perfected, first priority security interest in the Underlying Collateral referred to in clause (A) above to Originator pursuant to the applicable Pool B Contract. Such security interest is and shall be prior to all other liens upon and security interests in (i) the Underlying Originator’s in such Underlying Collateral and (ii) such Underlying Contract (and the proceeds thereof) that now exist or may hereafter arise or be created.

23.[Intentionally omitted.]

24.If the Underlying Collateral related to such Underlying Contract (other than an Underlying Contract related to a Vehicle Sublimit Pledged Receivable) includes a Vehicle, the Borrower or the Servicer shall have delivered to the applicable Registrar of Titles an application for a Certificate of Title for such Vehicle which such Certificate of Title shall indicate “Morgan Stanley Bank” as the sole lienholder with respect to such Vehicle.

25.No such Underlying Contract meets any of the following criteria:

Sch.III-C-3

       (i)                any part of any Underlying Scheduled Payment (or other amount payable under the terms of the related Underlying

 Contract) remains unpaid for more than 120 days after the due date therefor set forth in such Underlying Contract;

(ii)the first or second Underlying Scheduled Payment is not paid in full when due under the related Underlying Contract;

(iii)any payment or other material terms of the related Underlying Contract have been modified due to credit related reasons after such Underlying Contract was acquired by the Originator pursuant to the applicable Pool B Contract;

(iv)a Bankruptcy Event has occurred with respect to the related Underlying Obligor or such Underlying Contract has been or should otherwise be deemed uncollectible by the Underlying Originator in accordance with its credit and collection policy;

(v)with respect to such Underlying Contract the Underlying Originator has repossessed the related Underlying Equipment;

(vi)any Underlying Scheduled Payment (or other amount payable under the terms of such Underlying Contract) remains unpaid for more than 30 days but not more than 120 days after the due date therefor set forth in such Underlying Contract.

26.Each such Underlying Contract is payable by an Underlying Obligor which is not subject to any bankruptcy, insolvency, reorganization or similar proceeding.

27.The information pertaining to each such Underlying Contract set forth in the Schedule of Contracts (as defined in the Purchase and Sale Agreement), the related Assignment and each Borrowing Base Certificate and Monthly Remittance Report is true and correct in all respects.

28.With respect to each such Underlying Contract, by the Borrowing Date on which the related Pool B Contract is Pledged hereunder and on each relevant date thereafter, the related Underlying Originator will have caused its master computer records relating to such Underlying Contract to be clearly and unambiguously marked to show that such Underlying Contract has been pledged to Originator.

29.[Intentionally omitted.]

30.No such Underlying Contract has been repaid, prepaid, satisfied, subordinated or rescinded, and the Underlying Collateral securing such Underlying Contract has not been released from the lien of the related Underlying Originator, in whole or in part.

31.No such Underlying Contract was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer, pledge and/or assignment of such Underlying Contract under this Agreement, the Purchase and Sale Agreement or the related Pool B Contract, and the related Underlying Originator has not entered

Sch.III-C-4

into any agreement with any Underlying Obligor that prohibits, restricts or conditions the sale, transfer, pledge and/or assignment of such Underlying Contract.

32.No such Underlying Contract has been sold, transferred, assigned or pledged by the related Underlying Originator to any Person other than Originator. Such Underlying Originator has not taken any action to convey any right to any Person that would result in such Person having a right to payments due under any such Underlying Contract or payments received under any related Underlying Insurance Policy or otherwise to impair the rights of Originator in such Underlying Contract, any Underlying Insurance Policy or any proceeds thereof. There is an Underlying Insurance Policy in full force and effect with respect to the Equipment related to such Underlying Contract if such Equipment had an original cost over $100,000.

33.[Intentionally omitted.]

34.No such Underlying Contract is assumable by another Person in a manner which would release the Underlying Obligor thereof from such Underlying Obligor’s obligations to the Underlying Originator.

35.There has been no default, breach, violation or event permitting acceleration under the terms of any such Underlying Contract, and no condition exists or event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of any such Underlying Contract, and there has been no waiver of any of the foregoing.

36.No selection procedures adverse to Originator have been utilized in selecting any such Underlying Contract from all other similar Underlying Contracts originated or purchased by the related Underlying Originator.

37.The Underlying Collateral related to any such Underlying Contract is not subject to any Adverse Claim.

38.[Intentionally omitted.]

39.The related Underlying Originator has delivered to the Originator the sole original counterpart (or a true and correct copy) of each such Underlying Contract and such document constitutes the entire agreement of the parties thereto in respect of the related Underlying Collateral.

40.Each such Underlying Contract is in full force and effect in accordance with its terms and neither the related Underlying Originator nor the Underlying Obligor has or will have suspended or reduced any payments or obligations due or to become due thereunder by reason of a default by any other party to such Underlying Contract; there are no proceedings pending or threatened asserting insolvency of such Underlying Obligor; there are no proceedings pending or threatened wherein such Underlying Obligor, any other obligated party or any governmental agency has alleged that such Underlying Contract is illegal or unenforceable.

Sch.III-C-5

41.The origination and collection practices used by the related Underlying Originator with respect to each such Underlying Contract have been in all respects customary in the equipment financing and servicing business.

42.The Underlying Collateral related to each such Underlying Contract was properly delivered to the Underlying Obligor in good repair and is in proper working order. Each Underlying Obligor has accepted the related Underlying Equipment. The related Underlying Obligor is the end user of the Underlying Equipment that is the subject of any such Underlying Contract and no Underlying Obligor has sublet the Underlying Equipment to any other party.

43.The Underlying Obligor with respect to any such Underlying Contract is not a merchant with respect to the Underlying Equipment related to such Underlying Contract and is not a partner, member or Affiliate of the Underlying Originator.

44.Except with respect to a breach of an Underlying Obligor’s right of quiet enjoyment of the related Underlying Equipment, neither the operation of any of the terms of any such Underlying Contract nor the exercise by the Underlying Originator, the Borrower, the Servicer or the Obligor of any right under any such Underlying Contract will render such Underlying Contract unenforceable in whole or in part nor subject to any right of rescission, setoff, claim, counterclaim or defense, and no such right of rescission, set-off, claim, counterclaim or defense, including a defense arising out of a breach of the Underlying Obligor’s right of quiet enjoyment of the Underlying Equipment, has been asserted with respect thereto.

45.The Underlying Originator has duly fulfilled all obligations on its part to be fulfilled under or in connection with the origination, acquisition and assignment of the Underlying Contract, including, without limitation, giving any notices and obtaining any consents necessary to effect, as applicable, the acquisition of the Underlying Contract by, or the pledge of the Underlying Contract to, the Originator, and has done nothing to impair the rights of Originator in the Underlying Contract or payments with respect thereto. The Underlying Originator, Originator, the Servicer and Borrower, as applicable, have duly fulfilled all continuing obligations on their part to be fulfilled under or in connection with such Underlying Contract.

46.[Intentionally omitted.]

47.The sale from the related Underlying Originator to Originator of each such Underlying Contract does not violate the terms or provisions of any agreement to which either of them is a party or by which it is bound.

48.[Intentionally omitted.]

49.The pledge of the Underlying Contract from the related Underlying Originator to Originator pursuant to the related Pool B Contract is not subject to or will result in any tax, fee or governmental charge payable by Originator or any other Person to any federal, state or local government.

50.No such Underlying Contract (other than a “true lease”) may be (i) an executory contract or (ii) in any event, deemed to be an executory contract or unexpired lease subject to

Sch.III-C-6

rejection by an Underlying Obligor under Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect to such Underlying Obligor.

51.Each such Underlying Contract contains enforceability provisions (i) permitting the acceleration of the payments thereunder if the Underlying Obligor is in default under such Underlying Contract and (ii) sufficient to enable the related Underlying Originator (or any assignee thereof) to repossess or foreclose upon the Underlying Collateral related thereto.

52.Each such Underlying Contract generally contains provisions requiring the payment of both interest and principal (or, in the case of an Underlying Lease Contract, lease payments) in each calendar month or quarter during the term of such Underlying Contract.

53.The promissory note, if any, related to each such Underlying Contract (i) was payable to the related Underlying Originator immediately prior to its transfer to Originator pursuant to the related Pool B Contract and has not been endorsed by the related Underlying Originator to any Person other than Originator.

54.The final Underlying Scheduled Payment required by each such Underlying Contract is less than or equal to the Discounted Balance of such Underlying Contract at the time of origination.

55.The Underlying Collateral related to such Underlying Contract is not one or more Vehicles regularly engaged in the long-haul transportation of goods.

56.The related Underlying Originator is not a guarantor under any Underlying Contract.

57.The vendor of the Underlying Equipment relating to such Underlying Contract has received payment in full from the Underlying Obligor prior to the pledge of such Underlying Contract under the related Pool B Contract and has no remaining obligations with respect to such Underlying Equipment except for any applicable warranty.

Sch.III-C-7

SCHEDULE IV

CREDIT AND COLLECTION POLICY

Attached.

Sch.IV-1

SCHEDULE V

EQUIPMENT CATEGORIES

Sch.V-1

SCHEDULE VI

ADDRESSES FOR NOTICE

Resource Capital Funding II, LLC

c/o Leaf Funding Inc.

1818 Market Street, 9th Floor

Philadelphia, PA 19103

Attention: Matthew Goldenberg

Facsimile No.: (215) 640-6370

Confirmation No.: (215) 231-7070

LEAF Financial Corporation

1818 Market Street, 9^th Floor,

Philadelphia, PA 19103

Attention: Miles Herman

Facsimile No.: (215) 640-6363

Confirmation No.: (215) 717-3358

Morgan Stanley Capital Services Inc.

Transaction Management Group

1585 Broadway

New York, NY 10236-8293

Attention: Chief Legal Officer

Facsimile No.: 001-212-507-4022

Morgan Stanley Credit

750 Seventh Avenue

New York, NY 10019

Facsimile No.: (212) 507-5890

E-mail: spvmonthlyreport@morganstanley.com

Morgan Stanley Bank

1221 Avenue of the Americas

New York, NY 10020

Attention: Peter Woroniecki

Facsimile No.: (212) 762-6943

Confirmation No.: (212) 762-6942

Sch.VI-1

U.S. Bank National Association

EP-MN-WS3D

60 Livingston Ave.

St. Paul, MN 55107

Attention: Diane Reynolds

Facsimile No.: (651) 495-8090

Confirmation No.: (651) 495-3923

Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services)

U.S. Bank Portfolio Services

1310 Madrid Street

Marshall, MN 56258

Attention: Joe Andries

Facsimile No.: (866) 806-0775

Confirmation No.: (507) 532-7129

Sch.VI-2

EXHIBIT A

FORM OF BORROWING BASE CERTIFICATE

BORROWING BASE CERTIFICATE

__________, 200__

To:          Morgan Stanley Bank

1221 Avenue of the Americas

New York, NY 10020

Attn: Peter Woroniecki

Ladies and Gentlemen:

Reference is made to the Receivables Loan and Security Agreement dated as of October 31, 2006 (the “Loan Agreement”), among Resource Capital Funding II, LLC, (the “Borrower”), Leaf Financial Corporation, as the Servicer, Morgan Stanley Bank, as Lender, U.S. Bank National Association, as the Custodian and the Lender’s Bank and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) as the Backup Servicer. Capitalized terms used herein but not defined herein shall have the meanings assigned to such terms in the Loan Agreement.

In accordance with Section 6.10(c) of the Loan Agreement, the Borrower hereby certifies that, after giving effect to the Borrowing requested to occur on ---__________, 200__:

(1) the aggregate Facility Amount under the Loan Agreement does not exceed the lesser of (A) the Borrowing Limit and (B) the Borrowing Base;

(2) if such Borrowing is to be secured by Pool A Receivables, the aggregate Facility Amount under the Loan Agreement, calculated solely with respect to Loans secured by Pool A Receivables, does not exceed the Pool A Borrowing Base;

(3) if such Borrowing is to be secured by Pool B Receivables, the aggregate Facility Amount under the Loan Agreement, calculated solely with respect to Loans secured by Pool B Receivables, does not exceed the Pool B Borrowing Base;

(4) no Program Termination Event exists;

(5) if such Borrowing is to be secured by Pool A Receivables, no Pool A Termination Event exists;

(6) if such Borrowing is to be secured by Pool B Receivables, no Pool B Termination Event exists; and

Exh.A-1

The Borrower hereby further certifies that attached hereto as Schedule A are true and correct calculations evidencing the accuracy of the statements set forth in paragraphs (1) and, as applicable, (2) or (3) above.

Very truly yours,

RESOURCE CAPITAL FUNDING II, LLC

By:         

Name:Miles Herman

Title:Vice President

Exh.A-2

EXHIBIT B

FORM OF REQUIRED DATA FIELDS

(a)Obligor lease number;

(b)Obligor name;

(c)Underlying Obligor name;

(d)Obligor Credit risk rating (if available);

(e)Collateral location (city and state);

(f)Contract type (pool A or B);

(g)Equipment category/type;

(h)Non Level Payment Contract flag;

(i)Balloon flag and put payment flag;

(j)Stand Alone Working Capital Loan Flag;

(k)New/used flag (if available);

(l)Lease type (true/installment);

(m)Serial Number (if available);

(n)SIC Code (if available);

(o)Vendor;

(p)Commencement Date

(q)Maturity Date;

(r)Date Next Due;

(s)Original Term;

(t)Remaining Term;

(u)Payment Frequency;

(v)Original Receivable Balance;

Exh. B-1

(w)Current Receivable Balance;

(x)Original Equipment Cost;

(y)Amortized Equipment Cost;

(z)Scheduled Payment; and

(aa)Discounted Balance.

Exh. B-2

EXHIBIT C

FORM OF MONTHLY REMITTANCE REPORT

(See attached.)

Exh. C-1

EXHIBIT D

FORMS OF CONTRACT

(See attached.)

Exh. D-1

EXHIBIT E

(Intentionally Omitted.)

Exh. E-1

EXHIBIT F

FORM OF NOTICE OF BORROWING

NOTICE OF BORROWING

__________, 200__

To:          Morgan Stanley Bank

1221 Avenue of the Americas

New York, NY 10020

Attn: Peter Woroniecki

Notice of Borrowing No.: [1]

Gentlemen:

Reference is made to the Receivables Loan and Security Agreement dated as of October 31, 2006 (the “Loan Agreement”), among Resource Capital Funding II, LLC, (the “Borrower”), Leaf Financial Corporation, as the Servicer, Morgan Stanley Bank, as Lender, U.S. Bank National Association, as the Custodian and the Lender’s Bank and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) as the Backup Servicer. Capitalized terms used herein but not defined herein shall have the meanings assigned to such terms in the Loan Agreement.

In accordance with Sections 2.02(c) and 6.10(c) of the Loan Agreement, the Borrower hereby certifies that, after giving effect to the Borrowing requested to occur on __________, 200__:

1.Requested aggregate amount of Borrowing:$__________

To be comprised of

a.Requested Pool A Loans $__________

and;

b.Requested Pool B Loans; $__________

2. Requested date of Borrowing: __________, 200__

3. In connection with this Borrowing we Pledge to you the Eligible Pool A Receivables and the Eligible Pool B Receivables set forth on the Schedule of Receivables attached hereto.

Exh. F-1

Payments in connection with this Borrowing should be deposited to the following account: _________________________.

(Signature page to follow)

Exh. F-2

Very truly yours,

RESOURCE CAPITAL FUNDING II, LLC

By:          

Name:Miles Herman

Title:Vice President

Exh. F-3

EXHIBIT G

FORM OF ALLONGE

(See attached.)

Exh. G-1

TABLE OF CONTENTS

ARTICLE I. DEFINITIONS                                                            &# 160;                                     1

SECTION 1.01 Certain Defined Terms                                                                                                                                             1

     SECTION 1.02 Other Terms                        37

SECTION 1.03 Computation of Time Periods                           37

ARTICLE II. THE RECEIVABLES FACILITY                    37

SECTION 2.01 Borrowings                         37

SECTION 2.02 The Initial Borrowing and Subsequent Borrowings                                                                                        37

SECTION 2.03 Determination of Interest Periods and Interest Rates                    38

SECTION 2.04 Remittance Procedures                           39

SECTION 2.05 Security Deposit Account                     43

SECTION 2.06 Cash Reserve Account                           44

SECTION 2.07 Payments and Computations, Etc                               45

SECTION 2.08 Fees                          46

SECTION 2.09 Increased Costs; Capital Adequacy                          46

SECTION 2.10 Collateral Assignment of Agreements                      47

SECTION 2.11 Grant of a Security Interest                                                                                                                                 48

SECTION 2.12 Evidence of Debt                                                                                                                                                  49

SECTION 2.13 Release of Pledged Receivables                                                                                                                         49

SECTION 2.14 Treatment of Amounts Paid by the Borrower                                                                                                  50

SECTION 2.15 Prepayment; Certain Indemnification Rights; Termination                                                                            50

SECTION 2.16 Increase of Borrowing Limit                                                                                                                                51

ARTICLE III. CONDITIONS OF LOANS                                                                                                                                                     51

SECTION 3.01 Conditions Precedent to Initial Borrowing                                                                                                        51

SECTION 3.02 Conditions Precedent to All Borrowings                                                                                                           51

SECTION 3.03 Advances Do Not Constitute a Waiver                                                                                                             54

ARTICLE IV. REPRESENTATIONS AND WARRANTIES                                               54

SECTION 4.01 Representations and Warranties of the Borrower                                                                                            54

SECTION 4.02 Representations and Warranties of the Servicer                                                                                              57

SECTION 4.03 Resale of Receivables Upon Breach of Covenant or Representation and Warranty by Borrower          60

i

SECTION 4.04 Representations and Warranties of the Lender                                                                                                60

ARTICLE V. GENERAL COVENANTS OF THE BORROWER AND THE SERVICER                                                                         60

SECTION 5.01 General Covenants                                                                                                                                                60

ARTICLE VI. ADMINISTRATION AND SERVICING; CERTAIN COVENANTS                                                                                64

SECTION 6.01 Appointment and Designation of the Servicer                               64

SECTION 6.02 Collection of Receivable Payments; Modification and Amendment of Receivables; Lockbox Agreements             66

SECTION 6.03 Realization Upon Receivables                                                                                                                             67

SECTION 6.04 Insurance Regarding Equipment                                                                                                                         67

SECTION 6.05 Maintenance of Security Interests in Obligor Collateral     68

SECTION 6.06 Pledged Receivable Receipts                                                                                                                               69

SECTION 6.07 No Rights of Withdrawal                                                                                                                                     69

SECTION 6.08 Permitted Investments                                                                                                                                          69

SECTION 6.09 Servicing Compensation                                                                                                                                      70

SECTION 6.10 Reports to the Lender; Account Statements; Servicing Information                                                            70

SECTION 6.11 Statements as to Compliance; Financial Statements                                                                                        71

SECTION 6.12 Access to Certain Documentation; Obligors; Background Check                                                                74

SECTION 6.13 Backup Servicer                                                                                                                                                     75

SECTION 6.14 Additional Remedies of Lender Upon Event of Default                                                                                  78

SECTION 6.15 Waiver of Defaults                                                                                                                                                79

SECTION 6.16 Maintenance of Certain Insurance                                                                                                                     79

SECTION 6.17 Segregation of Collections                                                                                                                                   79

SECTION 6.18 UCC Matters; Protection and Perfection of Pledged Assets                                                                         79

SECTION 6.19 Servicer Advances                                                                                                                                                80

SECTION 6.20 Repurchase of Receivables Upon Breach of Covenant or Representation and Warranty by Servicer   80

SECTION 6.21 Compliance with Applicable Law                                                                                                                        81

SECTION 6.22 Receipt of Certificates of Title                                                                                                                             81

SECTION 6.23 Lender’s Bank Limitation of Liability                                                                                                                 81

ii

ARTICLE VII. EVENTS OF DEFAULT                                                                                                                                                         82

SECTION 7.01 Events of Default               82

SECTION 7.02 Additional Remedies of the Lender                 85

ARTICLE VIII. INDEMNIFICATION                       86

SECTION 8.01 Indemnities by the Borrower                            86

SECTION 8.02 Indemnities by Servicer                                                88

ARTICLE IX. MISCELLANEOUS                             90

SECTION 9.01 Amendments and Waivers                               90

SECTION 9.02 Notices, Etc                        90

SECTION 9.03 No Waiver; Remedies                             91

SECTION 9.04 Binding Effect; Assignability; Multiple Lenders                           91

SECTION 9.05 Term of This Agreement                        92

SECTION 9.06 GOVERNING LAW; JURY WAIVER; CONSENT TO JURISDICTION            92

SECTION 9.07 Costs, Expenses and Taxes                   92

SECTION 9.08 No Proceedings                 93

SECTION 9.09 Recourse Against Certain Parties                    94

SECTION 9.10 Execution in Counterparts; Severability; Integration         94

SECTION 9.11 Tax Characterization          94

SECTION 9.12 Calculation of Performance Triggers              95

ARTICLE X. THE COLLATERAL AGENT                                   95

SECTION 10.01 No Implied Duties                                 95

SECTION 10.02 Limits on Liability                                 96

SECTION 10.03 Acknowledgment                          ;        96

iii

LIST OF SCHEDULES AND EXHIBITS

SCHEDULES

SCHEDULE ICondition Precedent Documents

SCHEDULE IIPrior Names, Tradenames, Fictitious Names and “Doing Business As” Names

SCHEDULE IIIRepresentations and Warranties with Respect to Eligible Receivables, Eligible Underlying Contracts and Eligible Underlying Originators

SCHEDULE IVCredit and Collection Policy

SCHEDULE VEquipment Categories

SCHEDULE VIAddresses for Notice

EXHIBITS

EXHIBIT AForm of Borrowing Base Certificate

EXHIBIT BForm of Required Data Fields

EXHIBIT CForm of Monthly Remittance Report

EXHIBIT D-1(a)Form of Master Lease Agreement

EXHIBIT D-1(b)Form of Master Lease Schedule (Dollar Purchase Option)

EXHIBIT D-1(c)Form of Master Lease Schedule (FMV Purchase Option)

EXHIBIT D-1(d)Form of Master Lease Schedule (Put)

EXHIBIT D-1(e)Form of Stand Alone Lease Agreement

EXHIBIT D-2(a)Form of Loan Contract

EXHIBIT D-2(b)Form of Loan Contract

EXHIBIT D-3Form of Practice Acquisition Loan Contract

EXHIBIT D-4Eligibility Requirements for Pool B Transactions (Documentation Criteria)

EXHIBIT E[Intentionally Omitted]

EXHIBIT FForm of Notice of Borrowing

EXHIBIT GForm of Allonge

iv

EX-10.16A

EXECUTION COPY

FIRST AMENDMENT TO RECEIVABLES LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT TO THE RECEIVABLES LOAN AND SECURITY AGREEMENT, dated as December 21, 2006 (this “Amendment”), is entered into by RESOURCE CAPITAL FUNDING II, LLC, (the “Borrower”), LEAF FINANCIAL CORPORATION (“LEAF Financial” or the “initial Servicer”) as the Servicer and MORGAN STANLEY BANK (“Morgan Stanley”) as a Lender.

RECITALS

A.The Borrower, LEAF Financial, Morgan Stanley, U.S. Bank National Association and Lyon Financial Services, Inc. are parties to the Receivables Loan and Security Agreement, dated as of October 31, 2006 (as amended, supplemented or otherwise modified from time to time, the “Agreement”);

B.The parties hereto desire to amend the Agreement on the terms and conditions set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Certain Defined Terms. Capitalized terms used but not defined herein shall have the meanings set forth for such terms in Section 1.01 of the Agreement.

2.Amendments to the Agreement. The Agreement is hereby amended to incorporate the changes reflected on Exhibit A hereto.

3.Consent. Morgan Stanley hereby consents to the execution and delivery of the First Amendment to the Purchase and Sale Agreement, dated as of the date hereof (the “PSA Amendment”), between the Originator and the Borrower.

4.Conditions Precedent. The effectiveness of this Amendment is expressly conditioned upon the satisfaction of the following conditions precedent:

(a)the execution and delivery by all of the parties hereto of this Amendment and the PSA Amendment; and

(b)The execution and delivery by all of the parties thereto of the Membership Interest Purchase Agreement, dated as of the date hereof, between RCC Commercial, Inc., as seller, and the Originator, as buyer; and

(c)the delivery of favorable opinions of counsel regarding true sale and substantive nonconsolidation matters, in form and substance reasonably satisfactory to Morgan Stanley.

(d)The delivery of a reliance letter to Morgan Stanley Capital Services, Inc. with respect to the opinions of counsel dated October 31, 2006 and delivered in connection with the execution and delivery of the Receivables Loan and Security Agreement, excluding any such opinions delivered with respect to true sale and nonconsolidation matters.

5.Representations and Warranties. Both the Borrower and the Servicer represents and warrants to Morgan Stanley that:

(a)this Amendment has been duly authorized, executed and delivered on its behalf, and the Agreement, as so amended, constitutes its legal, valid and binding obligation enforceable against it in accordance with the terms hereof or thereof;

(b)the representations and warranties made by it in the Agreement (as amended by this Amendment) are true and correct as of the date hereof (except to the extent such representations and warranties speak as a prior date or have been the subject of any prior notice or waiver); and

(c)after giving effect to this Amendment, no Program Termination Event, Event of Default, or Unmatured Event of Default shall exist on the date hereof.

6.Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of the Agreement shall remain in full force and effect. After the date hereof, all references in the Agreement to “this Agreement”, “hereof”, or words of similar effect referring to such Agreement shall be deemed to be references to the Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Agreement other than as set forth herein.

7.Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.

8.Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York without regard to any otherwise applicable principles of conflicts of law.

9.Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof.

Signature pages follow

2

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

THE BORROWER:	RESOURCE CAPITAL FUNDING II, LLC By:______________________________  Name:  Title:
THE SERVICER:	LEAF FINANCIAL CORPORATION By:______________________________  Name:  Title:
THE LENDER:	MORGAN STANLEY BANK By:______________________________  Name:  Title:

S-1

Exhibit A

AMENDMENTS

EX-10.16B

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT, dated as of October 31, 2006 (this “Agreement”), between LEAF Funding, Inc., a Delaware corporation (“LEAF”), and Resource Capital Funding II, LLC, a Delaware limited liability company (the “Purchaser”).

W I T N E S S E T H:

WHEREAS, the Purchaser has agreed to purchase from LEAF from time to time, and LEAF has agreed to Sell (as hereinafter defined) to the Purchaser from time to time, certain Receivables, Related Security and Other Conveyed Property (in each case, as hereinafter defined) related thereto on the terms set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter contained, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Purchaser and LEAF, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1General. The specific terms defined in this Article include the plural as well as the singular. Words herein importing a gender include the other gender. References herein to “writing” include printing, typing, lithography, and other means of reproducing words in visible form. References to agreements and other contractual instruments include all subsequent amendments thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Agreement or the RLSA (as hereinafter defined). References herein to Persons include their successors and assigns permitted hereunder or under the RLSA. The terms “include” or “including” mean “include without limitation” or “including without limitation”. The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision, and Article, Section, Schedule and Exhibit references, unless otherwise specified, refer to Articles and Sections of and Schedules and Exhibits to this Agreement. Capitalized terms used herein but not defined herein shall have the respective meanings assigned to such terms in the RLSA.

SECTION 1.2Specific Terms. Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

“Agreement” means this Purchase and Sale Agreement and all amendments hereof and supplements hereto made in accordance with the terms hereof.

“Assignment” means an Assignment executed by LEAF, substantially in the form of Exhibit A attached hereto.

“Collateral Agent” has the meaning specified in the RLSA.

“Convey” means to Sell Receivables, Related Security and Other Conveyed Property hereunder.

“Conveyance” means, collectively, a Sale of Receivables, Related Security and Other Conveyed Property by LEAF to the Purchaser.

“Conveyance Date” has the meaning specified in Section 2.1(e).

“Cut-Off Date” means with respect to any Receivable Conveyed on any Conveyance Date, the first day of the calendar month immediately following such Conveyance Date.

“LEAF Pension Plan” means a “pension plan” as such term is defined in section 3(2) of ERISA, which is subject to title IV of ERISA and to which LEAF or any ERISA Affiliate of LEAF may have any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

“LEAF Purchase Event” means the occurrence of a material breach of any of LEAF’s representations and warranties under Section 4.1(a).

“Lender” means any present or future “Lender” named under the RLSA.

“Originator” means LEAF Funding, Inc., a Delaware corporation.

“Other Conveyed Property” means, with respect to any Receivable, all of LEAF’s right, title and interest in, to and under (i) all Collections and other monies at any time received or receivable with respect to such Receivable after the applicable Cut-Off Date, (ii) the Equipment or Underlying Equipment related to such Receivable (to the extent of LEAF’s ownership rights, if any, therein), (iii) in the case of a Receivable related to any Contract, any and all agreements, documents, certificates and instruments evidencing LEAF’s security interest or other interest in and to the related Obligor Collateral or any intercreditor agreement with respect thereto, including, without limitation, any Certificate of Title, (iv) the security interest in the Obligor Collateral related to such Receivable granted by the related Obligor to the Originator under the related Contract, (v) the Obligor Financing Statement, if any, related to such Receivable, (vi) the Insurance Policy and any Underlying Insurance Policy and any proceeds from the Insurance Policy and any Underlying Insurance Policy relating to such Receivable, including rebates of premiums not otherwise due to an Obligor, (vii) the related Contract and all other items required to be contained in the related Receivable File, any and all other documents or electronic records that LEAF keeps on file in accordance with its customary procedures relating to such Receivable, the related Obligor Collateral or the related Obligor, (viii) any Security Deposits or Cash Reserves related to such Receivable, (ix) all property (including the right to receive future Liquidation Proceeds) that secures such Receivable and that has been

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acquired by or on behalf of LEAF pursuant to the liquidation of such Receivable, and (x) all present and future rights, claims, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds and investments of any kind and nature in respect of any of the foregoing.

“Pool A Receivable” means the rights to all payments from an Obligor under a Pool A Contract, including, without limitation, any right to the payment with respect to (i) Scheduled Payments, (ii) any prepayments or overdue payments made with respect to such Scheduled Payments, (iii) any Guaranty Amounts, (iv) any Insurance Proceeds, (v) any Servicing Charges and (vi) any Recoveries.

“Pool B Receivable” means the rights to all payments from an Obligor under a Pool B Contract, including, without limitation, any right to the payment with respect to (i) Scheduled Payments and Underlying Scheduled Payments, (ii) any prepayments or overdue payments made with respect to such Scheduled Payments and Underlying Scheduled Payments, (iii) any Guaranty Amounts, (iv) any Insurance Proceeds, (v) any Servicing Charges and (vi) any Recoveries.

“Purchase Price” means, with respect to any Receivable and the Related Security and Other Conveyed Property related thereto Conveyed hereunder pursuant to a Sale, an amount determined on the related Conveyance Date equal to the sum of the Originator’s costs in originating such Receivable minus the amount of Collections received with respect to such Receivables prior to the Cut-Off Date therefor.

“Purchaser” has the meaning specified in the Preamble.

“Receivable” means a Pool A Receivable or a Pool B Receivable.

“Repurchase Date” has the meaning specified in Section 6.1(b).

“Repurchase Price” means, with respect to a Conveyed Receivable to be released hereunder, an amount equal to the Discounted Balance of such Conveyed Receivable at the time of such release plus interest accrued thereon at the Discount Rate from and including the Remittance Date immediately preceding the date such Conveyed Receivable is to be released through (but not including) the next succeeding Remittance Date.

“Request Notice” means a notice, which shall include a computer print-out, tape or other form acceptable to the Purchaser sufficient to enable the Purchaser to identify all Receivables to be Sold by LEAF to the Purchaser on a Conveyance Date.

“Request Notice Date” has the meaning specified in Section 2.1(b).

“RLSA” means the Receivables Loan and Security Agreement, dated as of the date hereof, by and among the Purchaser, LEAF Financial Corporation, as Servicer, the Lenders named therein, Lyon Financial Services, Inc., as Backup Servicer, U.S. Bank National Association, as Lender’s Bank and the Custodian, as amended and/or restated from time to time pursuant to the terms thereof.

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“Sale” and “Sell” have the meanings specified in Section 2.1(a).

“Schedule of Pool A Receivables” means the schedule of all Pool A Receivables Sold pursuant to this Agreement which is attached hereto as Schedule C-1, as amended or supplemented from time to time pursuant to the terms hereof.

“Schedule of Pool B Receivables” means the schedule of all Pool B Receivables Sold pursuant to this Agreement which is attached hereto as Schedule C-2, as amended or supplemented from time to time pursuant to the terms hereof.

“Schedule of Representations” means the Schedule of Representations and Warranties attached hereto as Schedule A.

“Transfer Taxes” means any tax, fee or governmental charge payable by the Purchaser, LEAF or any other Person to any federal, state or local government arising from or otherwise related to the Conveyance of any Receivable, the related Obligor Collateral and/or any other related Other Conveyed Property from LEAF to the Purchaser under this Agreement (excluding taxes measured by net income).

   SECTION 1.3Certain References. All references to the Discounted Balance of a Receivable as of a Conveyance Date shall refer to the close of business on such day.

ARTICLE II

CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY

   SECTION 2.1Conveyance of the Receivables and the Other Conveyed Property.

(a)Subject to the terms and conditions of this Agreement, on and after the date of this Agreement (but not after the occurrence of the Program Termination Date under the RLSA), LEAF hereby agrees to, from time to time, (i) sell or contribute (in accordance with subsection (f) below), transfer, assign, and otherwise convey (collectively, “Sell” and any such sale, transfer, assignment, and/or other conveyance, a “Sale”) to the Purchaser, without recourse (but with personal liability to the extent specifically provided in Sections 4.3 and 6.1(a) hereof), and the Purchaser hereby agrees to purchase, all right, title and interest of LEAF in and to certain Receivables acquired by LEAF and the Related Security and Other Conveyed Property related thereto, (ii) transfer, or cause the deposit, into the Collection Account of all Collections received by LEAF on account of any Receivables, Related Security and Other Conveyed Property Conveyed hereunder on and after Cut-Off Date related to such Receivables, Related Security and Other Conveyed Property, in each case, within one Business Day of the identification thereof, (iii) transfer, or cause the deposit, into the Security Deposit Account of funds in an amount equal to any Security Deposits related to any Receivables Conveyed hereunder, in each case, concurrent with the Conveyance of such Receivables and (iv) transfer, or cause the deposit, into the Cash Reserve Account of funds in an amount equal to any Cash Reserves related to any Receivables Conveyed hereunder, in each case, concurrent with the Conveyance of such Receivables. LEAF hereby acknowledges that each Conveyance to the Purchaser hereunder is absolute and irrevocable, without reservation or retention of any interest whatsoever by LEAF.

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(b)The Sales of Receivables, Related Security and Other Conveyed Property by LEAF to the Purchaser pursuant to this Agreement are intended to be absolute assignments (free and clear of any Liens) of all of LEAF’s right, title and interest in, to and under such Receivables, Related Security and Other Conveyed Property for all purposes and, except for personal liability to the extent specifically provided in Sections 4.3 and 6.1(a) hereof, without recourse.

(c)It is the intention of LEAF and the Purchaser that the Receivables, Related Security and Other Conveyed Property Sold by LEAF to the Purchaser pursuant to this Agreement shall not be part of LEAF’s estate in the event of the filing of a bankruptcy petition by or against LEAF under any bankruptcy or similar law.

(d)In the event that the Sales of Receivables, Related Security and Other Conveyed Property by LEAF to the Purchaser pursuant to this Agreement are deemed to be a secured financing (or are otherwise determined not to be absolute assignments of all of LEAF’s right, title and interest in, to and under the Receivables, Related Security and Other Conveyed Property Sold, or purportedly Sold hereunder), then (i) LEAF shall be deemed hereunder to have granted to the Purchaser, and LEAF does hereby grant to the Purchaser, a security interest in all of LEAF’s right, title and interest in, to and under such Receivables, Related Security and Other Conveyed Property, whether now owned or hereafter acquired and all proceeds of, and all amounts received or receivable under any or all of, the foregoing and (ii) this Agreement shall constitute a security agreement under applicable law.

(e)LEAF may on any Business Day (each a “Conveyance Date”) deliver to the Purchaser a Request Notice identifying the Receivables, Related Security and Other Conveyed Property to be Sold by LEAF to the Purchaser on such Conveyance Date. Each delivery of a Request Notice shall be accompanied by an updated Schedule of Pool A Receivables and an updated Schedule of Pool B Receivables, which schedules shall be attached hereto as Schedules C-1 and C-2, as applicable, and made a part hereof. Each schedule so delivered shall supersede any prior schedules so delivered.

(f)The price paid for Receivables and the Related Security and Other Conveyed Property related thereto which are Sold hereunder shall be the Purchase Price with respect thereto. Subject to the following sentence, such Purchase Price shall be paid by means of an immediate cash payment to LEAF by wire transfer on the applicable Conveyance Date to an account designated by LEAF on or before such Conveyance Date, and documented by means of proper accounting entries upon the accounts and records of LEAF and the Purchaser on the applicable Conveyance Date. In the event that LEAF owns any membership interests in the Purchaser, and the Purchaser does not have sufficient cash to pay the full amount of the Purchase Price for any Sale hereunder, LEAF may, in its sole discretion, elect to contribute to the capital of the Purchaser a portion of the Receivables (and the Related Security and Other Conveyed Property related thereto) being Sold on the applicable Conveyance Date in an amount equal to such deficiency. LEAF and the Purchaser intend that the Purchase Price for any Receivables and the Related Security and Other Conveyed Property related thereto Sold by LEAF to the Purchaser hereunder reflect the fair market value which would be obtained in an arm’s length transaction with an unaffiliated party of such Receivables, at the time of the applicable Sale.

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(g)On and after each Conveyance Date hereunder, the Purchaser shall own the Receivables, Related Security and Other Conveyed Property Sold by LEAF to the Purchaser on such Conveyance Date and LEAF shall not take any action inconsistent with such ownership and shall not claim any ownership interest in such Receivables, Related Security and/or Other Conveyed Property.

(h)Until the occurrence of a Servicer Default and the replacement of LEAF Financial Corporation as Servicer pursuant to the terms of the RLSA, LEAF Financial Corporation, as Servicer, shall conduct the servicing, administration and collection of the Receivables Conveyed hereunder and shall take, or cause to be taken, all such actions as may be necessary or advisable to service, administer and collect such Conveyed Receivables, from time to time, all in accordance with the terms of the RLSA. In accordance with the Custodial Agreement, certain documents relating to Receivables Conveyed hereunder shall be delivered to and held in trust by the Custodian for the benefit of the Purchaser and its assignees, and the Purchaser hereby instructs LEAF to so deliver such documents to the Custodian. Such delivery to the Custodian of such documents and the possession thereof by the Custodian is at the will of the Purchaser and its assignees and in a custodial capacity for their benefit only.

(i)On each Conveyance Date, LEAF shall deliver to the Custodian on behalf of the Purchaser and any assignee thereof each item contained in the Receivable Files of, and any other chattel paper (as defined in the UCC) representing or evidencing, any of the Receivables, the Related Security and the Other Conveyed Property related thereto being Conveyed on such Conveyance Date.

ARTICLE III

CONDITIONS OF CONVEYANCE

   SECTION 3.1Conditions Precedent to the Initial Conveyance. The initial Conveyance hereunder is subject to the condition precedent that the Purchaser shall have received on or before the date of the initial Conveyance under this Agreement, in form and substance satisfactory to the Purchaser:

(i)a copy of this Agreement duly executed by each of the parties hereto, and an Assignment executed by LEAF and setting forth the Receivables to be Conveyed on the date of the initial Conveyance under this Agreement;

(ii)a copy of resolutions duly adopted by LEAF approving this Agreement, the Assignments and the other documents to be delivered by it hereunder and the transactions and matters contemplated hereby and thereby, certified by LEAF’s secretary or assistant secretary;

(iii)the certificate of incorporation, as amended, of LEAF, certified by the Secretary of State of Delaware and LEAF’s secretary or assistant secretary;

(iv)a good standing certificate for LEAF issued by the Secretary of State of Delaware, dated as of a recent date;

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(v)a copy of LEAF’s by-laws as amended, certified by LEAF’s secretary or assistant secretary;

(vi)a certificate of the secretary or assistant secretary of LEAF certifying the names and true signatures of the officers authorized on its behalf to sign this Agreement, the Assignments, and the other documents to be delivered by it hereunder (on which certificate the Purchaser may conclusively rely until such time as the Purchaser shall receive from LEAF a revised certificate meeting the requirements of this subsection (vi)) and certifying that all representations and warranties made by LEAF in this Agreement are true and correct in all material respects;

(vii)copies of proper financing statements (on Form UCC-1) (x) accurately describing the Conveyed Receivables, the Related Security and the Other Conveyed Property related thereto and naming LEAF as the “Debtor/Seller”, the Purchaser as “Secured Party/Purchaser”, and the Collateral Agent as the “Total Assignee of Secured Party/Purchaser”, and (y) other similar instruments or documents, in form and substance sufficient for filing under the UCC or any comparable law of any and all jurisdictions as may be necessary or, in the opinion of the Purchaser or any assignee thereof, desirable to perfect the Purchaser’s ownership interest in all Conveyed Receivables, the Related Security and the Other Conveyed Property related thereto;

(viii)copies of properly executed termination statements or statements of release (on Form UCC-3) or other similar instruments or documents, if any, in form and substance satisfactory for filing under the UCC or any comparable law of any and all jurisdictions as may be necessary or, in the opinion of the Purchaser and its assigns, desirable to release all security interests and similar rights of any Person in the Conveyed Receivables and Other Conveyed Property related thereto previously granted by LEAF;

(ix)certified copies of requests for information or copies (or a similar search report certified by a party acceptable to the Purchaser and any assignee thereof), dated a date reasonably near and prior to the date of such initial Conveyance, listing all effective financing statements and other similar instruments and documents which name LEAF (under its present name, any previous name or any trade name) as debtor and which are filed in the jurisdictions in which filings are to be made pursuant to such subsections (vii) and (viii) above, together with copies of such financing statements, none of which, except those filed pursuant to subsection (vii), above, shall cover any Conveyed Receivables or Related Security or Other Conveyed Property related thereto;

(x)any necessary third party consents to the closing of the transactions contemplated hereby, in the form and substance satisfactory to the Purchaser; and

(xi)one or more favorable opinions of counsel to LEAF, with respect to true sale, non-consolidation, good standing, authorization, non-contravention, enforceability, perfection, and such other matters as are customarily requested in transactions of the type contemplated by the Transaction Documents.

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SECTION 3.2Conditions Precedent to All Conveyances. The Conveyance to take place on the initial Conveyance Date and each Conveyance to take place on a subsequent Conveyance Date hereunder shall be subject to the further conditions precedent that:

(a)The following statements shall be true:

(i)the representations and warranties of LEAF contained in Section 4.1 shall be correct on and as of such Conveyance Date in all material respects, before and after giving effect to the Conveyance to take place on such Conveyance Date and to the application of proceeds therefrom, as though made on and as of such date; and

(ii)LEAF is in compliance with each of its covenants and other agreements set forth herein.

(b)The Purchaser shall have received an Assignment, dated the date of such Conveyance Date, executed by LEAF, listing each Receivable being Conveyed on such Conveyance Date.

(c)LEAF shall have delivered to the Custodian on behalf of the Purchaser and any assignee thereof each item contained in the Receivable Files of, and any other chattel paper (as defined in the UCC) representing or evidencing, any of the Receivables or Related Security or Other Conveyed Property related thereto being Conveyed on such Conveyance Date.

(d)LEAF shall have taken such other action, including delivery of approvals, consents, opinions, documents and instruments to the Purchaser, as the Purchaser or any assignee thereof may reasonably request.

(e)LEAF shall have taken all steps necessary under all applicable law in order to (A) Convey to the Purchaser the Receivable being Conveyed on such Conveyance Date and the Related Security and the Other Conveyed Property related thereto and (B) ensure that, upon the Conveyance of such Receivable and the Related Security and the Other Conveyed Property related thereto from LEAF to the Purchaser pursuant to the terms hereof, the Purchaser will have acquired good and marketable title to and a valid and perfected ownership interest in the Conveyed Receivables and the Related Security and Other Conveyed Property related thereto, free and clear of any Adverse Claim or restrictions on transferability.

(f)There shall have been no material adverse change in the condition (financial or otherwise), business, or results of operations of LEAF since the preceding Conveyance Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.1Representations and Warranties of LEAF. LEAF makes the following representations and warranties, on which the Purchaser relies in acquiring the Receivables and the Related Security and the Other Conveyed Property related thereto Conveyed hereunder and in granting a security interest in such Receivables and the Related Security and

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the Other Conveyed Property related thereto to the Collateral Agent under the RLSA. Such representations are made as of the execution and delivery of this Agreement, as of each Conveyance Date and at such other times specified below or specified in the Schedule of Representations, but shall survive the Conveyance hereunder of the Receivables and the Other Conveyed Property related thereto and the grant of a security interest therein to the Collateral Agent under the RLSA.

(a)Schedule of Representations. All of the representations and warranties set forth on the Schedule of Representations are true and correct with respect to all of the Contracts, and, as applicable, Underlying Contracts and Underlying Originators, related to the Receivables which are referred to in any Assignment (or any annex or schedule thereto) delivered by LEAF to the Purchaser as of the date of such Assignment.

(b)Organization and Good Standing. LEAF has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, and had at all relevant times and now has power, authority and legal right to acquire and own the Receivables and the Related Security and the Other Conveyed Property related thereto Conveyed hereunder.

(c)Due Qualification. LEAF is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its property or the conduct of its business requires such qualification, licenses and/or approvals.

(d)Power and Authority. LEAF has the power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to carry out its terms and their terms, respectively; LEAF has the full power and authority to Convey the Receivables and the Related Security and Other Conveyed Property related thereto to be Conveyed to the Purchaser hereunder and has duly authorized such Conveyance to the Purchaser by all necessary corporate action and the execution, delivery and performance of this Agreement. and the other Transaction Documents to which it is a party have been duly authorized by LEAF by all necessary corporate action.

(e)Valid Conveyance; Binding Obligations. This Agreement, each Assignment and the Transaction Documents to which LEAF is party have been and, in the case of each Assignment delivered after the date hereof, will be duly executed and delivered by LEAF, and this Agreement shall effect valid Conveyances of Receivables and the Related Security and the Other Conveyed Property related thereto, enforceable against LEAF and creditors of and purchasers from LEAF, and this Agreement and such Transaction Documents shall constitute legal, valid and binding obligations of LEAF enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, conservatorship, receivership, liquidation or other similar laws affecting the enforcement of creditors’ rights generally and general principles of equity.

(f)No Violation. The consummation of the transactions contemplated by this Agreement and the Transaction Documents to which it is a party, and the fulfillment of the terms

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of this Agreement and the Transaction Documents to which it is a party, shall not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the certificate of incorporation or by-laws of LEAF, or any material indenture, agreement, mortgage, deed of trust or other instrument to which LEAF is a party or by which it is bound or any of its properties are subject, or result in the creation or imposition of any lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument, other than liens created under this Agreement or the RLSA, or violate any law, order, rule or regulation applicable to LEAF of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over LEAF or any of its properties.

(g)No Proceedings. There are no proceedings or investigations pending or, to the best of LEAF’s knowledge, threatened against LEAF before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over LEAF or its properties (i) asserting the invalidity of this Agreement or any of the Transaction Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the Transaction Documents, (iii) seeking any determination or ruling that could have an adverse effect on the performance by LEAF of its obligations under, or the validity or enforceability of, this Agreement or any of the Transaction Documents, (iv) that would reasonably be likely to have an adverse effect on the federal or state income tax attributes of, or seek to impose any excise, franchise, transfer or similar tax upon, the transfer and acquisition of the Receivables and the Related Security and the Other Conveyed Property related thereto Conveyed hereunder or (v) that would reasonably be likely to have an adverse effect on the Receivables and the Related Security and Other Conveyed Property related thereto Conveyed to the Purchaser hereunder.

(h)No Consents. LEAF is not required to obtain the consent of any other party or any consent, license, approval or authorization, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement except those which may have been obtained.

(i)Approvals. All approvals, authorizations, orders or other actions of any person, corporation or other organization, or of any court, governmental agency or body or official, required in connection with the execution and delivery by LEAF of this Agreement and the consummation of the transactions contemplated hereby (including the Conveyance of Receivables and the Related Security and the Other Conveyed Property related thereto to the Purchaser) have been or will be taken or obtained on or prior to the date hereof or the applicable Conveyance Date.

(j)Chief Executive Office. The chief executive office of LEAF and the office where LEAF keeps its records regarding the Receivables (other than those delivered to the Custodian) is located at 1818 Market Street, 9^th Floor, Philadelphia, PA 19103. LEAF’s legal name is as set forth in this Agreement; other than as disclosed on Schedule B hereto, LEAF has not changed its name since its incorporation; LEAF does not have tradenames, fictitious names, assumed names or “doing business as” names other than as disclosed on Schedule B hereto.

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(k)Solvency. LEAF is solvent and will not become insolvent after giving effect to the transactions contemplated by this Agreement and the other Transaction Documents. LEAF, after giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, will have an adequate amount of capital to conduct its business in the foreseeable future.

(l)Accounting Treatment. For accounting purposes, LEAF will treat the transactions effected by this Agreement as sales of assets to, or contributions of assets to the capital of, the Purchaser in accordance with GAAP. LEAF’s financial records shall reflect that the assets Conveyed hereunder have been Conveyed to the Purchaser, are no longer owned by LEAF and are not intended to be available to the creditors of LEAF.

(m)Compliance With Laws. LEAF has complied and will comply in all material respects with all applicable laws, rules, regulations, judgments, agreements, decrees and orders with respect to its business and properties.

(n)Taxes. LEAF has filed on a timely basis all tax returns (including, without limitation, foreign, federal, state, local and otherwise) required to be filed, is not liable for taxes payable by any other Person and has paid or made adequate provisions for the payment of all taxes, assessments and other governmental charges due from LEAF other than those being disputed in good faith by appropriate proceedings and in respect of which no penalty may be assessed from such contest and it has made proper reserves on its books. No tax lien or similar adverse claim has been filed, and LEAF has received no notice of any claim being asserted, with respect to any such tax, assessment or other governmental charge. Any taxes, fees and other governmental charges payable by LEAF in connection with the execution and delivery of this Agreement and the other Transaction Documents and the transactions contemplated hereby or thereby have been paid.

(o)Request Notices. Each Request Notice is accurate in all material respects.

(p)Assignments. Each Assignment is accurate in all material respects.

(q)No Liens, Etc. The Receivables and the Related Security and Other Conveyed Property related thereto to be Conveyed to the Purchaser hereunder are owned by LEAF free and clear of any Adverse Claim or restrictions on transferability and LEAF has the full right, corporate power and lawful authority to Convey the same and interests therein and, upon Conveyance thereof hereunder, the Purchaser will have acquired good and marketable title to and a valid and perfected ownership interest in such Receivables and the Related Security and Other Conveyed Property related thereto, free and clear of any Adverse Claim or restrictions on transferability. No effective financing statement or other instrument similar in effect covering all or any part of any Receivables or the Related Security and Other Conveyed Property related thereto Conveyed hereunder is on file in any recording office, except such as may have been filed in favor of the Collateral Agent as “Secured Party” or “Assignee” or except as shall be released upon the Conveyance of such Receivables and Related Security and Other Conveyed Property to the Purchaser.

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(r)Information True and Correct. All information heretofore or hereafter furnished by or on behalf of LEAF to the Purchaser or any assignee thereof in connection with this Agreement or any transaction contemplated hereby is and will be true and complete in all material respects and does not and will not omit to state a material fact necessary to make the statements contained therein not misleading.

(s)ERISA Compliance. LEAF is in compliance in all material respects with ERISA and the Internal Revenue Code of 1986 with respect to any “employee benefit plans” (within the meaning of Section 3(1) of ERISA) it maintains or contributes to (the “Plans”). No steps have been taken to terminate any LEAF Pension Plan which could result in material liability, and no contribution failure has occurred with respect to any LEAF Pension Plan sufficient to give rise to a lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Leaf Pension Plan which could result in LEAF or any ERISA Affiliate of LEAF incurring any material liability, fine or penalty. Neither LEAF nor any ERISA Affiliate of LEAF contributes to a “multiemployer pension plan,” as defined in Section 4001 of ERISA.

(t)No Material Adverse Effect; No Default. (i) LEAF is not a party to any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter or corporate restriction that would reasonably be likely to have, and no provision of applicable law or governmental regulation would reasonably be likely to have, a material adverse effect on the condition (financial or otherwise), business, operations, results of operations or properties of LEAF, or would reasonably be likely to have such an effect on the ability of LEAF to carry out its obligations under this Agreement and the other Transaction Documents to which LEAF is a party and (ii) LEAF is not in default under or with respect to any contract, agreement, lease or other instrument to which LEAF is a party and which is material to LEAF’s condition (financial or otherwise), business, operations or properties, and LEAF has not delivered or received any notice of default thereunder.

(u)Financial or Other Condition. There has been no material adverse change in the condition (financial or otherwise), business, operations, results of operations, or properties of LEAF since June 30, 2006.

(v)Investment Company Status. LEAF is not an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended. The consummation of the transactions contemplated by this Agreement and the other Transaction Documents by LEAF will not violate any provision of such Act or any rule, regulation or order issued by the Securities and Exchange Commission thereunder.

(w)No Shared Obligations. There is not now, nor will there be at any time in the future, any agreement or understanding between LEAF and the Purchaser (other than as expressly set forth herein or in the other Transaction Documents) providing for the allocation or sharing of obligations to make payments or otherwise in respect of any taxes, fees, assessments or other governmental charges.

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(x)Representation and Warranties True and Correct. Each of the representations and warranties of LEAF contained in this Agreement and the other Transaction Documents to which it is a party is true and correct in all respects as of the date made or deemed made and LEAF hereby makes each such representation and warranty to, and for the benefit of, the Purchaser as if the same were set forth in full herein.

(y)Intent of LEAF. LEAF has not Conveyed any interest in any Receivable or the Related Security or the Other Conveyed Property related thereto to the Purchaser with any intent to hinder, delay or defraud any of LEAF’s creditors.

(z)Consideration. LEAF has received fair consideration and reasonably equivalent value in exchange for the Conveyance of the Receivables and the Related Security and the Other Conveyed Property related thereto Conveyed hereunder.

(aa)Margin Regulations. No proceeds of any Conveyance hereunder will be used by LEAF for a purpose that violates, or would be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time.

SECTION 4.2Representations and Warranties of the Purchaser. The Purchaser makes the following representations and warranties, on which LEAF relies in Conveying Receivables and the Related Security and the Other Conveyed Property related thereto to the Purchaser hereunder. Such representations are made as of the execution and delivery of this Agreement, but shall survive the Conveyance of Receivables and the Related Security and the Other Conveyed Property related thereto Conveyed hereunder and the grant of a security interest in such Receivables and the Related Security and the Other Conveyed Property related thereto by the Purchaser under the RLSA.

(a)Organization and Good Standing. The Purchaser has been duly organized and is validly existing and in good standing as a limited liability company under the laws of the State of Delaware, with the power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, and had at all relevant times, and has, full power, authority and legal right to acquire and own the Receivables and the Related Security and the Other Conveyed Property related thereto Conveyed hereunder.

(b)Due Qualification. The Purchaser is duly qualified to do business as a foreign limited liability company in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of its property or the conduct of its business requires such qualification, licenses and/or approvals.

(c)Power and Authority. The Purchaser has the power, authority and legal right to execute and deliver this Agreement and to carry out the terms hereof and to acquire the Receivables and the Related Security and the Other Conveyed Property related thereto Conveyed hereunder; and the execution, delivery and performance of this Agreement and all of the documents required pursuant hereto have been duly authorized by the Purchaser by all necessary action.

(d)No Consent Required. The Purchaser is not required to obtain the consent of any other Person, or any consent, license, approval or authorization or registration or

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declaration with, any governmental authority, bureau or agency in connection with the execution, delivery or performance of this Agreement, the RLSA and the other Transaction Documents to which it is a party, except for such as have been obtained, effected or made.

(e)Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, conservatorship, receivership, liquidation or other similar laws affecting the enforcement of creditors’ rights generally and general principles of equity.

(f)No Violation. The execution, delivery and performance by the Purchaser of this Agreement, the consummation of the transactions contemplated by this Agreement, the RLSA and the other Transaction Documents to which it is a party and the fulfillment of the terms of this Agreement, the RLSA and the other Transaction Documents to which it is a party do not and will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the organizational documents of the Purchaser, or conflict with or breach any of the terms or provisions of, or constitute (with or without notice or lapse of time) a default under, any indenture, agreement, mortgage, deed of trust or other instrument to which the Purchaser is a party or by which the Purchaser is bound or to which any of its properties are subject, or result in the creation or imposition of any lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument (other than liens created hereunder or under the RLSA), or violate any law or any order, rule or regulation, applicable to the Purchaser or its properties, of any federal or state regulatory body, any court, administrative agency, or other governmental instrumentality having jurisdiction over the Purchaser or any of its properties.

(g)No Proceedings. There are no proceedings or investigations pending, or, to the best of the Purchaser’s knowledge, threatened against the Purchaser before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality having jurisdiction over the Purchaser or its properties: (i) asserting the invalidity of this Agreement, the RLSA or any of the Transaction Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement, the RLSA or any of the Transaction Documents, (iii) seeking any determination or ruling that could have an adverse effect (other than an inconsequential adverse effect) on the performance by the Purchaser of its obligations under, or the validity or enforceability of, this Agreement, the RLSA or any of the Transaction Documents, (iv) that would be reasonably likely to have an adverse effect (other than an inconsequential adverse effect) on the federal or state income tax attributes of, or seek to impose any excise, franchise, transfer or similar tax upon, the transfer and acquisition of the Receivables and the Related Security and the Other Conveyed Property related thereto Conveyed hereunder or (v) that could have an adverse effect (other than an inconsequential adverse effect) on the Receivables and Other Conveyed Property related thereto Conveyed to the Purchaser hereunder.

(h)Consideration. The Purchaser has given fair consideration and reasonably equivalent value in exchange for the Conveyance of the Receivables and the Other Conveyed Property related thereto Conveyed hereunder.

SECTION 4.3Indemnification.

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(a)LEAF shall defend, indemnify and hold harmless each of the Purchaser, the Custodian, the Backup Servicer, the Lender’s Bank and the Lender and each of their respective Affiliates (each an “Indemnified Person”) from and against any and all costs, expenses, losses, damages, claims, and liabilities, suffered or sustained by any Indemnified Person arising out of or resulting from any breach of LEAF’s representations, warranties, agreements and covenants contained herein, except for any such amounts resulting solely from (A) any gross negligence, bad faith or willful misconduct of any Indemnified Person claiming indemnification hereunder, (B) taxes (including interest and penalties imposed thereon) imposed by the jurisdiction in which such Indemnified Person’s principal executive office is located, on or measured by the overall net income of such Indemnified Person; (C) Indemnified Amounts to the extent that they are or result from lost profits (other than principal, Yield and Fees with respect to the Loans); and (D) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or, except as otherwise specifically provided in this Agreement, would constitute recourse to LEAF for losses in respect of such uncollectible Receivables (the “Excluded Amounts”).

(b)LEAF shall defend, indemnify and hold harmless each Indemnified Person from and against any and all costs, expenses, losses, damages, claims, and liabilities, other than Excluded Amounts, arising out of, resulting from or otherwise related to any Person’s use, ownership, leasing or operation of any Obligor Collateral or Underlying Collateral to the extent that such use, ownership, leasing or operation took place prior to the date the related Receivable is Conveyed hereunder.

(c)LEAF will defend and indemnify and hold harmless each Indemnified Person against any and all costs, expenses, losses, damages, claims and liabilities, other than Excluded Amounts, arising out of or resulting from any action taken by LEAF, other than in accordance with this Agreement, in respect of any portion of the Receivables or the Related Security and the Other Conveyed Property related thereto which are Conveyed hereunder.

(d)LEAF agrees to pay, and shall defend, indemnify and hold harmless each Indemnified Person from and against, any taxes (other than taxes (including interest and penalties imposed thereon) imposed by the jurisdiction in which such Indemnified Person’s principal executive office is located, on or measured by the overall net income of such Indemnified Person and taxes that would constitute Excluded Amounts) that may at any time be asserted against any Indemnified Person with respect to the transactions contemplated in this Agreement, including, without limitation, any sales, gross receipts, general corporation, tangible or intangible personal property, privilege, or license taxes and costs and expenses in defending against the same, arising by reason of the acts to be performed by LEAF under this Agreement and imposed against such Person. Without limiting the foregoing, in the event that the Purchaser, the Custodian, the Backup Servicer or the Lender receives actual notice of any Transfer Taxes arising out of the Conveyance of any Receivable, the Related Security with respect thereto, the related Obligor Collateral and/or any other related Other Conveyed Property from LEAF to the Purchaser under this Agreement, on written demand by such party, or upon LEAF otherwise being given notice thereof, LEAF shall pay, and otherwise indemnify and hold the Purchaser,

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the Custodian, the Backup Servicer, the Lender’s Bank and the Lender harmless, on an after-tax basis, from and against any and all such Transfer Taxes (it being understood that the Purchaser, the Custodian, the Backup Servicer, the Lender’s Bank and the Lender shall have no contractual obligation to pay such Transfer Taxes). Notwithstanding the foregoing, LEAF agrees to pay, and shall defend, indemnify and hold harmless the Purchaser from and against any state taxes (including income and franchise taxes) as to which Purchaser may become liable solely because of its inclusion in a consolidated group, combined group, or other similar group.

(e)LEAF shall defend, indemnify, and hold harmless each Indemnified Person from and against any and all costs, expenses, losses, claims, damages, and liabilities, other than Excluded Amounts, to the extent that such cost, expense, loss, claim, damage, or liability arose out of, or was imposed upon such Indemnified Person through the negligence, willful misfeasance, or bad faith of LEAF in the performance of its duties under this Agreement or by reason of reckless disregard of LEAF’s obligations and duties under this Agreement.

(f)LEAF shall indemnify, defend and hold harmless each Indemnified Person from and against any loss, liability or expense, other than Excluded Amounts, imposed upon, or incurred by, any such Indemnified Person as a result of the failure of any Receivable or the Related Security or the Other Conveyed Property related thereto which are Conveyed hereunder, to comply with all requirements of applicable law as of its Conveyance Date.

(g)LEAF shall indemnify, defend and hold harmless each Indemnified Person from and against any loss, liability or expense, other than Excluded Amounts, imposed upon, or incurred by, any such Indemnified Person as a result of the failure by LEAF to comply with all requirements of Section 6.1 hereof.

Indemnification under this Section 4.3 shall include reasonable fees and expenses of counsel and expenses of litigation. The indemnity obligations hereunder shall be in addition to any obligation that LEAF may otherwise have under applicable law or any other Transaction Document.

ARTICLE V

COVENANTS OF LEAF

SECTION 5.1Protection of Title of the Purchaser.

(a)On or prior to the date hereof, LEAF shall have filed or caused to be filed UCC-1 financing statements, executed by LEAF as seller or debtor, naming the Purchaser as purchaser or secured party, naming the Collateral Agent as assignee and describing the Receivables, Related Security and the Other Conveyed Property being Conveyed by it to the Purchaser as collateral, with the office of the Secretary of State of the State of Delaware and in such other locations as the Purchaser or the Collateral Agent shall have required. Without limiting the foregoing, LEAF hereby authorizes the Purchaser and /or any assignee thereof to prepare and file any such UCC-1 financing statements. From time to time thereafter, LEAF shall authorize, execute (as applicable) and file such financing statements and cause to be executed (if applicable) and filed such continuation statements, all in such manner and in such places as may be required by law (or deemed desirable by the Purchaser or any assignee thereof) to fully perfect, preserve, maintain and protect the interest of the Purchaser under this Agreement, and

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the security interest of the Collateral Agent under the RLSA, in the Receivables, Related Security and the Other Conveyed Property related thereto which are Conveyed hereunder, as the case may be, and in the proceeds thereof. LEAF shall deliver (or cause to be delivered) to the Purchaser, the Custodian, the Backup Servicer and the Collateral Agent file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. In the event that LEAF fails to perform its obligations under this subsection, the Purchaser or the Lender may perform such obligations, at the expense of LEAF, and LEAF hereby authorizes the Purchaser or the Lender and grants to the Purchaser and the Lender an irrevocable power of attorney to take any and all steps in order to perform such obligations in LEAF’s or in its own name, as applicable, and on behalf of LEAF, as are necessary or desirable, in the determination of the Purchaser or Lender or any assignee thereof.

(b)On or prior to each Conveyance Date hereunder, LEAF shall take all steps necessary under applicable law in order to transfer and assign to the Purchaser the Receivables, Related Security and the Other Conveyed Property related thereto being Conveyed on such Conveyance Date to the Purchaser so that, upon the Conveyance of such Receivables and the Other Conveyed Property related thereto from LEAF to the Purchaser pursuant to the terms hereof on such Conveyance Date, the Purchaser will have acquired good and marketable title to and a valid and perfected ownership interest in such Receivables and Other Conveyed Property related thereto, free and clear of any Adverse Claim or restrictions on transferability (other than Permitted Liens). On or prior to each Conveyance Date hereunder, LEAF shall take all steps required under applicable law in order for the Purchaser to grant to the Collateral Agent a first priority perfected security interest in the Receivables, Related Security and the Other Conveyed Property related thereto being Conveyed to the Purchaser on such Conveyance Date (other than with respect to Equipment which has an original value of less than $25,000 and is leased under a Dollar Purchase Option Contract or $50,000 and is leased under a FMV Contract) and, from time to time thereafter, LEAF shall take all such actions as may be required by applicable law (or deemed desirable by the Collateral Agent) to fully preserve, maintain and protect the Purchaser’s ownership interest in, and the Collateral Agent’s first priority perfected security interest in, the Receivables, the Related Security and the Other Conveyed Property related thereto (other than with respect to Equipment which has a value of less than $25,000 and is leased under a Dollar Purchase Option Contract or $50,000 and is leased under a FMV Contract) which have been Conveyed to the Purchaser hereunder.

(c)With respect to each Receivable Conveyed hereunder, LEAF shall, prior to or on the Conveyance Date of such Receivable, (i) take or cause to be taken all steps necessary under all applicable law in order to cause a valid, subsisting and enforceable perfected, first priority security interest to exist in LEAF’s favor in the Obligor Collateral securing such Receivable (other than with respect to Equipment which has an original value of less than $25,000 and is leased under a Dollar Purchase Option Contract or $50,000 and is leased under a FMV Contract), (ii) have assigned the perfected, first priority security interest in the Obligor Collateral referred to in clause (i) above to the Purchaser by means of a Conveyance hereunder and (iii) take or cause to be taken all steps necessary under all applicable law in order to allow the Purchaser to assign the perfected, first priority security interest in the Obligor Collateral referred to in clause (i) above to the Collateral Agent pursuant to Section 2.11 of the RLSA.

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(d)With respect to each Receivable Conveyed hereunder, LEAF shall, prior to or on the Conveyance Date of such Receivable, if the Obligor Collateral related to such Receivable (other than a Vehicle Sublimit Pledged Receivable) is a Vehicle, (X) deliver to the Purchaser a Certificate of Title for such Vehicle naming the Purchaser as the owner of such Vehicle and containing a notation of the lien on such Vehicle of the Collateral Agent or (Y) if such Certificate of Title has not yet been received, deliver to the Purchaser a copy of the duly completed and executed application for such a Certificate of Title which shall have been delivered to the appropriate Registrar of Titles;

(e)LEAF shall not change its name, identity, or corporate structure in any manner that would or could make any financing statement or continuation statement filed by LEAF (or by the Purchaser on behalf of LEAF) in accordance with paragraph (a) above seriously misleading within the meaning of § 9-506 of the UCC (or any similar provision of the UCC), unless LEAF shall have given the Purchaser, the Custodian, the Backup Servicer and the Lender at least 30 days prior written notice thereof, and shall promptly file and hereby authorize the Purchaser or the Lender to file appropriate new financing statements or amendments to all previously filed financing statements and continuation statements.

(f)LEAF shall give the Purchaser, the Custodian, the Backup Servicer and the Lender at least 30 days prior written notice of any change in its jurisdiction of incorporation, if, as a result of such change, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement. LEAF shall at all times maintain its jurisdiction of incorporation, each office from which it services Receivables and its principal executive office within the United States of America.

(g)LEAF shall maintain its computer systems so that, from and after the time of Conveyance under this Agreement of Receivables (and the Other Conveyed Property related thereto) to the Purchaser and the grant of a security interest in such Receivables (and the Related Security and the Other Conveyed Property related thereto) by the Purchaser to the Collateral Agent, LEAF’s master computer records (including archives) that shall refer to such a Receivable (and the Related Security and the Other Conveyed Property related thereto) indicate clearly that such Receivable (and the Related Security and the Other Conveyed Property related thereto) has been Conveyed to the Purchaser hereunder and Pledged by the Purchaser under the RLSA. Indication of the Collateral Agent’s security interest in a Receivable (and the Related Security and the Other Conveyed Property related thereto) Conveyed hereunder shall be deleted from or modified on LEAF’s computer systems when, and only when, such Conveyed Receivable shall be (i) paid off by the related Obligor, (ii) liquidated by the Servicer, (iii) purchased by LEAF in accordance with Section 6.1 or 6.2 hereof or (iv) released by the Collateral Agent pursuant to Section 2.13 of the RLSA.

(h)If at any time LEAF shall propose to sell, grant a security interest in, or otherwise transfer any interest in any loan, installment sale contract or lease receivables to any prospective purchaser, lender or other transferee, LEAF shall give to such prospective purchaser, lender, or other transferee computer tapes, records, or print-outs (including any restored from archives) that, if they shall refer in any manner whatsoever to any Receivable (and/or the Related Security and the Other Conveyed Property related thereto) Conveyed hereunder, shall indicate

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clearly that such Receivable (and the Related Security and the Other Conveyed Property related thereto) has been so Conveyed to the Purchaser and is subject to a security interest in favor of the Collateral Agent.

SECTION 5.2Other Liens or Interests. Except for the Conveyances hereunder, LEAF will not sell, pledge, assign, transfer or otherwise convey to any other Person, or grant, create, incur, assume or suffer to exist any Adverse Claim on the Receivables or the Related Security and the Other Related Property related thereto Conveyed hereunder or any interest therein, and LEAF shall defend the right, title, and interest of the Purchaser and the Collateral Agent in and to such Receivables and the Related Security and the Other Conveyed Property related thereto against all Adverse Claims of third parties claiming through or under LEAF. To the extent that any Contract contains a provision stating that the Equipment which is the subject of such Contract shall at any time secure any debt of the related Obligor or Underlying Obligor to LEAF other than under such Contract, LEAF agrees that any security interest in its favor arising from such a provision shall be subordinate to the security interest (and, in the event of enforcement of such security interest by the Purchaser, the ownership interest) of the Purchaser in such Equipment.

SECTION 5.3Costs and Expenses. LEAF shall pay all reasonable, documented costs and disbursements in connection with the performance of its obligations hereunder and the Transaction Documents to which it is a party.

ARTICLE VI

PURCHASES BY LEAF

SECTION 6.1Purchases by LEAF.

(a)In the event of the occurrence of a LEAF Purchase Event, LEAF shall, unless such LEAF Purchase Event shall have been cured in all respects, purchase each Receivable Conveyed hereunder which is affected by or related to such LEAF Purchase Event from the Purchaser within five Business Days of the discovery by or notice (from any Person) to LEAF of such LEAF Purchase Event, and LEAF shall pay to the Purchaser (by means of a transfer to the Collection Account) the Repurchase Price of such Receivable determined as of the date of the purchase thereof from the Purchaser. Notwithstanding any other provision of this Agreement or the RLSA to the contrary, the obligation of LEAF under this Section shall be performed in accordance with the terms hereof notwithstanding the failure of the Servicer or the Purchaser to perform any of their respective obligations with respect to such Receivable under the RLSA. It is understood and agreed that the obligation of LEAF to cure a LEAF Purchase Event or purchase the Receivables Conveyed hereunder which are affected by or related to such LEAF Purchase Event shall (i) constitute the sole remedy against LEAF with respect to such LEAF Purchase Event available to the Purchaser or the Lender or any assignee of any of the foregoing (except for indemnities, if applicable, provided for under Section 4.3(a) hereof or under the RLSA) and (ii) is not intended to, and shall not, constitute a guaranty of the collectibility or payment of any Receivable which is not collected, not paid or uncollectible on account of the insolvency, bankruptcy, or financial inability to pay of the related Obligor.

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(b)LEAF shall have the right to repurchase Receivables Conveyed hereunder upon not less than three Business Days’ prior written notice to the Purchaser; provided, however, that the aggregate Discounted Balance of all Receivables repurchased pursuant to this Section 6.1(b) may not exceed 5% of the aggregate Discounted Balance of all Receivables Conveyed by LEAF pursuant to this Agreement, determined for each Receivable as of the time of the Sale of such Receivable pursuant to Section 2.1 hereof. Such notice shall specify the date that LEAF desires that such repurchase occur (such date, the “Repurchase Date”) and shall identify the Receivables to be included in such repurchase. LEAF agrees that it will not utilize any selection procedure in selecting the Receivables to be so repurchased which is adverse to the interests of the Purchaser or its assigns or would reasonably be expected to result in the repurchased Receivables containing a lower percentage of Defaulted Receivables or Delinquent Receivables than the percentage of Defaulted Receivables or Delinquent Receivables, as applicable, in the Receivables retained by the Purchaser. On the Repurchase Date, LEAF shall pay to the Purchaser (by means of a transfer to the Collection Account) an amount equal to the aggregate Discounted Balance of the Receivables included in such repurchase as of the date of such repurchase. Notwithstanding the foregoing, in no event shall LEAF be entitled to repurchase any Conveyed Receivable unless, after giving effect to any such repurchase and the application of the proceeds thereof in accordance with the terms hereof and Section 2.04 of the RLSA, there shall not be a Borrowing Base Deficiency, Program Termination Event, Pool A Termination Event or a Pool B Termination Event (and such Pool B Termination Event is related to such Pledged Receivable), or an event that but for notice or lapse of time or both would constitute any of the foregoing events.

SECTION 6.2Reassignment of Purchased Receivables. Upon deposit in the Collection Account of the price paid to the Purchaser for any Receivable purchased by LEAF under Section 6.1, the Purchaser shall (and shall request the Collateral Agent to) take such steps as may be reasonably requested by LEAF in order to assign to LEAF all of the Purchaser’s and the Collateral Agent’s right, title and interest in and to such Receivable and all security and documents and all Related Security and Other Conveyed Property Conveyed to the Purchaser and the Collateral Agent directly relating thereto, without recourse, representation or warranty of any kind, except as to the absence of liens, charges or encumbrances created by or arising solely as a result of actions of the Purchaser or the Collateral Agent. Such assignment shall be a sale and assignment outright, and not for security. If, following the reassignment of a Receivable, in any enforcement suit or legal proceeding, it is held that LEAF may not enforce any such Receivable on the ground that it shall not be a party in interest or a holder entitled to enforce such Receivable, the Purchaser shall, at the expense of LEAF, take such steps as LEAF deems reasonably necessary to enforce such Receivable, including bringing suit in the Purchaser’s name.

SECTION 6.3Waivers. No failure or delay on the part of the Purchaser or any assignee thereof, in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other or future exercise thereof or the exercise of any other power, right or remedy.

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ARTICLE VII

MISCELLANEOUS

SECTION 7.1Liability of LEAF. LEAF shall be liable in accordance herewith only to the extent of the obligations in this Agreement specifically undertaken by LEAF and with respect to its representations and warranties hereunder.

SECTION 7.2Limitation on Liability of LEAF and Others. LEAF and any manager, employee or agent of LEAF may rely in good faith on the advice of counsel respecting any matters arising under this Agreement. LEAF shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement, the RLSA or the Transaction Documents to which it is a party.

SECTION 7.3Amendment. This Agreement may be amended by LEAF and the Purchaser only with the prior written consent of the Lender. No termination or waiver of any provision of this Agreement or consent to any departure therefrom shall be effective without the prior written consent of the Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 7.4Notices. All demands, notices and communications to LEAF or the Purchaser hereunder shall be in writing, personally delivered, or sent by telecopier (subsequently confirmed in writing), reputable overnight courier or mailed by certified mail, return receipt requested, and shall be deemed to have been given upon receipt (a) in the case of LEAF at the following address: c/o LEAF Financial Corporation, 1818 Market Street, Philadelphia, PA 19061, Attention: Miles Herman, Facsimile No.: 215-561-0834 or such other address as shall be designated by LEAF in a written notice delivered to the Purchaser and (b) in the case of the Purchaser at the following address: c/o Resource Capital Corp., 1845 Walnut Street, 10th Floor, Philadelphia, PA 19103, Attention: Thomas C. Elliott, Facsimile No.: 215-546-4785 or such other address as shall be designated by a party in a written notice delivered to the other party.

SECTION 7.5Merger and Integration. Except as specifically stated otherwise herein, this Agreement, the RLSA and the Transaction Documents set forth the entire understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement, the RLSA and the Transaction Documents. This Agreement may not be modified, amended, waived or supplemented except as provided herein.

SECTION 7.6Severability of Provisions. If any one or more of the covenants, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, provisions or terms shall be deemed severable from the remaining covenants, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement.

SECTION 7.7GOVERNING LAW; JURY WAIVER; CONSENT TO JURISDICTION. i) THIS AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-

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1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE PURCHASER IN THE CONVEYED RECEIVABLES, RELATED SECURITY OR OTHER CONVEYED PROPERTY, OR REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

(b)EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.

(c)ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

SECTION 7.8Counterparts. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 7.9Non-petition Covenant. Until one year and one day after the latest maturing “Obligation” of the Purchaser under (and as defined in) the RLSA shall be paid in full, LEAF shall not petition or otherwise invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Purchaser 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 Purchaser or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Purchaser. LEAF agrees that damages will not be an adequate remedy for a breach of this

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covenant and that this covenant may be specifically enforced by the Purchaser or any assignee thereof.

SECTION 7.10Binding Effect; Assignability.

(a)This Agreement shall be binding upon and inure to the benefit of LEAF, the Purchaser and their respective successors and assigns; provided, however, that LEAF may not assign its rights or obligations hereunder or any interest herein without the prior written consent of the Purchaser and any assignee thereof. The Purchaser may assign or collaterally assign its rights hereunder to an assignee, and such assignee shall have all rights of the Purchaser under this Agreement (as if such assignee were the Purchaser hereunder).

(b)This Agreement shall create and constitute the continuing obligation of the parties hereto in accordance with its terms, and shall remain in full force and effect until such time, after the Collection Date, when all of the Receivables Conveyed hereunder are collected in full; provided, however, that rights and remedies with respect to any breach of any representation and warranty made by LEAF pursuant to Article IV hereof and the provisions of Article V and Section 7.9 shall be continuing and shall survive any termination of this Agreement.

SECTION 7.11Third Party Beneficiary. Each of the parties hereto hereby acknowledges that the Purchaser intends to collaterally assign all of its rights under this Agreement to the Collateral Agent and LEAF hereby consents to such assignment. The Collateral Agent shall be a third party beneficiary of, and shall be entitled to enforce the Purchaser’s rights and remedies under, this Agreement to the same extent as if it were a party hereto.

SECTION 7.12Term. This Agreement shall commence as of the date of execution and delivery hereof and shall continue in full force and effect until the later of (a) the payment in full with respect to each Receivable Conveyed hereunder and (b) the Collection Date under the RLSA.

23

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

LEAF FUNDING, INC.

By:      _______________________________

         Name:

         Title:

RESOURCE CAPITAL FUNDING II, LLC

By:      _______________________________

         Name:

         Title:

Signature Page to Purchase and Sale Agreement

EXHIBIT A

FORM OF ASSIGNMENT

ASSIGNMENT, dated as of ____________, 20___ between LEAF Funding, Inc. (“LEAF”) and Resource Capital Funding II, LLC (the “Purchaser”).

l.We refer to the Purchase and Sale Agreement (the “Purchase and Sale Agreement”) dated as of October 31, 2006 between LEAF and the Purchaser. All provisions of the Purchase and Sale Agreement are incorporated herein by reference. All capitalized terms used herein and not defined herein shall have the meanings set forth in the Purchase and Sale Agreement.

2.LEAF does hereby Convey, to the Purchaser, without recourse (except to the extent specifically provided in the Purchase and Sale Agreement), and the Purchaser hereby acquires, all right, title and interest of LEAF in, to and under the Receivables identified as such on Annex A hereto and the Related Security and the Other Conveyed Property related thereto (including, without limitation, all right, title and interest of LEAF in and to the Obligor Collateral related to each such Receivable) pursuant to the Purchase and Sale Agreement.

3.All of the representations and warranties set forth on the Schedule of Representations are true and correct with respect to all of the Contracts, and, as applicable, Underlying Contracts and Underlying Originators, related to the Receivables identified in Annex A hereto as of the date of this Assignment.

4.LEAF does hereby remake the representations and warranties set forth in Section 4.1 of the Purchase and Sale Agreement with full force and effect as if the same were fully set forth herein.

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

LEAF FUNDING, INC.

By:      _______________________________

         Name:

         Title:

RESOURCE CAPITAL FUNDING II, LLC

By:      _______________________________

         Name:

         Title:

ANNEX A

(TO ASSIGNMENT)

[See attached.]

SCHEDULE A

REPRESENTATIONS AND WARRANTIES OF LEAF WITH RESPECT TO

RECEIVABLES REFERRED TO IN ANY ASSIGNMENT

PART 1

Representations and Warranties of LEAF with Respect to Contracts Related to Pool A Receivables Referred to in Any Assignment

The following representations and warranties are made by LEAF as of the date of any Assignment delivered by LEAF to the Purchaser with respect to the Contracts related to the Pool A Receivables which are referred to in such Assignment (or any schedule thereto).

l.Each such Contract represents the genuine, legal, valid, binding and full recourse payment obligation of the Obligor thereunder, enforceable by LEAF in accordance with its terms and the Obligor, with respect to such Contract (and any guarantor of the Obligor’s obligations thereunder), had full legal capacity to execute and deliver such Contract and any other documents related thereto.

2.[Intentionally omitted.]

3.To the extent that such Contract consists of a “Term Note (Level Payments)” or “Term Note (Step Payments)” or similar promissory note, together with the “Master Loan and Security Agreement” or similar agreement related thereto and incorporated by reference therein, each other “Term Note (Level Payments)” or “Term Note (Step Payments)” or similar promissory note related to the same “Master Loan and Security Agreement” or similar agreement is also a Contract related to a Conveyed Receivable. To the extent that such Contract consists of a “Master Lease Schedule” or similar agreement together with a “Master Lease Agreement” or similar agreement which is related to, and incorporated by reference therein, each other “Master Lease Schedule” or similar agreement related to the same “Master Lease Agreement” or similar agreement is also a Contract related to a Conveyed Receivable.

4.Each such Contract, at the time of origination and at all times thereafter to the date of any Assignment delivered by LEAF to the Purchaser, conformed to all requirements of the Credit and Collection Policy applicable to such Contract and, in any case, no such Contract would be required to be written off pursuant to the Credit and Collection Policy.

5.Each such Contract (i) was (a) originated by Originator in the ordinary course of Originator’s business and Originator had all necessary licenses and permits to originate Contracts in the State where the related Obligor and the related Obligor Collateral were located or (b) purchased by Originator, in a transaction that would constitute a “true sale” for bankruptcy purposes, from a Person (a “Seller”) who originated such Contract in the ordinary course of Seller’s business and who had all necessary licenses and permits to originate Contracts in the State where the related Obligor and the related Obligor Collateral were located, (ii) was sold by LEAF to the Purchaser under this Agreement and LEAF has all necessary licenses and permits to own Receivables and enter into Contracts in the state where the related Obligor and the related Obligor Collateral are located, (iii) contains customary and enforceable provisions, such as to

render the rights and remedies of LEAF (and any assignee thereof) adequate for realization against the collateral security related thereto and (iv) provides for level Scheduled Payments during the term of such Contract or such Contract is a Non-Level Payment Contract.

6.Each such Contract was originated by Originator or the Seller without any fraud or material misrepresentation on the part of the related Obligor or Originator or the Seller. Each such Contract was sold by LEAF to the Purchaser without any fraud or material misrepresentation on the part of LEAF.

7.No such Contract is the subject of any litigation, nor is it subject to any right of rescission, setoff, counterclaim or defense on the part of the Obligor thereunder.

8.Each such Contract has had no provision thereof waived, amended, altered or modified in any respect since its origination except in conformity with the Credit and Collection Policy.

9.The Obligor, with respect to each such Contract, has a billing address in the United States and, except as otherwise permitted in writing by the Lender from time to time, the Equipment which is the subject of each such Contract and all other Obligor Collateral with respect thereto is located in the United States.

10.Each such Contract (i) is calculated at a fixed yield, (ii) is fully amortizing in periodic installments over its remaining term (which may include a Balloon Payment or Put Payment not in excess of 45% of the Discounted Balance of such Contract at the time of origination), (iii) has a remaining term of 180 months or less and does not permit renewal or extension, (iv) provides for acceleration of the Scheduled Payments thereunder if the related Obligor is in default under or has otherwise violated or breached any material provision of such Contract, (v) prohibits the related Obligor from applying any part of the Security Deposit or cash collateral paid under such Contract to the Scheduled Payments due under such Contract (and neither the Servicer, LEAF or any other Person has applied any part of the Security Deposit or cash collateral paid under such Contract to any of the Scheduled Payments due under such Contract) and (vi) has not been assigned by the related Obligor nor has there been any sub-lease of the Obligor Collateral.

11.[Intentionally omitted.]

12.Each such Contract (i) is payable by a single Obligor, that is a corporate Person, or, if the collateral is Equipment used in a business, an individual and (ii) provides for the financing or lease of Obligor Collateral to be used in the business of the related Obligor.

13.Each such Contract was originated in the United States and is denominated and payable solely in United States Dollars.

14.Each such Contract (i) if a Lease Contract, contains “hell or high water” provisions, (ii) requires the related Obligor to assume all risk of loss or malfunction of the related Obligor Collateral; (iii) requires the related Obligor to pay all maintenance, repair, insurance and taxes, together with all other ancillary costs and expenses, with respect to the related Obligor

Sch. A-2

Collateral; and (iv) requires the related Obligor to pay, in full, when due, all Scheduled Payments notwithstanding any casualty, loss or other damage to the related Obligor Collateral.

15.Each such Contract is by its terms an absolute and unconditional obligation of the related Obligor and is non-cancelable (in the case of a Lease Contract) and non-cancelable and non-prepayable without the payment in full of principal and accrued interest and finance charges prior to the expiration of the term of such Contract; such Contract does not provide for the substitution, exchange or addition of any other items of Obligor Collateral related to such Contract if the effect thereof would be to reduce or extend the Scheduled Payments related thereto; and the rights with respect to such Contract are assignable by Originator (and its successors and assigns, including the Purchaser) without the consent of or notice to any Person.

16.Each such Contract is in the form of one of the form contracts attached to the RLSA as Exhibit D-1, Exhibit D-2 or Exhibit D-3 or in a form otherwise approved by the Servicer in compliance with the Credit and Collection Policy.

17.[Intentionally omitted.]

18.All material requirements of applicable federal, state and local laws, and regulations thereunder in respect of each such Contract, the origination thereof, and the Obligor Collateral related thereto, have been complied with in all respects.

19.The applicable Obligor (other than a lessee under a Lease Contract that is a “true lease”) has good and marketable title to the Equipment which is the subject of each such Contract and such Equipment is free and clear of all Adverse Claims.

20.Each such Contract constitutes either an “Instrument” or “Chattel Paper” or a “Payment Intangible” within the meaning of the UCC.

21.Each such Contract contains language by which the related Obligor grants a security interest to Originator in the Obligor Collateral which is the subject of each such Contract.

22.(A) The Originator shall have taken or caused to be taken all steps necessary under all applicable law (including the filing of an Obligor Financing Statement with respect to each such Contract) in order to cause a valid, subsisting and enforceable perfected, first priority security interest to exist in Originator’s favor in the Obligor Collateral securing each such Contract (other than with respect to Equipment which has a value of less than $25,000 if such Equipment is leased under Dollar Purchase Option Contracts or $50,000 if such Equipment is leased under FMV Contracts) and, (B) LEAF shall have assigned the perfected, first priority security interest in the Obligor Collateral referred to in clause (A) above to the Purchaser pursuant to this Agreement.

23.LEAF has taken all steps necessary under all applicable law in order to Convey to the Purchaser (i) LEAF’s interest in the Obligor Collateral related to each such Contract (other than Equipment which has a value of less than $25,000 if such Equipment is leased under Dollar Purchase Option Contracts or $50,000 if such Equipment is leased under FMV Contracts) and (ii) each such Contract and the Receivable, Related Security and Other

Sch. A-3

Conveyed Property related thereto (and the proceeds thereof), and the Purchaser will have acquired good and marketable title to and a valid and perfected ownership interest in (i) LEAF’s interest in such Obligor Collateral and (ii) such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof) and such ownership interest is free and clear of any Adverse Claim or restrictions on transferability.

24.If the Obligor Collateral related to such Contract (other than a Contract related to a Vehicle Sublimit Pledged Receivable) includes a Vehicle, LEAF or the Servicer shall have delivered to the applicable Registrar of Titles an application for a Certificate of Title for such Vehicle which such Certificate of Title shall indicate the Purchaser as the owner of the related Vehicle and indicate “Morgan Stanley Bank” as the sole lienholder with respect to such Vehicle.

25.No such Contract is a Defaulted Receivable or a Delinquent Receivable.

26.Each such Contract is payable by an Obligor which is not subject to any bankruptcy, insolvency, reorganization or similar proceeding.

27.The information pertaining to each such Contract set forth in the Schedule of Contracts and the related Assignment is true and correct in all respects.

28.With respect to each such Contract, by the Conveyance Date on which such Contract is Conveyed hereunder, Originator will have caused its master computer records relating to such Contract to be clearly and unambiguously marked to show that such Contract has been Conveyed under this Agreement.

29.With respect to each such Contract there exists a Receivable File and such Receivable File contains each item listed in the definition of Receivable File with respect to such Contract and such Receivable File has been delivered to the Custodian.

30.No such Contract has been repaid, prepaid, satisfied, subordinated or rescinded, and the Obligor Collateral securing such Contract has not been released from the lien of the Purchaser, in whole or in part (except for releases of Equipment from a Contract prior to the date of the Conveyance thereof and which releases have been noted in the Collateral Receipt related to such document).

31.No such Contract was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer, pledge and/or assignment of such Contract under this Agreement or the RLSA, and LEAF has not entered into any agreement with any Obligor that prohibits, restricts or conditions the sale, transfer, pledge and/or assignment of such Contract.

32.[Intentionally omitted.]

33.No such Contract has been sold, transferred, assigned or pledged by LEAF to any Person other than the Purchaser. LEAF has not taken any action to convey any right to any Person that would result in such Person having a right to payments due under any such Contract or payments received under the related Insurance Policy or otherwise to impair the

Sch. A-4

rights of LEAF, the Purchaser or the Lender in such Contract, the related Insurance Policy or any proceeds thereof. There is an Insurance Policy in full force and effect with respect to the Equipment related to such Contract if such Equipment had an original cost over $100,000.

34.No such Contract is assumable by another Person in a manner which would release the Obligor thereof from such Obligor’s obligations to LEAF or the Purchaser.

35.There has been no default, breach, violation or event permitting acceleration under the terms of any such Contract, and no condition exists or event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of any such Contract, and there has been no waiver of any of the foregoing.

36.No selection procedures adverse to the Purchaser or the Lender have been utilized in selecting any such Contract from all other similar Contracts originated or purchased by Originator.

37.The Obligor Collateral related to any such Contract is not subject to any tax or mechanic’s lien or any other Adverse Claim.

38.[Intentionally omitted.]

39.LEAF has delivered to the Custodian the sole original counterpart of each such Contract (or a true and correct copy thereof) and such document constitutes the entire agreement between the parties thereto in respect of the related Obligor Collateral.

40.Each such Contract is in full force and effect in accordance with its terms and neither LEAF nor the Obligor has or will have suspended or reduced any payments or obligations due or to become due thereunder by reason of a default by any other party to such Contract; there are no proceedings pending or threatened asserting insolvency of such Obligor; there are no proceedings pending or threatened wherein such Obligor, any other obligated party or any governmental agency has alleged that such Contract is illegal or unenforceable.

41.The origination and collection practices used by the Servicer with respect to each such Contract have been in all respects customary in the equipment financing and servicing business.

42.The Obligor Collateral related to each such Contract was properly delivered to the Obligor in good repair and is in proper working order. Each Obligor has accepted the related Equipment. The related Obligor is the end user of the Equipment that is the subject of any such Contract and no Obligor has sublet the Equipment to any other party.

43.The Obligor with respect to any such Contract is not a merchant with respect to the Equipment related to such Contract.

44.Except with respect to a breach of an Obligor’s right of quiet enjoyment of the related Equipment, neither the operation of any of the terms of any such Contract nor the exercise by LEAF (or any assignee thereof), the Servicer or the Obligor of any right under any

Sch. A-5

such Contract will render such Contract unenforceable in whole or in part nor subject to any right of rescission, setoff, claim, counterclaim or defense, and no such right of rescission, set-off, claim, counterclaim or defense, including a defense arising out of a breach of the Obligor’s right of quiet enjoyment of the Equipment, has been asserted with respect thereto.

45.LEAF and the Servicer have duly fulfilled all obligations on their part to be fulfilled under or in connection with the origination, acquisition and assignment of such Contract, and have done nothing to impair the rights of the Purchaser or the Collateral Agent in such Contract or payments with respect thereto. LEAF and the Servicer have duly fulfilled all continuing obligations on their part to be fulfilled under or in connection with such Contract.

46.[Intentionally omitted.]

47.The conveyance from LEAF to the Purchaser of each such Contract and the Other Conveyed Property and Related Security related thereto does not violate the terms or provisions of any agreement to which LEAF is a party or by which it is bound.

48.The transfer, assignment and conveyance of the Contract and the related Related Security and Other Conveyed Property from LEAF to the Purchaser pursuant to this Agreement is not subject to or will not result in any tax, fee or governmental charge payable by LEAF or any other Person to any federal, state or local government.

49.No such Contract (other than a “true lease”) is (i) an executory contract or (ii) in any event, deemed to be an executory contract or unexpired lease subject to rejection by an Obligor under Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect to such Obligor.

50.Each such Contract contains enforceability provisions (i) permitting the acceleration of the payments thereunder if the Obligor is in default under such Contract and (ii) sufficient to enable the LEAF (or its assignees) to repossess or foreclose upon the Obligor Collateral related thereto.

51.Each such Contract generally contains provisions requiring the payment of both interest and principal (or, in the case of a Lease Contract, lease payments) in each calendar month or quarter during the term of such Contract.

52.The promissory note, if any, related to each such Contract was payable to LEAF immediately prior to its transfer to the Purchaser under this Agreement and has not been endorsed by LEAF to any Person other than the Purchaser.

53.The final Scheduled Payment required by each such Contract is less than or equal to the Discounted Balance of such Contract at the time of origination.

54.The Obligor Collateral related to such Contract is not one or more Vehicles regularly engaged in the long-haul transportation of goods.

Sch. A-6

55.The Obligor with respect to any such Contract which is a lease of, or is secured by, Equipment related to the practice of dentistry, medicine or veterinary medicine is a dentist, doctor or veterinarian.

56.The vendor of the Equipment relating to such Receivable has received payment in full from the Obligor prior to the Pledge of such Receivable hereunder and has no remaining obligations with respect to such Equipment except for any applicable warranty.

Sch. A-7

PART 2

Representations and Warranties of LEAF with Respect to Contracts Related to Pool B

Receivables Referred to in Any Assignment

The following representations and warranties are made by LEAF as of the date of any Assignment delivered by LEAF to the Purchaser with respect to the Contracts related to the Pool B Receivables which are referred to in such Assignment (or any schedule thereto).

1.Each such Contract represents the genuine, legal, valid, binding and full recourse payment obligation of the Obligor thereunder, enforceable by LEAF in accordance with its terms and the Obligor, with respect to such Contract (and any guarantor of the Obligor’s obligations thereunder), had full legal capacity to execute and deliver such Contract and any other documents related thereto.

2.[Intentionally omitted.]

3.The Obligor under such Contract has been continuously originating lease or loan agreements related to equipment with an original cost of less than $100,000 for at least three (3) complete calendar years unless such Obligor is Pentech Financial Services, Inc.

4.Each such Contract, at the time of origination and at all times thereafter to the date of any Assignment delivered by LEAF to the Purchaser, conformed to all requirements of the Credit and Collection Policy applicable to such Contract and, in any case, no such Contract would be required to be written off pursuant to the Credit and Collection Policy.

5.Each such Contract (i) was originated by Originator in the ordinary course of Originator’s business and Originator had all necessary licenses and permits to originate Contracts in the State where the related Obligor and the related Obligor Collateral were located, (ii) was sold by LEAF to the Purchaser under this Agreement and LEAF has all necessary licenses and permits to own Receivables and enter into Contracts in the state where the related Obligor and the related Obligor Collateral are located, (iii) contains customary and enforceable provisions, such as to render the rights and remedies of LEAF (and any assignee thereof) adequate for realization against the collateral security related thereto and (iv) provides for level Scheduled Payments during the term of such Contract or such Contract is a Non-Level Payment Contract.

6.Each such Contract was originated by Originator without any fraud or material misrepresentation on the part of the related Obligor or Originator. Each such Contract was sold by LEAF to the Purchaser without any fraud or material misrepresentation on the part of LEAF.

7.No such Contract is the subject of any litigation, nor is it subject to any right of rescission, setoff, counterclaim or defense on the part of the Obligor thereunder.

8.Each such Contract has had no provision thereof waived, amended, altered or modified in any respect since its origination except in conformity with the Credit and Collection Policy.

Sch. A-8

9.The Obligor with respect to each such Contract has a billing address in the United States and, except as otherwise permitted in writing by the Lender from time to time, all Obligor Collateral with respect thereto is located in the United States.

10.Each such Contract (i) is calculated at a fixed yield, (ii) is fully amortizing in periodic installments over its remaining term (which amortization may include a Balloon Payment or Put Payment not in excess of 10% of the aggregate original cost of the related Underlying Equipment), (iii) has a remaining term of 120 months or less and does not permit renewal or extension, (iv) provides for acceleration of the Scheduled Payments thereunder if the related Obligor is in default under or has otherwise violated or breached any material provision of such Contract, (v) prohibits the related Obligor from applying any part of the Cash Reserve (if any) paid under such Contract to the Scheduled Payments due under such Contract (and neither the Servicer, LEAF or any other Person has applied any part of the Cash Reserve paid under such Contract to any of the Scheduled Payments due under such Contract) and (vi) has not been assigned by the related Obligor nor has there been any sub-lease of the Obligor Collateral.

11.The obligations of the Obligor under each such Contract are secured by Underlying Originator Loan Collateral which includes Eligible Pool B Underlying Lease Contracts and Eligible Pool B Underlying Loan Contracts with aggregate Discounted Balances equal to or greater than the Discounted Balance of such Contract.

12.Each such Contract (i) is payable by a single Obligor, that is a corporate Person or, if the collateral is Equipment used in a business, an individual and (ii) provides for the financing or lease of Obligor Collateral to be used in the business of the related Obligor.

13.Each such Contract was originated in the United States and is denominated and payable solely in United States Dollars.

14.[Intentionally omitted.]

15.Each such Contract is by its terms an absolute and unconditional obligation of the related Obligor and is non-cancelable and non-prepayable without the payment in full of principal and accrued interest and finance charges prior to the expiration of the term of such Contract; such Contract does not provide for the substitution, exchange or addition of any other items of Underlying Originator Loan Collateral related to such Contract if the effect thereof would be to reduce or extend the Scheduled Payments related thereto; and the rights with respect to such Contract are assignable by Originator (and its successors and assigns, including the Purchaser) without the consent of or notice to any Person.

16.Each such Contract conforms with the criteria set forth in Exhibit D-4 to the RLSA.

17.[Intentionally omitted.]

18.All material requirements of applicable federal, state and local laws, and regulations thereunder in respect of each such Contract, the origination thereof, and the Obligor Collateral related thereto, have been complied with in all respects.

Sch. A-9

19.The applicable Underlying Obligor (other than a lessee under an Underlying Lease Contract that is a “true lease”) has good and marketable title to Underlying Originator Loan Collateral related to such Contract and such Underlying Originator Loan Collateral is free and clear of all Adverse Claims.

20.Each such Contract constitutes either an “Instrument” or “Chattel Paper” or a “Payment Intangible” within the meaning of the UCC.

21.Each such Contract contains language by which the related Obligor grants a security interest to Originator in the Obligor Collateral which is the subject of each such Contract.

22.(A) The Originator shall have taken or caused to be taken all steps necessary under all applicable law (including the filing of an Obligor Financing Statement with respect to each such Contract) in order to cause a valid, subsisting and enforceable perfected, first priority security interest to exist in Originator’s favor in the Obligor Collateral securing each such Contract (other than with respect to Underlying Equipment relating to such Contract which has an original value of less than $25,000 if such Underlying Equipment is leased under Dollar Purchase Option Contracts or $50,000 if such Underlying Equipment is leased under FMV Contracts) and (B) LEAF shall have assigned the perfected, first priority security interest in the Obligor Collateral referred to in clause (A) above to the Purchaser pursuant to this Agreement.

23.LEAF has taken all steps necessary under all applicable law in order to Convey to the Purchaser (i) LEAF’s interest in the Obligor Collateral related to each such Contract (other than with respect to Underlying Equipment relating to such Contract which has an original value of less than $25,000 if such Underlying Equipment is leased under Dollar Purchase Option Contracts or $50,000 if such Underlying Equipment is leased under FMV Contracts) and (ii) each such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof), and the Purchaser will have acquired good and marketable title to and a valid and perfected ownership interest in (i) LEAF’s interest in such Obligor Collateral and (ii) such Contract and the Receivable, Related Security and Other Conveyed Property related thereto (and the proceeds thereof) and such ownership interest is free and clear of any Adverse Claim or restrictions on transferability.

24.[Intentionally omitted.]

25.No such Contract is a Defaulted Receivable or, at the time of its Pledge hereunder, a Delinquent Receivable.

26.Each such Contract is payable by an Obligor which is not subject to any bankruptcy, insolvency, reorganization or similar proceeding.

27.The information pertaining to each such Contract set forth in the Schedule of Contracts and the related Assignment is true and correct in all respects.

28.With respect to each such Contract, by the Conveyance Date on which such Contract is Conveyed hereunder, Originator will have caused its master computer records

Sch. A-10

relating to such Contract to be clearly and unambiguously marked to show that such Contract has been Conveyed under this Agreement.

29.With respect to each such Contract there exists a Receivable File and such Receivable File contains each item listed in the definition of Receivable File with respect to such Contract and such Receivable File is in the possession of the Custodian.

30.No such Contract has been repaid, prepaid, satisfied, subordinated or rescinded, and the Obligor Collateral securing such Contract has not been released from the lien of the Collateral Agent, in whole or in part.

31.No such Contract was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer, pledge and/or assignment of such Contract under this Agreement or the RLSA, and LEAF has not entered into any agreement with any Obligor that prohibits, restricts or conditions the sale, transfer, pledge and/or assignment of such Contract.

32.[Intentionally omitted.]

33.No such Contract has been sold, transferred, assigned or pledged by LEAF to any Person other than the Purchaser. LEAF has not taken any action to convey any right to any Person that would result in such Person having a right to payments due under any such Contract or payments received under the related Insurance Policy or otherwise to impair the rights of the Purchaser or the Collateral Agent in such Contract, the related Insurance Policy or any proceeds thereof.

34.No such Contract is assumable by another Person in a manner which would release the Obligor thereof from such Obligor’s obligations to LEAF or the Purchaser.

35.There has been no default, breach, violation or event permitting acceleration under the terms of any such Contract, and no condition exists or event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of any such Contract, and there has been no waiver of any of the foregoing.

36.No selection procedures adverse to the Purchaser or the Lender have been utilized in selecting any such Contract from all other similar Contracts originated or purchased by Originator.

37.The Obligor Collateral related to any such Contract is not subject to any Adverse Claim.

38.[Intentionally omitted.]

39.LEAF has delivered to the Custodian the sole original counterpart (or a true and correct copy) of each such Contract and such document constitutes the entire agreement between the parties thereto in respect of the related Obligor Collateral.

Sch. A-11

40.Each such Contract is in full force and effect in accordance with its terms and neither LEAF nor the Obligor has or will have suspended or reduced any payments or obligations due or to become due thereunder by reason of a default by any other party to such Contract; there are no proceedings pending or threatened asserting insolvency of such Obligor; there are no proceedings pending or threatened wherein such Obligor, any other obligated party or any governmental agency has alleged that such Contract is illegal or unenforceable.

41.The origination and collection practices used by LEAF and the Servicer with respect to each such Contract have been in all respects customary in the equipment financing and servicing business.

42.[Intentionally omitted.]

43.[Intentionally omitted.]

44.Neither the operation of any of the terms of any such Contract nor the exercise by LEAF, the Servicer or the Obligor of any right under any such Contract will have rendered such Contract unenforceable in whole or in part nor subject to any right of rescission, setoff, claim, counterclaim or defense, and no such right of rescission, set-off, claim, counterclaim or defense has been asserted with respect thereto.

45.LEAF and the Servicer have duly fulfilled all obligations on their part to be fulfilled under or in connection with the origination, acquisition and assignment of the Contract, and have done nothing to impair the rights of the Purchaser or the Collateral Agent in the Contract or payments with respect thereto. LEAF and the Servicer have duly fulfilled all continuing obligations on their part to be fulfilled under or in connection with such Contract.

46.[Intentionally omitted.]

47.The Conveyance from LEAF to the Purchaser of each such Contract and the Other Conveyed Property and Related Security related thereto does not violate the terms or provisions of any agreement to which LEAF is a party or by which it is bound.

48.The transfer, assignment and conveyance of the Contract and the related Related Security and Other Conveyed Property from LEAF to the Purchaser pursuant to this Agreement is not subject to or will not result in any tax, fee or governmental charge payable by the Purchaser or any other Person to any federal, state or local government.

49.No such Contract may be (i) an executory contract or (ii) in any event, deemed to be an executory contract or unexpired lease subject to rejection by an Obligor under Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect to such Obligor.

50.Each such Contract contains enforceability provisions (i) permitting the acceleration of the payments thereunder if the Obligor is in default under such Contract and (ii) sufficient to enable the LEAF (or its assignees) to repossess or foreclose upon the Obligor Collateral related thereto.

Sch. A-12

51.Each such Contract generally contains provisions requiring the payment of both interest and principal (or, in the case of a Lease Contract, lease payments) in each calendar month or quarter during the term of such Contract.

52.The promissory note, if any, related to each such Contract (i) was payable to Originator immediately prior to its transfer to LEAF under each Originator Sale Agreement and (ii) was payable to LEAF immediately prior to its transfer to the Purchaser under this Agreement and has not been endorsed by LEAF to any Person other than the Purchaser.

53.The final Scheduled Payment required by each such Contract is less than or equal to the Discounted Balance of such Contract at the time of origination.

54.Such Contract contains “Seller Events of Default” or similar events of default which (i) would occur if a Pool B Termination Event with respect to the related Underlying Originator occurred, (ii) would entitle the Purchaser, as assignee of the Originator’s rights under the Contract, to deliver, or cause the delivery of, a redirection notice which would require all Underlying Obligors to make all payments under Underlying Contracts sold or pledged to the Originator under such Contract to Lockbox Account or an account designated by the Purchaser or the Servicer and (iii) would entitle the Purchaser, as assignee of the Originator’s rights under the Contract, to receive 100% of all payments under the Underlying Contracts sold or pledged to the Originator under such Contract.

Sch. A-13

PART 3

Representations and Warranties of LEAF with Respect to Underlying Contracts Related to Pool B

Receivables Referred to in Any Assignment

The following representations and warranties are made by LEAF as of the date of any Assignment delivered by LEAF to the Purchaser with respect to the Underlying Contracts related to the Pool B Receivables which are referred to in such Assignment (or any schedule thereto).

1.Each such Underlying Contract represents the genuine, legal, valid, binding and full recourse payment obligation of the Underlying Obligor thereunder, enforceable by the Underlying Originator in accordance with its terms and the Underlying Obligor, with respect to such Underlying Contract (and any guarantor of the Underlying Obligor’s obligations thereunder), had full legal capacity to execute and deliver such Underlying Contract and any other documents related thereto.

2.[Intentionally omitted.]

3.[Intentionally omitted.]

4.Each such Underlying Contract at the time of origination and at all times thereafter, conformed to all requirements of the credit and collection policy of the applicable Underlying Originator applicable to such Underlying Contract and, in any case, no such Underlying Contract would be required to be written off pursuant to such credit and collection policy.

5.Each such Underlying Contract (i) was originated by an Eligible Underlying Originator in the ordinary course of its business and such Underlying Originator had all necessary licenses and permits to originate Underlying Contracts in the State where the related Underlying Obligor and the related Underlying Collateral were located, (ii) was pledged by such Underlying Originator to the Originator under the applicable Pool B Contract and (iii) contains customary and enforceable provisions, such as to render the rights and remedies of such Underlying Originator (and any assignee thereof, including, without limitation, LEAF) adequate for realization against the collateral security related thereto.

6.Each such Underlying Contract was originated by the applicable Underlying Originator without any fraud or material misrepresentation on the part of the related Underlying Obligor or Underlying Originator. Each such Underlying Contract was pledged by such Underlying Originator to Originator without any fraud or material misrepresentation on the part of such Underlying Originator or Originator, as applicable.

7.No such Underlying Contract is the subject of any litigation, nor is it subject to any right of rescission, setoff, counterclaim or defense on the part of the Underlying Obligor thereunder.

8.Each such Underlying Contract has had no provision thereof waived, amended, altered or modified in any respect since its origination except in conformity with the credit and collection policy of the applicable Underlying Originator.

Sch. A-14

9.The Underlying Obligor, with respect to each such Underlying Contract, has a billing address in the United States and, except as otherwise permitted in writing by the Lender from time to time, the Underlying Equipment which is the subject of each such Underlying Contract and all other Obligor Collateral with respect thereto is located in the United States.

10.Each such Underlying Contract (i) is calculated at a fixed yield, (ii) is fully amortizing in periodic installments over its remaining term (which may include a Balloon Payment or Put Payment not in excess of 10% of the original cost of the related Underlying Equipment), (iii) has an remaining term of 120 months or less and does not permit renewal or extension, (iv) provides for acceleration of the Underlying Scheduled Payments thereunder if the related Underlying Obligor is in default under or has otherwise violated or breached any material provision of such Underlying Contract, (v) prohibits the related Underlying Obligor from applying any part of the Underlying Security Deposit (if any) paid under such Underlying Contract to the Underlying Scheduled Payments due under such Underlying Contract (and neither the Underlying Originator, the Servicer, LEAF or any other Person has applied any part of the Underlying Security Deposit paid under such Underlying Contract to any of the Underlying Scheduled Payments due under such Underlying Contract) and (vi) has not been assigned by the related Underlying Obligor nor has there been any sub-lease of the Underlying Obligor Collateral.

11.Such Underlying Contract has a Discounted Balance of not greater than $800,000.

12.Each such Underlying Contract (i) is payable by a single Underlying Obligor, that is a corporate Person or, if the collateral is Equipment used in a business, an individual and (ii) provides for the financing or lease of Underlying Collateral to be used in the business of the related Underlying Obligor.

13.Each such Underlying Contract was originated in the United States and is denominated and payable solely in United States Dollars.

14.Each such Underlying Contract (i) if an Underlying Lease Contract, contains “hell or high water” provisions; (ii) requires the related Underlying Obligor to assume all risk of loss or malfunction of the related Underlying Collateral; (iii) requires the related Underlying Obligor to pay all maintenance, repair, insurance and taxes, together with all other ancillary costs and expenses, with respect to the related Underlying Collateral; and (iv) requires the related Underlying Obligor to pay, in full, when due, all Underlying Scheduled Payments notwithstanding any casualty, loss or other damage to the related Underlying Collateral.

15.Each such Underlying Contract is by its terms an absolute and unconditional obligation of the related Underlying Obligor and is non-cancelable (in the case of an Underlying Lease Contract) and non-cancelable and non-prepayable without the payment in full of principal and accrued interest and finance charges prior to the expiration of the term of such Underlying Contract; such Underlying Contract does not provide for the substitution, exchange or addition of any other items of Underlying Collateral related to such Underlying Contract if the effect thereof would be to reduce or extend the Underlying Scheduled Payments

Sch. A-15

related thereto; and the rights with respect to such Underlying Contract are assignable by the applicable Underlying Originator (and its successors and assigns, including LEAF and the Purchaser) without the consent of or notice to any Person.

16.[Intentionally omitted.]

17.[Intentionally omitted.]

18.All material requirements of applicable federal, state and local laws, and regulations thereunder in respect of each such Underlying Contract, the origination thereof, and the Underlying Collateral related thereto, have been complied with in all respects.

19.The applicable Underlying Obligor (other than a lessee under an Underlying Lease Contract that is a “true lease”) has good and marketable title to the Underlying Equipment which is the subject of each such Underlying Contract and such Underlying Equipment is free and clear of all Adverse Claims.

20.Each such Underlying Contract constitutes either an “Instrument” or “Chattel Paper” or a “Payment Intangible” within the meaning of the UCC.

21.Each such Underlying Contract contains language by which the related Underlying Obligor grants a security interest to the related Underlying Originator in the Underlying Collateral which is the subject of each such Underlying Contract.

22.(A) The applicable Underlying Originator shall have taken or caused to be taken all steps necessary under all applicable law (including the filing of a sufficient UCC-1 Financing Statement with respect to each such Underlying Contract) in order to cause a valid, subsisting and enforceable perfected, first security interest to exist in such Underlying Contract’s favor in the Underlying Collateral securing each such Underlying Contract (other than with respect to Equipment which has a value of less than $25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under FMV Contracts) and (B) such Underlying Originator shall have assigned the perfected, first priority security interest in the Underlying Collateral referred to in clause (A) above to Originator pursuant to the applicable Pool B Contract. Such security interest is and shall be prior to all other liens upon and security interests in (i) the Underlying Originator’s in such Underlying Collateral and (ii) such Underlying Contract (and the proceeds thereof) that now exist or may hereafter arise or be created.

23.[Intentionally omitted.]

24.If the Underlying Collateral related to such Underlying Contract (other than an Underlying Contract related to a Vehicle Sublimit Pledged Receivable) includes a Vehicle, LEAF or the Servicer shall have delivered to the applicable Registrar of Titles an application for a Certificate of Title for such Vehicle which such Certificate of Title shall indicate “Morgan Stanley Bank” as the sole lienholder with respect to such Vehicle.

25.No such Underlying Contract meets any of the following criteria:

Sch. A-16

(i)any part of any Underlying Scheduled Payment (or other amount payable under the terms of the related Underlying Contract) remains unpaid for more than 120 days after the due date therefor set forth in such Underlying Contract;

(ii)the first or second Underlying Scheduled Payment is not paid in full when due under the related Underlying Contract;

(iii)any payment or other material terms of the related Underlying Contract have been modified due to credit related reasons after such Underlying Contract was acquired by the Originator pursuant to the applicable Pool B Contract;

(iv)a Bankruptcy Event has occurred with respect to the related Underlying Obligor or such Underlying Contract has been or should otherwise be deemed uncollectible by the Underlying Originator in accordance with its credit and collection policy;

(v)with respect to such Underlying Contract the Underlying Originator has repossessed the related Underlying Equipment;

(vi)any Underlying Scheduled Payment (or other amount payable under the terms of such Underlying Contract) remains unpaid for more than 30 days but not more than 120 days after the due date therefor set forth in such Underlying Contract.

26.Each such Underlying Contract is payable by an Underlying Obligor which is not subject to any bankruptcy, insolvency, reorganization or similar proceeding.

27.The information pertaining to each such Underlying Contract set forth in the Schedule of Contracts and the related Assignment is true and correct in all respects.

28.With respect to each such Underlying Contract, by the Conveyance Date on which the related Pool B Contract is Conveyed hereunder, the related Underlying Originator will have caused its master computer records relating to such Underlying Contract to be clearly and unambiguously marked to show that such Underlying Contract has been pledged to Originator.

29.[Intentionally omitted.]

30.No such Underlying Contract has been repaid, prepaid, satisfied, subordinated or rescinded, and the Underlying Collateral securing such Underlying Contract has not been released from the lien of the related Underlying Originator, in whole or in part.

31.No such Underlying Contract was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer, pledge and/or assignment of such Underlying Contract under this Agreement, the RLSA or the related Pool B Contract, and the related Underlying Originator has not entered into any agreement with any Underlying Obligor that prohibits, restricts or conditions the sale, transfer, pledge and/or assignment of such Underlying Contract.

Sch. A-17

32.No such Underlying Contract has been sold, transferred, assigned or pledged by the related Underlying Originator to any Person other than Originator. Such Underlying Originator has not taken any action to convey any right to any Person that would result in such Person having a right to payments due under any such Underlying Contract or payments received under any related Underlying Insurance Policy or otherwise to impair the rights of Originator in such Underlying Contract, any Underlying Insurance Policy or any proceeds thereof. There is an Underlying Insurance Policy in full force and effect with respect to the Equipment related to such Underlying Contract if such Equipment had an original cost over $100,000.

33.[Intentionally omitted.]

34.No such Underlying Contract is assumable by another Person in a manner which would release the Underlying Obligor thereof from such Underlying Obligor’s obligations to the Underlying Originator.

35.There has been no default, breach, violation or event permitting acceleration under the terms of any such Underlying Contract, and no condition exists or event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of any such Underlying Contract, and there has been no waiver of any of the foregoing.

36.No selection procedures adverse to Originator have been utilized in selecting any such Underlying Contract from all other similar Underlying Contracts originated or purchased by the related Underlying Originator.

37.The Underlying Collateral related to any such Underlying Contract is not subject to any Adverse Claim.

38.[Intentionally omitted.]

39.The related Underlying Originator has delivered to the Originator the sole original counterpart (or a true and correct copy) of each such Underlying Contract and such document constitutes the entire agreement of the parties thereto in respect of the related Underlying Collateral.

40.Each such Underlying Contract is in full force and effect in accordance with its terms and neither the related Underlying Originator nor the Underlying Obligor has or will have suspended or reduced any payments or obligations due or to become due thereunder by reason of a default by any other party to such Underlying Contract; there are no proceedings pending or threatened asserting insolvency of such Underlying Obligor; there are no proceedings pending or threatened wherein such Underlying Obligor, any other obligated party or any governmental agency has alleged that such Underlying Contract is illegal or unenforceable.

41.The origination and collection practices used by the related Underlying Originator with respect to each such Underlying Contract have been in all respects customary in the equipment financing and servicing business.

Sch. A-18

42.The Underlying Collateral related to each such Underlying Contract was properly delivered to the Underlying Obligor in good repair and is in proper working order. Each Underlying Obligor has accepted the related Underlying Equipment. The related Underlying Obligor is the end user of the Underlying Equipment that is the subject of any such Underlying Contract and no Underlying Obligor has sublet the Underlying Equipment to any other party.

43.The Underlying Obligor with respect to any such Underlying Contract is not a merchant with respect to the Underlying Equipment related to such Underlying Contract and is not a partner, member or Affiliate of the Underlying Originator.

44.Except with respect to a breach of an Underlying Obligor’s right of quiet enjoyment of the related Underlying Equipment, neither the operation of any of the terms of any such Underlying Contract nor the exercise by the Underlying Originator, LEAF, the Servicer or the Obligor of any right under any such Underlying Contract will render such Underlying Contract unenforceable in whole or in part nor subject to any right of rescission, setoff, claim, counterclaim or defense, and no such right of rescission, set-off, claim, counterclaim or defense, including a defense arising out of a breach of the Underlying Obligor’s right of quiet enjoyment of the Underlying Equipment, has been asserted with respect thereto.

45.The Underlying Originator has duly fulfilled all obligations on its part to be fulfilled under or in connection with the origination, acquisition and assignment of the Underlying Contract, including, without limitation, giving any notices and obtaining any consents necessary to effect, as applicable, the acquisition of the Underlying Contract by, or the pledge of the Underlying Contract to, the Originator, and has done nothing to impair the rights of Originator in the Underlying Contract or payments with respect thereto. The Underlying Originator, LEAF and the Servicer, as applicable, have duly fulfilled all continuing obligations on their part to be fulfilled under or in connection with such Underlying Contract.

46.[Intentionally omitted.]

47.The sale from the related Underlying Originator to Originator of each such Underlying Contract does not violate the terms or provisions of any agreement to which either of them is a party or by which it is bound.

48.[Intentionally omitted.]

49.The pledge of the Underlying Contract from the related Underlying Originator to Originator pursuant to the related Pool B Contract is not subject to or will result in any tax, fee or governmental charge payable by Originator or any other Person to any federal, state or local government.

50.No such Underlying Contract (other than a “true lease”) may be (i) an executory contract or (ii) in any event, deemed to be an executory contract or unexpired lease subject to rejection by an Underlying Obligor under Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect to such Underlying Obligor.

51.Each such Underlying Contract contains enforceability provisions (i) permitting the acceleration of the payments thereunder if the Underlying Obligor is in default

Sch. A-19

under such Underlying Contract and (ii) sufficient to enable the related Underlying Originator (or any assignee thereof) to repossess or foreclose upon the Underlying Collateral related thereto.

52.Each such Underlying Contract generally contains provisions requiring the payment of both interest and principal (or, in the case of an Underlying Lease Contract, lease payments) in each calendar month or quarter during the term of such Underlying Contract.

53.The promissory note, if any, related to each such Underlying Contract (i) was payable to the related Underlying Originator immediately prior to its transfer to Originator pursuant to the related Pool B Contract and has not been endorsed by the related Underlying Originator to any Person other than Originator.

54.The final Underlying Scheduled Payment required by each such Underlying Contract is less than or equal to the Discounted Balance of such Underlying Contract at the time of origination.

55.The Underlying Collateral related to such Underlying Contract is not one or more Vehicles regularly engaged in the long-haul transportation of goods.

56.The related Underlying Originator is not a guarantor under any Underlying Contract.

57.The vendor of the Underlying Equipment relating to such Underlying Contract has received payment in full from the Underlying Obligor prior to the pledge of such Underlying Contract under the related Pool B Contract and has no remaining obligations with respect to such Underlying Equipment except for any applicable warranty.

Sch. A-20

SCHEDULE B

PRIOR NAMES, TRADE NAMES, FICTITIOUS NAMES

AND “DOING BUSINESS AS” NAMES OF LEAF

[None.]

Sch. B-1

SCHEDULE C- I

SCHEDULE OF POOL A RECEIVABLES

None.

Sch. C-1

SCHEDULE C-2

SCHEDULE OF POOL B RECEIVABLES

None.

Sch. C-2

PURCHASE AND SALE AGREEMENT

between

LEAF FUNDING, INC.

and

RESOURCE CAPITAL FUNDING II, LLC

Dated as of October 31, 2006

TABLE OF CONTENTS

			Page
ARTICLE I      DEFINITIONS			1
	SECTION 1.1	General	1
	SECTION 1.2	Specific Terms	1
	SECTION 1.3	Certain References	2
ARTICLE II   CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY			4
	SECTION 2.1	Conveyance of the Receivables and the Other Conveyed Property	4
ARTICLE III    CONDITIONS OF CONVEYANCE			7
	SECTION 3.1	Conditions Precedent to the Initial Conveyance	7
	SECTION 3.2	Conditions Precedent to All Conveyances	8
ARTICLE IV    REPRESENTATIONS AND WARRANTIES			9
	SECTION 4.1	Representations and Warranties of LEAF	9
	SECTION 4.2	Representations and Warranties of the Purchaser	14
	SECTION 4.3	Indemnification	16
ARTICLE V    COVENANTS OF LEAF			18
	SECTION 5.1	Protection of Title of the Purchaser	18
	SECTION 5.2	Other Liens or Interests	20
	SECTION 5.3	Costs and Expenses	20
	SECTION 5.4	Financial Covenants	21
ARTICLE VI    PURCHASES BY LEAF			21
	SECTION 6.1	Purchase of Receivables Upon Breach of Warranty	21
	SECTION 6.2	Reassignment of Purchased Receivables	21
	SECTION 6.3	Waivers	22

  

i

			Page
ARTICLE VII      MICELLANEOUS			22
	SECTION 7.1	Liability of LEAF	22
	SECTION 7.2	Limitation on Liability of LEAF and Others	23
	SECTION 7.3	Amendment	23
	SECTION 7.4	Notices	23
	SECTION 7.5	Merger and Integration	23
	SECTION 7.6	Severability of Provisions	24
	SECTION 7.7	Governing Law	24
	SECTION 7.8	Counterparts	24
	SECTION 7.9	Non-petition Covenant	24
	SECTION 7.10	Binding Effect; Assignability	24
	SECTION 7.11	Third Party Beneficiary	25
	SECTION 7.12	Term	25
EXHIBIT A		FORM OF ASSIGNMENT
SCHEDULE A		REPRESENTATIONS AND WARRANTIES OF LEAF WITH RESPECT TO RECEIVABLES REFERRED TO IN ANY ASSIGNMENT
SCHEDULE B		PRIOR NAMES, TRADENAMES, FICTITIOUS NAMES AND “DOING BUSINESS AS” NAMES OF LEAF
SCHEDULE C-1		SCHEDULE OF POOL A RECEIVABLES
SCHEDULE C-2		SCHEDULE OF POOL B RECEIVABLES

ii

EX-10.16C

EXECUTION COPY

FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT

THIS FIRST AMENDMENT TO THE PURCHASE AND SALE AGREEMENT, dated as December 21, 2006 (this “Amendment”), is entered into by LEAF Funding, Inc., a Delaware corporation (“LEAF”) and Resource Capital Funding II, LLC, a Delaware limited liability company (the “Purchaser”).

RECITALS

A.LEAF and the Purchaser are parties to the Purchase and Sale Agreement, dated as of October 31, 2006 (as amended, supplemented or otherwise modified from time to time, the “Agreement”);

B.The parties hereto desire to amend the Agreement on the terms and conditions set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Certain Defined Terms. Capitalized terms used but not defined herein shall have the meanings set forth for such terms in Section 1.2 of the Agreement.

2.Amendments to the Agreement. The Agreement is hereby amended to incorporate the changes reflected on Exhibit A hereto.

3.Effect of Amendment. Except as expressly amended and modified by this Amendment, all provisions of the Agreement shall remain in full force and effect. After the date hereof, all references in the Agreement to “this Agreement”, “hereof”, or words of similar effect referring to such Agreement shall be deemed to be references to the Agreement as amended by this Amendment. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Agreement other than as set forth herein.

4.Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.

5.Governing Law. This Amendment shall be governed by, and construed in accordance with, the law of the State of New York without regard to any otherwise applicable principles of conflicts of law.

6.Section Headings. The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof.

Signature pages follow

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

LEAF FUNDING, INC.

By:______________________________

Name:

Title:

RESOURCE CAPITAL FUNDING II, LLC

as Purchaser

By:______________________________

Name:

Title:

Exhibit A

AMENDMENTS

EX-10.16D

MORGAN STANLEY BANK

October [__],31, 2006

Resource Capital Funding II, LLC

c/o Resource Capital Corp.

1845 Walnut Street, 10th Floor

Philadelphia, PA 19103

Re:Fee Letter

Ladies and Gentlemen:

Reference is made to the Receivables Loan and Security Agreement dated as of the date hereof (as such may be amended, restated and/or otherwise modified from time to time, the “RLSA”) among Resource Capital Funding II, LLC, as Borrower (the “Borrower”), LEAF Financial Corporation (“LEAF Financial”), as Servicer, Morgan Stanley Bank (“Morgan Stanley”) and the other Lenders party thereto from time to time, U.S. Bank National Association, as Custodian and the Lender’s Bank, and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services). Terms defined in the RLSA are used in this fee letter as therein defined.

This fee letter is the fee letter referred to in Section 2.08(a) of the RLSA and sets forth the understanding of the parties hereto with respect to certain fees that are payable by the Borrower in connection with the financing provided by the Lenders pursuant to the RLSA.

The parties hereto agree as follows:

l.Resource Capital Corp. hereby agrees to pay to Morgan Stanley, a one-time, up-front, fully-earned and non-refundable due diligence fee (the “Due Diligence Fee”), in the amount of $25,000. The parties hereto acknowledge that the Due Diligence Fee shall be paid prior to the initial Borrowing and the Borrower shall receive a credit against the Arrangement Fee equal to any portion of the Due Diligence Fee not applied to the out-of-pocket expenses of Morgan Stanley.

2.The Borrower hereby agrees to pay to Morgan Stanley a fee (the “Arrangement Fee”) in the amount of $500,000, which such fee shall have been earned, in its entirety, as of the date hereof. The Arrangement Fee is payable in four (4) equal installments according to the following schedule: 1^st payment of $125,000 (minus the amount of the Due Diligence Fee not applied to the out-of-pocket expenses of Morgan Stanley) on

1

October 15, 2006; 2^nd payment of $125,000 on January 15, 2007; 3^rd payment of $125,000 on April 15, 2006; and 4^th payment of $125,000 on July 15, 2007.

3.The Borrower hereby agrees that, in the event that the Lender increases the Borrowing Limit pursuant to Section 2.16 of the RLSA, the Borrower shall pay to the Agent, for its own account, immediately prior to the effectiveness of such increase, a fee (the “Increase Fee”) in an amount equal to 0.20% of the principal amount of such increase, which such fee shall have been earned, in its entirety, on the date of such increase.

4.(a)During the period commencing on the date hereof and ending on the Collection Date, the Borrower shall pay Morgan Stanley, a fee (the “Unused Fee”) in respect of each Fee Period (other than the Fee Period commencing on the date hereof and the five following Fee Periods) which shall be equal to (A) 0.10%, if the Facility Amount is equal to or less than $100,000,000, and 0.25%, if the Facility Amount is greater than $100,000,000, multiplied by (B) an amount equal to (i) the Borrowing Limit (or, if more than one Borrowing Limit was in effect during such Fee Period, the daily average Borrowing Limit) in effect during such Fee Period minus (ii) the daily average Facility Amount during such Fee Period, as determined by the Lender, multiplied by (C) a fraction, the numerator of which shall be the actual number of days in such Fee Period and the denominator of which shall be 360 days.

(b)The Unused Fee shall be payable by the Borrower in arrears on each Remittance Date commencing on the seventh (7^th) Remittance Date after the Closing Date with respect to the Fee Period immediately preceding such Remittance Date, and on the Collection Date. The Unused Fee shall not be payable with respect to any Fee Period during interest in respect of the Loans Outstanding is computed by reference to the Default Funding Rate.

5.If the Borrower exercises its right to prepay, in whole or in part, the outstanding principal amount of the Loans in accordance with Section 2.15 of the RLSA, the Borrower shall pay Morgan Stanley a fee (the “Prepayment Premium”) in an amount equal to 0.50% multiplied by the Facility Amount. Notwithstanding the foregoing, such Prepayment Premium shall be credited against any fees paid to Morgan Stanley in connection with a securitization transaction.

6.Whenever any payment hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of such payment; provided, that no day shall be included in more than one Fee Period.

7.For all purposes under the RLSA, “Adjusted Eurodollar Rate Margin” shall mean (a) prior to the date the Facility Amount first exceeds $100,00,000,100,000,000, 0.60% per annum and (b) on or after the date the Facility Amount first exceeds $100,000,000, 0.75% per annum.

8.Unless otherwise required by applicable law, each party hereto agrees to maintain the confidentiality of this fee letter in communications with third parties and otherwise; provided, that, this fee letter may be disclosed by each party to its respective legal counsel and auditors, any rating agency and any provider of liquidity support or credit enhancement, if they

2

agree to hold it confidential. The terms and provisions of this fee letter shall be binding upon, and shall inure to the benefit of, the successors and assigns of the parties hereof. THIS FEE LETTER SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

[Remainder of page intentionally left blank.]

3

This fee letter may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this fee letter by facsimile shall be effective as delivery of a manually executed counterpart of this fee letter.

Very truly yours,

MORGAN STANLEY BANK, as Lender

By:________________________________

Name:

Title:

Agreed and accepted as of

the date first above written:

RESOURCE CAPITAL FUNDING II, LLC,

as Borrower

By:___________________________

Name:

Title:

S-1

EX-10.17

SECOND AMENDMENT TO CREDIT AGREEMENT

This SECOND AMENDMENT TO CREDIT AGREEMENT (the “Second Amendment”) dated December __, 2006, is by and among LEAF FINANCIAL CORPORATION, a Delaware corporation (“LEAF Financial”), and LEAF FUNDING, INC., a Delaware corporation (“LEAF Funding” and together with LEAF Financial, each individually a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the various financial institutions and other Persons parties hereto (the “Lenders”), and National City Bank, as administrative agent and collateral agent for the Lenders (in such capacity, the “Agent”).

BACKGROUND

A.Pursuant to that certain Credit Agreement dated July 31, 2006, by and among the Borrowers, the Lenders, and the Agent, as amended by a First Amendment dated August 14, 2006 (as the same may be modified and amended from time to time, including by this Second Amendment, the “Credit Agreement”), the Lenders agreed, inter alia, to extend to the Borrowers a revolving credit facility in the maximum aggregate principal amount of $150,000,000.

B.The Borrowers have requested an amendment to the Credit Agreement permitting certain Investments, to which the Lenders are willing to agree, on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

1.Definitions.

(a)General Rule. Except as expressly set forth herein, all capitalized terms used and not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement.

(b)Additional Definition. The following additional definitions shall be added to Article 1 of the Credit Agreement to read in its entirety as follows:

“Second Amendment” means the Second Amendment to this Agreement dated December __, 2006.

(c)Amended Definition. The following definition in Article 1 of the Credit Agreement shall be amended and restated to read in its entirety as follows:

“Adjusted Tangible Net Worth” means, as of any date, (a) the sum on such date of (i) Tangible Net Worth, and (ii) Subordinated Debt, less (b) the portion of Tangible Net Worth attributable to the value of any LEAF SPE.

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  2.Amendment to Section 6.8. Section 6.8 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Section 6.8Subsidiaries. The Borrowers have no Subsidiaries, except those Subsidiaries described on Schedule 6.8 hereto and those which are permitted to be organized in accordance with Section 10.4. Schedule 6.8 hereto sets forth the capitalization of each of the Borrowers as of the date of the Second Amendment.”

3.Amendment to Section 10.4. Subsection 10.4(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“(a) Investments identified on Schedule 6.8 or Schedule 10.4, together with any future transfers of Investments described on Schedule 6.8, subject to the additional covenants set forth on Schedule 6.8;”

4.Amendment to Schedule 6.8. Schedule 6.8 to the Credit Agreement is hereby amended and restated in its entirety with Schedule 6.8 attached hereto.

5.Amendment to Guaranty. All references to “Adjusted Net Worth” in the Guaranty are hereby amended and restated in their entirety to be references to “Adjusted Tangible Net Worth”.

6.Representations and Warranties. Each Borrower hereby represents and warrants to the Agent and each Lender that, as to such Borrower:

(a)Representations. each of the representations and warranties of such Borrower contained in the Credit Agreement and/or the other Credit Documents are true, accurate and correct in all material respects on and as of the date hereof as if made on and as of the date hereof, except to the extent such representation or warranty was made as of a specific date;

(b)Power and Authority. (i) such Borrower has the power and authority under the laws of its jurisdiction of organization and under its organizational documents to enter into and perform this Second Amendment and any other documents which the Lenders require such Borrower to deliver hereunder (this Second Amendment and any such additional documents delivered in connection with the Second Amendment are herein referred to as the “Amendment Documents”); and (ii) all actions, corporate or otherwise, necessary or appropriate for the due execution and full performance by the Borrower of this Second Amendment have been adopted and taken and, upon their execution, the Credit Agreement, as amended by this Second Amendment will constitute the valid and binding obligations of the Borrower enforceable in accordance with their respective terms (except as may be limited by applicable insolvency, bankruptcy, moratorium, reorganization, or other similar laws affecting enforceability of creditors’ rights generally and the availability of equitable remedies);

(c)No Violations of Law or Agreements. the making and performance of this Second Amendment will not violate any provisions of any law or regulation, federal, state,

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local, or foreign, or the organizational documents of such Borrower, or result in any breach or violation of, or constitute a default or require the obtaining of any consent under, any agreement or instrument by which such Borrower or its property may be bound;

(d)No Default. no Default or Event of Default has occurred and is continuing; and

(e)No Material Adverse Effect. no Material Adverse Effect has occurred since July 31, 2006.

7.Conditions to Effectiveness of Amendment. This Second Amendment shall be effective upon the Agent’s receipt of the following, each in form and substance reasonably satisfactory to the Lenders:

(a)Second Amendment. this Second Amendment, duly executed by the Borrowers and the Lenders;

(b)Consent and Waivers. copies of any consents or waivers necessary in order for the Borrowers to comply with or perform any of its covenants, agreements or obligations contained in any agreement, which are required as a result of the Borrowers’ execution of this Second Amendment, if any; and

(c)Other Documents and Actions. such additional agreements, instruments, documents, writings and actions as the Lenders may reasonably request.

8.No Waiver; Ratification. The execution, delivery and performance of this Second Amendment shall not operate as a waiver of any right, power or remedy of the Agent or the Lenders under the Credit Agreement or any Credit Document, or constitute a waiver of any provision thereof. Except as expressly modified hereby, all terms, conditions and provisions of the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed by any Borrower. Nothing contained herein constitutes an agreement or obligation by the Agent or any Lender to grant any further amendments to any of the Credit Documents.

9.Acknowledgments. To induce the Lenders to enter into this Second Amendment, each Borrower acknowledges, agrees, warrants, and represents that:

(a)Acknowledgment of Obligations; Collateral; Waiver of Claims. (i) the Credit Documents are valid and enforceable against, and all of the terms and conditions of the Credit Documents are binding on, the Borrowers; (ii) the liens and security interests granted to the Agent by the Borrowers pursuant to the Credit Documents are valid, legal and binding, properly recorded or filed and first priority perfected liens and security interests; and (iii) the Borrowers hereby waive any and all defenses, set-offs and counterclaims which they, whether jointly or severally, may have or claim to have against the Agent or any Lender as of the date hereof; and

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    (b)No Waiver of Existing Defaults. no Default or Event of Default exists immediately before or immediately after giving effect to this Second Amendment. Nothing in this Second Amendment nor any communication between the Agent, any Lender, any Borrower or any of their respective officers, agents, employees or representatives shall be deemed to constitute a waiver of (i) any Default or Event of Default arising as a result of the foregoing representation proving to be false or incorrect in any material respect; or (ii) any rights or remedies which the Agent or any Lender has against any Borrower under the Credit Agreement or any other Credit Document and/or applicable law, with respect to any such Default or Event of Default arising as a result of the foregoing representation proving to be false or incorrect in any material respect.

10.Binding Effect. This Second Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

11.Governing Law. This Second Amendment and all rights and obligations of the parties hereunder shall be governed by and be construed and enforced in accordance with the laws of the internal laws of the Commonwealth of Pennsylvania.

12.Headings. The headings of the sections of this Second Amendment are inserted for convenience only and shall not be deemed to constitute a part of this Second Amendment.

13.Counterparts. This Second Amendment may be executed in any number of counterparts with the same affect as if all of the signatures on such counterparts appeared on one document and each counterpart shall be deemed an original.

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 IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to Credit Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above.

LEAF FINANCIAL CORPORATION

By: ________________________________

Name:

Title:

LEAF FUNDING, INC.

By: ________________________________

Name:

Title:

ACKNOWLEDGEMENT OF GUARANTORS

The undersigned, each by its elected officer duly authorized as of the date set forth below, having previously executed and delivered to the Agent, pursuant to the Credit Agreement (the “Credit Agreement”) being amended by this Second Amendment (the “Second Amendment”), that certain Guaranty and Suretyship Agreement, dated July 31, 2006, (the “Guaranty”), securing the Obligations under the Credit Agreement, does hereby consent and agree to the above terms and conditions of this Second Amendment, together with the First Amendment, including, without limitation, specifically as to Section 5 of the Second Amendment amending the Guaranty, and confirms that the Guaranty is in full force and effect, without any setoff, counterclaim, deduction or other claim of avoidance of any nature (except as therein expressly provided).

RESOURCE AMERICA, INC.

By: _________________________

Name:

Title:

RESOURCE LEASING, INC.

By: _________________________

Name:

Title:

Dated this December __, 2006

Borrowers Signature Page

Second Amendment to Credit Agreement

NATIONAL CITY BANK,

as Agent, Swingline Lender and as a Lender

By: ________________________________

Name:

Title:

Lender Signature Page

Second Amendment to Credit Agreement

HSH NORDBANK AG, NEW YORK BRANCH

By: ________________________________

Name:

Title:

By: ________________________________

Name:

Title:

Lender Signature Page

Second Amendment to Credit Agreement

SOVEREIGN BANK

By: ________________________________

Name:

Title:

Lender Signature Page

Second Amendment to Credit Agreement

LASALLE BANK NATIONAL ASSOCIATION

By: ________________________________

Name:

Title:

Lender Signature Page

Second Amendment to Credit Agreement

COMMERCE BANK, N.A.

By: ________________________________

Name:

Title:

Lender Signature Page

Second Amendment to Credit Agreement

WACHOVIA BANK, NATIONAL ASSOCIATION

By: ________________________________

Name:

Title:

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Jonathan Z. Cohen, certify that:

1)   I have reviewed this report on Form 10-Q for the quarterly period ended December 31, 2006 of Resource America, Inc.;

2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5)   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jonathan Z. Cohen

Jonathan Z. Cohen

Chief Executive Officer

February 5, 2007

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Steven J. Kessler, certify that:

1)   I have reviewed this report on Form 10-Q for the quarterly period ended December 31, 2006 of Resource America, Inc.;

2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4)   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5)   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Steven J. Kessler

Steven J. Kessler

Executive Vice President and Chief Financial Officer

February 5, 2007

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource America, Inc. (the "Company") on Form 10-Q for the quarterly period ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jonathan Z. Cohen, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jonathan Z. Cohen

Jonathan Z. Cohen

Chief Executive Officer

February 5, 2007

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource America, Inc. (the "Company") on Form 10-Q for the quarterly period ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steven J. Kessler, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven J. Kessler

Steven J. Kessler

Executive Vice President and Chief Financial Officer

February 5, 2007