10-Q

`UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2011

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)

(215) 546-5005

(Registrant's telephone number, including area code)

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

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

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

Large accelerated filer	¨		Accelerated filer	R
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

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

The number of outstanding shares of the registrant’s common stock on February 2, 2012 was 19,647,622 shares.

RESOURCE AMERICA, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q

		PAGE
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets – December 31, 2011 (unaudited) and September 30, 2011	3
	Consolidated Statements of Operations − Three Months Ended December 31, 2011 and 2010 (unaudited)	4
	Consolidated Statement of Changes in Equity − Three Months Ended December 31, 2011 (unaudited)	5
	Consolidated Statements of Cash Flows − Three Months Ended December 31, 2011 and 2010 (unaudited)	6
	Notes to Consolidated Financial Statements – December 31, 2011 (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46
Item 4.	Controls and Procedures	46
PART II	OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6.	Exhibits	47
SIGNATURES		49

PART I.                      FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RESOURCE AMERICA, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31,			September 30,
	2011			2011
	(unaudited)
ASSETS
Cash	$	12,803		$	24,455
Restricted cash		607			20,257
Receivables		479			1,981
Receivables from managed entities and related parties, net		54,348			54,815
Investments in commercial finance, net		−			192,012
Investments in real estate		19,100			18,998
Investment securities, at fair value		17,330			15,124
Investments in unconsolidated entities		13,197			12,710
Property and equipment, net		4,294			7,942
Deferred tax assets, net		47,184			51,581
Goodwill		−			7,969
Other assets		8,993			14,662
Total assets	$	178,335		$	422,506
LIABILITIES AND EQUITY
Liabilities:
Accrued expenses and other liabilities	$	29,327		$	40,887
Payables to managed entities and related parties		275			1,232
Borrowings		28,471			222,659
Total liabilities		58,073			264,778
Commitments and contingencies
Equity:
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none outstanding		−			−
Common stock, $.01 par value, 49,000,000 shares authorized; 28,779,998 and 28,779,998 shares issued, respectively (including nonvested restricted stock of 644,723 and 649,007, respectively)		281			281
Additional paid-in capital		281,357			281,686
Accumulated deficit		(48,416	)		(48,032	)
Treasury stock, at cost; 9,313,932 and 9,126,966 shares, respectively		(99,775	)		(98,954	)
Accumulated other comprehensive loss		(13,504	)		(14,613	)
Total stockholders’ equity		119,943			120,368
Noncontrolling interests		319			37,360
Total equity		120,262			157,728
	$	178,335		$	422,506

The accompanying notes are an integral part of these statements

3

RESOURCE AMERICA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended
	December 31,
	2011			2010
REVENUES:
Real estate	$	8,666		$	6,874
Financial fund management		6,579			8,330
Commercial finance		3,419			1,476
		18,664			16,680
COSTS AND EXPENSES:
Real estate		7,192			5,461
Financial fund management		5,804			6,720
Commercial finance		1,963			4,273
General and administrative		2,896			3,116
Gain on sale of leases and loans		(37	)		(11	)
Provision for credit losses		2,250			1,606
Depreciation and amortization		2,061			1,125
		22,129			22,290
OPERATING LOSS		(3,465	)		(5,610	)
OTHER INCOME (EXPENSE):
Gain on sale of management contract		−			6,520
Gain on deconsolidation of LEAF		8,749			−
Loss on extinguishment of debt		(2,190	)		−
Gain (loss) on sale of investment securities, net		58			(1,461	)
Interest expense		(2,974	)		(2,369	)
Other income, net		559			1,086
		4,202			3,776
Income (loss) from continuingoperations before taxes		737			(1,834	)
Income tax provision (benefit)		154			(642	)
Income (loss) from continuing operations		583			(1,192	)
Loss from discontinued operations, net of tax		(20	)		−
Net income (loss)		563			(1,192	)
Add: net (income) loss attributable to noncontrolling interests		(378	)		625
Net income (loss) attributable to common shareholders	$	185		$	(567	)
Amounts attributable to common shareholders:
Income (loss) from continuing operations	$	205		$	(567	)
Discontinued operations		(20	)		−
Net income (loss)	$	185		$	(567	)
Basic income (loss) per share:
Continuing operations	$	0.01		$	(0.03	)
Discontinued operations		−			−
Net income (loss)	$	0.01		$	(0.03	)
Weighted average shares outstanding		19,641			19,076
Diluted income (loss) per share:
Continuing operations	$	0.01		$	(0.03	)
Discontinued operations		−			−
Net income (loss)	$	0.01		$	(0.03	)
Weighted average shares outstanding		20,039			19,076
Dividends declared per common share	$	0.03		$	0.03

The accompanying notes are an integral part of these statements

4

RESOURCE AMERICA, INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

THREE MONTHS ENDED DECEMBER 31, 2011

(in thousands)

(unaudited)

	Attributable to Common Shareholders
												Accumulated
			Additional									Other			Total
	Common		Paid-In			Accumulated			Treasury			Comprehensive			Stockholders’			Noncontrolling			Total			Comprehensive
	Stock		Capital			Deficit			Stock			(Loss) Income			Equity			Interests			Equity			Income
Balance, October 1, 2011	$	281	$	281,686		$	(48,032	)	$	(98,954	)	$	(14,613	)	$	120,368		$	37,360		$	157,728
Net income		−		−			185			−			−			185			378			563		$	563
Treasury shares issued		−		(70	)		−			118			−			48			−			48
Stock-based compensation		−		450			−			−			−			450			−			450
Repurchases of common stock		−		−			−			(939	)		−			(939	)		−			(939	)
Cash dividends		−		−			(569	)		−			−			(569	)		−			(569	)
Contribution		−		−			−			−			−			−			85			85
Deconsolidation of LEAF (see Note 1)		−		(709	)		−			−			−			(709	)		(37,553	)		(38,262	)
Other comprehensive income		−		−			−			−			1,109			1,109			49			1,158			1,158
Balance, December 31, 2011	$	281	$	281,357		$	(48,416	)	$	(99,775	)	$	(13,504	)	$	119,943		$	319		$	120,262		$	1,721

The accompanying notes are an integral part of this statement

5

RESOURCE AMERICA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended December 31,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	563		$	(1,192	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		3,087			1,911
Provision for credit losses		2,250			1,606
Equity in earnings of unconsolidated entities		(557	)		(1,427	)
Distributions from unconsolidated entities		1,163			663
Gain on sale of leases and loans		(37	)		(11	)
(Gain) loss on sale of loans and investment securities, net		(58	)		1,461
Gain on deconsolidation of LEAF		(8,749	)		−
Loss on extinguishment of debt		2,190			−
Gain on sale of management contract		−			(6,520	)
Deferred income tax provision		154			422
Equity-based compensation issued		498			781
Equity-based compensation received		−			(57	)
Changes in operating assets and liabilities		(1,412	)		(611	)
Net cash used in operating activities		(908	)		(2,974	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(106	)		(38	)
Payments received on real estate loans and real estate		1,550			−
Investments in unconsolidated real estate entities		(127	)		(283	)
Purchase of commercial finance assets		(18,483	)		(10,690	)
Principal payments received on leases and loans		9,031			−
Cash divested in deconsolidation of LEAF		(2,284	)		−
Proceeds from sale of management contract		−			9,095
Purchase of loans and investments		(600	)		−
Proceeds from sale of loans and investments		207			2,946
Net cash (used in) provided by investing activities		(10,812	)		1,030
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings		128,845			1,000
Principal payments on borrowings		(123,823	)		(1,908	)
Dividends paid		(569	)		(551	)
Repurchase of common stock		(939	)		−
Preferred stock dividends paid by LEAF to RCC		(188	)		−
Payment of debt financing costs		(1,839	)		−
(Increase) decrease in restricted cash		(633	)		6,617
Other		(411	)		73
Net cash provided by financing activities		443			5,231
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating activities		(375	)		−
Net cash used in discontinued operations		(375	)		−
(Decrease) increase in cash		(11,652	)		3,287
Cash at beginning of year		24,455			11,243
Cash at end of period	$	12,803		$	14,530

The accompanying notes are an integral part of these statements

6

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(unaudited)

NOTE 1 – ORGANIZATION AND BASIS OF QUARTERLY PRESENTATION

Resource America, Inc. (the "Company") (NASDAQ: REXI) is a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its real estate,  financial fund management, and commercial finance operating segments.  As a specialized asset manager, the Company seeks to develop investment funds for outside investors for which the Company provides asset management services, typically under long-term management and operating arrangements either through a contract with, or as the manager or general partner of, the sponsored fund.  The Company limits its investment funds to investment areas where it owns existing operating companies or has specific expertise.  The Company manages assets on behalf of institutional and individual investors and Resource Capital Corp. (“RCC”) (NYSE: RSO), a diversified real estate finance company that qualifies as a real estate investment trust (“REIT”).

LEAF Commercial Capital, Inc. (“LEAF”).  In January 2011, the Company formed LEAF to conduct its equipment lease origination and servicing operations and to obtain outside equity and debt financing sources.  LEAF Financial Corporation retained the management of the four equipment leasing partnerships, which are sub-serviced by LEAF. On November 16, 2011, the Company and LEAF, together with RCC, entered into a stock purchase agreement and related agreements (collectively the “November 2011 LCC Transaction”) with Eos Partners, L.P., a private investment firm, and its affiliates (“Eos”).  Pursuant to the November 2011 LCC Transaction, Eos invested $50.0 million in cash in LEAF in exchange for 50,000 shares of newly-issued 12% Series A Participating Preferred Stock (the “Series A Preferred Stock”) and warrants to purchase 2,954 shares of LEAF common stock for an exercise price of $0.01 per share, collectively representing, on a fully-diluted basis, a 45.1% interest in LEAF.  In exchange for its prior interest in LEAF, RCC received 31,341 shares of Series A Preferred Stock, 4,872 shares of newly-issued 8% Series B Redeemable Preferred Stock (the “Series B Preferred Stock”) and 2,364 shares of newly-issued Series D Redeemable Preferred Stock (the “Series D Preferred Stock”), collectively representing, on a fully-diluted basis, a 26.7% interest in LEAF.  The Company retained 18,414 shares of LEAF common stock, representing a fully-diluted interest of 15.7%, and senior management of LEAF maintained a 10% fully-diluted interest.  As a result of the November 2011 LCC Transaction, the Company deconsolidated LEAF (see Note 3) and has accounted for its investment in LEAF on the equity method beginning on November 17, 2011.

The Company utilized several approaches, including discounted expected cash flows, market approach and comparable sales transactions to estimate the fair value of its investment in LEAF as a result of the transaction.  These approaches required assumptions and estimates of many critical factors, including revenue and market growth, operating cash flows, market multiples, and discount rates, which were based on the current economic environment and credit market conditions.  The Company’s investment in LEAF was valued at $1.7 million based on a third-party valuation.  Accordingly, the Company recorded a gain of $8.7 million in conjunction with the transaction and resulting deconsolidation of LEAF.  Based upon terms in the November 2011 LCC Transaction, the Company calculated its share of losses incurred by LEAF for the period November 17, 2011 to December 31, 2011 using the equity method of accounting based upon its share of common stock ownership of LEAF during that period.

On December 29, 2011, the Company entered into a sale and purchase agreement and related agreements, collectively the (“SPA”), with CVC Capital Partners SICAV-FIS, S.A. (“CVC”), pursuant to which the Company will sell 100% of the common equity interests of Apidos Capital Management, LLC (“Apidos”), its CLO management subsidiary, to CVC in exchange for (i) $25 million in cash, (ii) a 33% limited partner interest in CVC Credit Partners, L.P, a newly-formed Cayman Islands limited partnership to be jointly owned by the Company and CVC (the “Partnership”), and (iii) a 33% interest in the Partnership’s general partner, a Jersey corporation (“the General Partner”).  Prior thereto, CVC will have contributed to the Partnership its credit management subsidiary, CVC Cordatus Group Limited (“Cordatus”). The Company will retain a preferred equity interest in Apidos, which will entitle the Company to receive distributions from the Partnership equal to 75% of the incentive management fees from the legacy Apidos portfolios. Consummation of the transactions contemplated by the SPA is subject to UK Financial Services Authority and Jersey Financial Services Commission approvals and receipt of certain third-party consents and rating agency confirmations that the transaction will not lead to a downgrade of some of the Apidos CLO obligations.  If the regulatory approvals are not obtained by May 31, 2012, the SPA will automatically terminate.

7

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements reflect the Company’s accounts and the accounts of the Company’s majority-owned and/or controlled subsidiaries.  The Company also consolidates entities that are variable interest entities (“VIEs”) where it has determined that it is the primary beneficiary of such entities.  Once it is determined that the Company holds a variable interest in a VIE, management performs a qualitative analysis to determine (i) if the Company has the power to direct the matters that most significantly impact the VIE’s financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE.  If the Company’s variable interest possesses both of these characteristics, the Company is deemed to be the primary beneficiary and would be required to consolidate the VIE. This assessment must be done on an ongoing basis. The portions of these entities that the Company does not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements.

Variable interests in the Company’s real estate segment have historically related to subordinated financings in the form of mezzanine loans or unconsolidated real estate interests.  As of December 31 and September 30, 2011, the Company had one such variable interest in an entity that it consolidated.  The Company will continually assess its involvement with VIEs and reevaluate the requirement to consolidate them.  See Note 8 for additional disclosures pertaining to VIEs.

All intercompany transactions and balances have been eliminated in the Company’s consolidated financial statements.

Financing Receivables

Receivables from Managed Entities.  The Company performs a review of the collectability of its receivables from managed entities on a quarterly basis.  The Company analyzes the expected future cash flows of the managed entity.  With respect to receivables from its commercial finance investment partnerships, this takes into consideration several assumptions by management, specifically concerning estimates of future bad debts and recoveries.  For receivables from the real estate investment entities for which there are uncertainties regarding collectability, the Company estimates the cash flows through the sale of the underlying properties, which is based on projected net operating income as a multiple of published capitalization rates, which is then reduced by the underlying mortgage balances and priority distributions due to the investors in the entity.  The Company will record an allowance against the related receivable from managed entities to the extent that the estimated cash flows are insufficient to fully recover its receivable balance.

Recent Accounting Standards

Accounting Standards Issued But Not Yet Effective

The Financial Accounting Standards Board (“FASB”) has issued the following guidance that is not yet effective for the Company as of December 31, 2011:

Comprehensive income (loss).  In June 2011, the FASB issued an amendment to eliminate the option to present components of other comprehensive income (loss) as part of the statement of changes in stockholders’ equity.  The amendment requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income (loss) or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income (loss) and its components followed consecutively by a second statement that should present total other comprehensive income (loss), the components of other comprehensive income (loss), and the total of comprehensive income (loss).  In December 2011, the FASB updated the guidance to defer the requirement related to the presentation of reclassification adjustments.  The Company plans to provide the disclosures as required by this amendment beginning October 1, 2012.

8

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

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

Accounting Standards Issued But Not Yet Effective – (Continued)

Fair value measurements.  In May 2011, the FASB issued an amendment to revise the wording used to describe the requirements for measuring fair value and for disclosing information about fair value measurements.  For many of the requirements, the FASB does not intend for the amendments to result in a change in the application of the current requirements.  Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements, such as specifying that the concepts of highest and best use and valuation premise in a fair value measurement are relevant only when measuring the fair value of nonfinancial assets.  Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements such as specifying that, in the absence of a Level 1 input, a reporting entity should apply premiums or discounts when market participants would do so when pricing the asset or liability. This guidance will become effective for the Company beginning January 1, 2012 and is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 3 − SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents supplemental cash flow information (in thousands) (unaudited):

	Three Months Ended December 31,
	2011			2010
Cash paid during the period for:
Interest	$	2,077		$	1,563
Income taxes		118			19
Non-cash effects from the deconsolidation of LEAF: (1)
Cash	$	2,284		$	−
Restricted cash		20,282			−
Receivables		954			−
Receivables from managed entities and related parties, net		(3,411	)		−
Investments in commercial finance assets, net		199,955			−
Investments in unconsolidated entities		7,049			−
Property and equipment, net		3,754			−
Deferred tax assets, net		4,558			−
Goodwill		7,969			−
Other assets		6,806			−
Accrued expense and other liabilities		(10,208	)		−
Payables to managed entities and related parties		(98	)		−
Borrowings		(202,481	)		−
Accumulated other comprehensive loss		255			−
Noncontrolling interests		(37,668	)		−

(1) As a result of the deconsolidation of LEAF during the three months ended December 31, 2011, the amounts set forth above were removed from the Company’s consolidated balance sheets.  The sum of the assets removed equates to the sum of the liabilities and equity that were similarly eliminated and, as such, there was no change in net assets.

9

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 4 – FINANCING RECEIVABLES

The following tables reflect the aging of the Company’s past due financing receivables, gross of allowances for credit losses (1) (in thousands):

	30-89 Days Past Due		Greater Than 90 Days		Greater Than 181 Days		Total Past Due		Current		Total
As of December 31, 2011:
Receivables from managed entities and related parties: (1)
Commercial finance investment entities	$	−	$	−	$	37,801	$	37,801	$	271	$	38,072
Real estate investment entities		1,176		1,683		14,282		17,141		5,309		22,450
Financial fund management entities		119		218		28		365		2,360		2,725
RCC		1,855		−		−		1,855		1,561		3,416
Other		−		−		−		−		260		260
		3,150		1,901		52,111		57,162		9,761		66,923
Rent receivables – real estate		1		14		15		30		12		42
Total financing receivables	$	3,151	$	1,915	$	52,126	$	57,192	$	9,773	$	66,965
As of September 30, 2011:
Receivables from managed entities and related parties: (2)
Commercial finance investment entities	$	−	$	−	$	37,547	$	37,547	$	490	$	38,037
Real estate investment entities		1,324		1,511		17,405		20,240		1,734		21,974
Financial fund management entities		2,395		93		28		2,516		136		2,652
RCC		−		−		−		−		2,539		2,539
Other		−		−		−		−		103		103
		3,719		1,604		54,980		60,303		5,002		65,305
Investments in commercial finance		984		526		−		1,510		190,932		192,442
Rent receivables – real estate		1		11		−		12		3		15
Total financing receivables	$	4,704	$	2,141	$	54,980	$	61,825	$	195,937	$	257,762

(1) As of December 31, 2011, receivables related to the Company’s commercial finance and real estate investment entities are presented gross of allowances for credit losses of $10.3 million and $2.3 million, respectively.  The remaining receivables have no related allowance for credit losses.

(2) As of September 30, 2011, receivables are presented gross of an allowance for credit losses of $8.3 million and $2.2 million related to the Company’s commercial finance and real estate investment entities, respectively.  The remaining receivables from managed entities and related parties have no related allowance for credit losses.

The following table summarizes the Company’s financing receivables on nonaccrual status (in thousands):

	December 31,		September 30,
	2011		2011
Investments in commercial finance:
Leases and loans	$	−	$	526

10

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 4 – FINANCING RECEIVABLES – (Continued)

The following tables summarize the activity in the allowance for credit losses for the Company’s financing receivables (in thousands):

Three Months Ended December 31, 2011:	Receivables from Managed Entities		Investment in Commercial Finance -Leases and Loans			Rent Receivables		Total
Balance, beginning of year	$	10,490	$	430		$	15	$	10,935
Provision for credit losses		2,085		151			14		2,250
Charge-offs		−		(124	)		−		(124	)
Recoveries		−		25			−		25
Deconsolidation of LEAF		−		(482	)		−		(482	)
Balance, end of period	$	12,575	$	−		$	29	$	12,604
Ending balance, individually evaluated for impairment	$	12,575	$	−		$	29	$	12,604
Ending balance, collectively evaluated for impairment		−		−			−		−
Balance, end of period	$	12,575	$	−		$	29	$	12,604

			Investments in Commercial Finance
Three Months Ended December 31, 2010:	Receivables from Managed Entities		Leases and Loans			Future Payment Card Receivables			Investment in Real Estate Loans			Total
Balance, beginning of year	$	1,075	$	770		$	130		$	49		$	2,024
Provision for credit losses		1,411		183			12			−			1,606
Charge-offs		−		(1,000	)		(26	)		(49	)		(1,075	)
Recoveries		−		127			14			−			141
Balance, end of period	$	2,486	$	80			130		$	−		$	2,696
Ending balance, individually evaluated for impairment	$	2,486	$	−		$	−		$	−		$	2,486
Ending balance, collectively evaluated for impairment		−		80			130			−			210
Balance, end of period	$	2,486	$	80		$	130		$	−		$	2,696

11

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 4 – FINANCING RECEIVABLES – (Continued)

The Company’s gross financing receivables related to the balance in the allowance for credit losses as of December 31, 2011 are as follows (in thousands):

	Receivables from Managed Entities		Rent Receivables		Total
Ending balance, individually evaluated for impairment	$	66,923	$	42	$	66,965
Ending balance, collectively evaluated for impairment		−		−		−
Balance, end of period	$	66,923	$	42	$	66,965

The Company’s financing receivables (presented exclusive of any allowance for credit losses) as of September 30, 2011 relate to the balance in the allowance for credit losses, as follows (in thousands):

	Receivables from Managed Entities		Rent Receivables		Leases and Loans		Total
Ending balance, individually evaluated for impairment	$	65,305	$	15	$	−	$	65,320
Ending balance, collectively evaluated for impairment		−		−		192,442		192,442
Balance, end of year	$	65,305	$	15	$	192,442	$	257,762

The following tables disclose information about the Company’s impaired financing receivables (in thousands):

	Net Balance		Unpaid Balance		Specific Allowance		Average Investment in Impaired Assets
As of December 31, 2011:
Financing receivables without a specific valuation allowance:
Receivables from managed entities – commercial finance	$	−	$	−	$	−	$	−
Receivables from managed entities – real estate		−		−		−		−
Rent receivables – real estate		−		−		−		−
Financing receivables with a specific valuation allowance:
Receivables from managed entities – commercial finance	$	27,713	$	38,020	$	10,307	$	38,184
Receivables from managed entities – real estate		2,063		4,331		2,268		4,059
Rent receivables – real estate		13		42		29		34
Total:
Receivables from managed entities – commercial finance	$	27,713	$	38,020	$	10,307	$	38,184
Receivables from managed entities – real estate		2,063		4,331		2,268		4,059
Rent receivables – real estate		13		42		29		34
As of September 30, 2011:
Financing receivables without a specific valuation allowance:
Receivables from managed entities – commercial finance	$	−	$	−	$	−	$	−
Receivables from managed entities – real estate		−		−		−		−
Leases and loans		−		−		−		−
Rent receivables – real estate		−		−		−		−
Financing receivables with a specific valuation allowance:
Receivables from managed entities – commercial finance	$	14,990	$	23,302	$	8,312	$	23,377
Receivables from managed entities – real estate		2,353		4,531		2,178		3,897
Leases and loans		310		526		216		318
Rent receivables – real estate		−		15		15		7
Total:
Receivables from managed entities – commercial finance	$	14,990	$	23,302	$	8,312	$	23,377
Receivables from managed entities – real estate		2,353		4,531		2,178		3,897
Leases and loans		310		526		216		318
Rent receivables – real estate		−		15		15		7

12

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 5 – INVESTMENTS IN REAL ESTATE

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

	December 31,		September 30,
	2011		2011
Properties owned, net of accumulated depreciation of $4,986 and $4,785:
Hotel property (Savannah, Georgia)	$	12,145	$	12,051
Office building (Philadelphia, Pennsylvania)		3,143		3,165
Multifamily apartment complex (Kansas City, Kansas)		1,555		1,525
		16,843		16,741
Other real estate holdings		2,257		2,257
Investments in real estate, net	$	19,100	$	18,998

NOTE 6 − INVESTMENT SECURITIES

Components of the Company’s investment securities are as follows (in thousands):

	December 31,		September 30,
	2011		2011
Available-for-sale securities	$	17,280	$	14,884
Trading securities		50		240
Total investment securities, at fair value	$	17,330	$	15,124

Available-for-sale securities.  The following table discloses the pre-tax unrealized gains (losses) relating to the Company’s investments in equity and collateralized debt obligation (“CDO”) securities (in thousands):

	Cost or Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
December 31, 2011:
Equity securities	$	32,653	$	28	$	(18,382	)	$	14,299
CDO securities		1,593		1,388		−			2,981
Total	$	34,246	$	1,416	$	(18,382	)	$	17,280
September 30, 2011:
Equity securities	$	32,411	$	27	$	(19,910	)	$	12,528
CDO securities		1,039		1,317		−			2,356
Total	$	33,450	$	1,344	$	(19,910	)	$	14,884

Equity Securities.  The Company holds 2.5 million shares of RCC common stock as well as options to acquire an additional 2,166 shares (exercise price of $15.00 per share; expire in March 2015).  The Company also holds 18,972 shares of The Bancorp, Inc. (“TBBK”) (NASDAQ: TBBK) common stock.  A portion of these investments are pledged as collateral for one of the Company’s secured corporate credit facilities.

CDO securities.  The CDO securities represent the Company’s retained equity interest in three CDO issuers that it has sponsored and manages.  The fair value of these retained interests is impacted by the fair value of the investments held by the respective CDO issuers, which are sensitive to interest rate fluctuations and credit quality determinations. The primary inputs used in producing the internally generated expected cash flows models to determine the fair value are as follows:  (i) constant default rate (2%); (ii) loss recovery percentage (70%); (iii) constant prepayment rate (20%); (iv) reinvestment price on collateral (98% for the first year, 99% for years thereafter); and (v) discount rate (20%).

Trading Securities.  The Company held an additional 6,992 and 33,509 shares of TBBK common stock valued at $50,000 and $240,000 as of December 31, 2011 and September 30, 2011, respectively, in a Rabbi Trust for the Supplemental Employment Retirement Plan (“SERP”) for its former Chief Executive Officer.  The Company sold 26,517 and 20,225 of shares held in the Trust during the three months ended December 31, 2011 and 2010, respectively, and recognized gains of $17,000 and $9,000, respectively.  For the three months ended December 31, 2010, the Company also recorded an unrealized trading gain of $374,000.

13

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 6 − INVESTMENT SECURITIES – (Continued)

Unrealized losses along with the related fair value, aggregated by the length of time the investments were in a continuous unrealized loss position, are as follows (in thousands, except number of securities):

	Less than 12 Months						More than 12 Months
	Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses			Number of Securities
December 31, 2011:
Equity securities	$	−	$	−		−	$	14,162	$	(18,382	)		1
CDO securities		−		−		−		−		−			−
Total	$	−	$	−		−	$	14,162	$	(18,382	)		1
September 30, 2011:
Equity securities	$	−	$	−		−	$	12,393	$	(19,910	)		1
CDO securities		−		−		−		−		−			−
Total	$	−	$	−		−	$	12,393	$	(19,910	)		1

The unrealized losses in the above table are considered to be temporary impairments due to market factors and not reflective of credit deterioration.  The Company considers its role as the external manager of RCC and the value of its management contract, which includes a substantial fee for termination of the manager.  Further, because of its intent and ability to hold its investment in RCC, the Company does not consider the unrealized losses to be other-than-temporary impairments.

NOTE 7 − INVESTMENTS IN UNCONSOLIDATED ENTITIES

As a specialized asset manager, the Company develops various types of investment vehicles, which it manages under long-term management agreements or similar arrangements.  The following table details the Company’s investments in these vehicles, including the range of interests it owns (in thousands, except percentages):

	Range of Combined Ownership Interests		December 31, 2011		September 30, 2011
Real estate investment entities		2% – 10%	$	7,763	$	8,439
Financial fund management partnerships		2% − 11%		3,577		3,476
Trapeza entities		33% − 50%		867		795
LEAF		15.7%  (1)		990		−
Commercial finance investment entities		1% − 6%		−		−
Investments in unconsolidated entities			$	13,197	$	12,710

(1) Based upon terms of the agreements for the deconsolidation of LEAF, the Company is calculating its share of losses incurred by LEAF for the period from November 17 to December 31, 2011 based on the equity method of accounting.

Two of the Trapeza entities that have incentive distributions, also known as carried interests, are subject to a potential clawback to the extent that such distributions exceed the cumulative net profits of the entities, as defined in the respective partnership agreements (see Note 19).  The general partner of those entities is owned equally by the Company and its co-managing partner.  Performance-based incentive fees in interim periods are recorded based upon a formula as if the contract were terminated at that date.  On a quarterly basis (interim measurement date), the Company quantifies the cumulative net profits/net losses (as defined under the Trapeza partnership agreements) and allocates income/loss to limited and general partners according to the terms of such agreements.

14

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 7 − INVESTMENTS IN UNCONSOLIDATED ENTITIES – (Continued)

The Trapeza entities include the Company’s 50% equity interest in one of the managers of the Trapeza CDO entities, Trapeza Capital Management, LLC (“TCM”).  The Company does not control TCM and, accordingly, does not consolidate it.

Summarized operating data for TCM is presented in the following table (in thousands):

	Three Months Ended December 31,
	2011			2010
Management fees	$	981		$	978
Operating expenses		(266	)		(288	)
Other expense		(16	)		(31	)
Net income	$	699		$	659

LEAF’s operations were included in the Company’s consolidated results from October 1, 2011 until its deconsolidation on November 16, 2011, and thereafter, its results are reflected as an equity loss.  There is no comparable information for the prior year as LEAF was not formed until January 4, 2011.  Summarized operating data for LEAF for the three months ended December 31, 2011 is presented below (in thousands):

	For the period from October 1 to November 16, 2011			For the period from November 17 to December 31, 2011			Total for the Three Months Ended December 31, 2011
Finance revenues	$	4,134		$	4,169		$	8,303
Operating expenses		(3,553	)		(3,512	)		(7,065	)
Other expense, net		(1,054	)		(1,458	)		(2,512	)
Net loss	$	(473	)	$	(801	)	$	(1,274	)

15

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 8 – VARIABLE INTEREST ENTITIES

In general, VIEs are entities in which equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The Company has variable interests in VIEs through its management contracts and investments in various securitization entities, including collateralized loan obligation (“CLO”) and CDO issuers.  Since the Company serves as the asset manager for the investment entities it sponsored and manages, the Company is generally deemed to have the power to direct the activities of the VIE that most significantly impact the entity’s economic performance.  In the case of an interest in a VIE managed by the Company, the Company will perform an additional qualitative analysis to determine if its interest (including any investment as well as any management fees that qualify as variable interests) could absorb losses or receive benefits that could potentially be significant to the VIE.  This analysis considers the most optimistic and pessimistic scenarios of potential economic results that could reasonably be experienced by the VIE.  Then, the Company compares the benefits it would receive (in the optimistic scenario) or the losses it would absorb (in the pessimistic scenario) as compared to all benefits and losses absorbed by the VIE in total. If the benefits or losses absorbed by the Company were significant as compared to total benefits and losses absorbed by all variable interest holders, then the Company would conclude it is the primary beneficiary.

Consolidated VIE.  The following table reflects the assets and liabilities of a real estate VIE which was included in the Company’s consolidated balance sheets (in thousands):

	December 31,		September 30,
	2011		2011
Cash and property and equipment, net	$	912	$	955
Accrued expenses and other liabilities		260		300

VIEs Not Consolidated.  The Company’s investments in RCC, Resource Real Estate Opportunity REIT, Inc. (“RRE Opportunity REIT”), a fund that is currently in the offering stage, and its investments in the structured finance entities that hold investments in bank loans (“Apidos entities”),  trust preferred assets (“Trapeza entities”) and asset-backed securities (“Ischus entities”), were all determined to be VIEs that the Company does not consolidate as it does not have the obligation of, or right to, losses or earnings that would be significant to those entities.  With respect to RRE Opportunity REIT, the Company has advanced offering costs that are being reimbursed as the REIT raises additional equity.  Except for those advances, the Company has not provided financial or other support to these VIEs and has no liabilities, contingent liabilities, or guarantees (implicit or explicit) related to these VIEs at December 31, 2011.

The following table presents the carrying amounts of the assets in the Company’s consolidated balance sheet that relate to the Company’s variable interests in identified nonconsolidated VIEs and the Company’s maximum exposure to loss associated with these VIEs in which it holds variable interests at December 31, 2011 (in thousands):

	Receivables from Managed Entities and Related Parties, Net (1)		Investments		Maximum Exposure to Loss in Non-Consolidated VIEs
RCC	$	3,277	$	14,162	$	17,439
RRE Opportunity REIT		−		519		519
Apidos entities		2,257		2,981		5,238
Ischus entities		270		−		270
Trapeza entities		−		867		867
	$	5,804	$	18,529	$	24,333

(1) Exclusive of expense reimbursements due to the Company.

16

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 9 − PROPERTY AND EQUIPMENT

Property and equipment, net, consist of the following (in thousands):

	Estimated Useful	December 31,			September 30,
	Life	2011			2011
Furniture and equipment	3-7 years	$	6,155		$	5,620
Leasehold improvements	1-9 years		2,652			2,656
Real estate assets – consolidated VIE	40 years		1,600			1,600
LEAF property and equipment			−			11,939
			10,407			21,815
Accumulated depreciation and amortization			(6,113	)		(5,839	)
Accumulated depreciation and amortization – LEAF			−			(8,034	)
Property and equipment, net		$	4,294		$	7,942

NOTE 10 – ACCRUED EXPENSES AND OTHER LIABILITIES

The following is a summary of the components of accrued expenses and other liabilities (in thousands):

	December 31,		September 30,
	2011		2011
SERP liability (see Note 15)	$	6,902	$	7,049
Due to brokers		5,304		8,254
Accrued wages and benefits		3,257		1,770
Real estate loan commitment		1,927		2,147
Trapeza clawback (see Note 19)		1,181		1,181
Accounts payable and other accrued liabilities		10,756		10,000
LEAF payables		−		10,486
Accrued expenses and other liabilities	$	29,327	$	40,887

NOTE 11 – BORROWINGS

The credit facilities and other debt of the Company and related borrowings outstanding are as follows (in thousands):

	As of December 31,				September 30,
	2011				2011
	Amount of Facility		Borrowings Outstanding		Borrowings Outstanding
Corporate and Real estate debt:
TD Bank, N.A. – secured revolving credit facility (1)	$	6,997	$	5,303	$	7,493
TD Bank, N.A. – term loan		−		−		1,250
Republic Bank – secured revolving credit facility		3,500		−		−
Total corporate borrowings				5,303		8,743
Senior Notes (2)				10,000		16,263
Mortgage debt				10,660		10,700
Note payable to RCC				1,677		1,705
Other debt				831		548
Total corporate and real estate borrowings				28,471		37,959
Commercial finance debt				−		184,700
Total borrowings outstanding			$	28,471	$	222,659

(1) The amount of the facility as shown has been reduced for outstanding letters of credit totaling $503,000 at December 31, 2011.

(2) At September 30, 2011, the outstanding Senior Notes were reflected net of an unamortized discount of $2.6 million related to the fair value of detachable warrants issued to the note holders.

17

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 11 – BORROWINGS – (Continued)

Corporate and Real Estate Debt

TD Bank, N.A. (“TD Bank”).  In November 2011, the Company amended its agreement to extend the maturity of the TD Bank facility from August 31, 2012 to August 31, 2013 and repaid the outstanding term loan in the amount of $1.3 million.  The interest rate on borrowings is either (a) the prime rate of interest plus 2.25% or (b) LIBOR plus 3%, with a floor of 6%.  The Company is also charged a fee of 0.5% on the unused facility amount as well as a 5.25% fee on the $503,000 of outstanding letters of credit.

The facility requires that the Company repay the facility in an amount equal to 30% of the aggregate net proceeds (gross sales proceeds less reasonable and customary costs and expenses related to the sale) for certain asset sales.  Borrowings are secured by a first priority security interest in certain of the Company’s assets and the guarantees of certain subsidiaries, including (i) the present and future fees and investment income earned in connection with the management of, and investments in, sponsored CDO issuers, (ii) a pledge of 18,972 shares of TBBK common stock, and (iii) the pledge of 1,823,309 shares of RCC common stock.  Availability under the facility is limited to the lesser of (a) 75% of the net present value of future management fees to be earned or (b) the maximum revolving credit facility amount.

The December 31, 2011 principal balance on the secured credit facility was $5.3 million and the availability on the line was $1.7 million, as reduced for outstanding letters of credit.  Weighted average borrowings for the three months ended December 31, 2011 and 2010 were $5.4 million and $13.8 million, at a weighted average borrowing rate of 6.0% and 7.0% and an effective interest rate (inclusive of the amortization of deferred finance costs) of 10.6% and 10.9%, respectively.  Weighted average borrowings for the term note for the three months ended December 31, 2011 were $771,000 at a weighted average borrowing rate of 6% and an effective interest rate (inclusive of the accelerated amortization of deferred finance costs) of 38.2%.

Republic First Bank (“Republic Bank”).  In February 2011, the Company entered into a $3.5 million revolving credit facility with Republic Bank.  The facility bears interest at the prime rate of interest plus 1%, with a floor of 4.5%.  The loan is secured by a pledge of 700,000 shares of RCC stock and a first priority security interest in an office building located in Philadelphia, Pennsylvania.  Availability under this facility is limited to the lesser of (a) the sum of (i) 25% of the appraised value of the real estate, based upon the most recent appraisal delivered to the bank and (ii) 100% of the cash and 75% of the market value of the pledged RCC shares held in the pledged account; and (b) 100% of the cash and 100% of the market value of the pledged RCC shares held in the pledged account.  There were no borrowings under this facility for the three months ended December 31, 2011.  In January 2012, the Company amended this facility to extend the maturity date from December 28, 2012 to December 1, 2013 and to add an unused facility fee equal to 0.25% per year.

Senior Notes

In November 2011, the Company redeemed $8.8 million of the existing notes for cash and modified the remaining $10.0 million of notes to a reduced interest rate of 9% and extended the maturity to October 2013.  The detachable 5-year warrants to purchase 3,690,195 shares of common stock issued with the original notes remain outstanding.  The Company accounted for the warrants as a discount to the original Senior Notes.  Upon the modification and partial repayment of the Senior Notes, the Company expensed the remaining $2.2 million of unamortized discount.  The effective interest rate (inclusive of the amortization of the warrant discount prior to the refinancing) was 20.6% and 21.1% for the three months ended December 31, 2011 and 2010, respectively.

Other Debt – Corporate

Capital leases.  In December 2011, the Company entered into a capital lease for the purchase of equipment at an interest rate of 7.2%.  The two-year lease requires monthly payments of $22,697.  The principal balance of the lease at December 31, 2011 was $487,000.

18

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 11 – BORROWINGS – (Continued)

Commercial Finance Debt – No Longer Consolidated with the Company

Due to the November 2011 LCC Transaction and resulting deconsolidation of LEAF, the Company’s commercial finance facilities are no longer included in the Company’s consolidated financial statements.

Securitization of leases and loans. On October 28, 2011, LEAF completed a $105.0 million securitization.  A newly-formed subsidiary of LEAF issued eight classes of notes which are asset-backed debt, secured and payable by certain assets of LEAF.  The notes included eight fixed rate classes of notes ranging from 0.4% to 5.5%, rated by both Dominion Bond Rating Service, Inc. (“DBRS”) and Moody’s Investors Services, Inc., and mature from October 2012 to March 2019.  The weighted average borrowings for the period from October 1 to November 16, 2011 were $42.7 million, at a weighted average borrowing rate of 2.6% and an effective interest rate (inclusive of amortization of deferred financing costs and interest rate swaps) of 5.6%.

Guggenheim Securities LLC (“Guggenheim”).  At December 31, 2010, LEAF Financial had a short-term bridge loan with Guggenheim for borrowings up to $21.8 million.  The bridge facility was repaid in January 4, 2011 and terminated on February 28, 2011.  Beginning in January 2011, Guggenheim provided LEAF with a revolving warehouse credit facility with availability up to $110.0 million and committed to further expand the borrowing limit to $150.0 million.  LEAF, through its wholly-owned subsidiary, issued to Guggenheim, as initial purchaser, six classes of DBRS-rated variable funding notes, with ratings ranging from “AAA” to “B”, for up to $110.0 million.  The notes are secured and payable only from the underlying equipment leases and loans.  Interest is calculated at a rate of 30-day London Interbank Offered Rate (“LIBOR”) plus a margin rate applicable to each class of notes.  The revolving period of the facility ends on December 31, 2012 and the stated maturity of the notes is December 15, 2020, unless there is a mutual agreement to extend.  Principal payments on the notes are required to begin when the revolving period ends.  The Company was not an obligor or a guarantor of these securities and the facility was non-recourse to the Company.  The weighted average borrowings for the period from October 1 to November 16, 2011 were $68.8 million, at a weighted average borrowing rate of 4.2% and an effective interest rate (inclusive of amortization of deferred financing costs and interest rate swaps) of 5.1%.  The weighted average borrowings on the bridge loan for the three months ended December 31, 2010 were $20.9 million at a weighted average interest rate of 10.8%.

Series 2010-2 term securitization.  In May 2010, LEAF Receivables Funding 3, LLC, a subsidiary of LEAF (“LRF3”), issued $120.0 million of equipment contract-backed notes (“Series 2010-2”) to provide financing for leases and loans.  In the connection with the formation of LEAF in January 2011, RCC contributed these notes, along with the underlying lease portfolio to LEAF.  LRF3 is the sole obligator of these notes.  The weighted average borrowings for the period from October 1 to November 16, 2011 were $70.1 million, at a weighted average borrowing rate of 5.1% and an effective interest rate (inclusive of amortization of discount and deferred finance costs) of 8.5%.

Note payable to RCC − commercial finance. On July 20, 2011, RCC entered into an agreement with LEAF pursuant to which RCC agreed to provide a $10.0 million loan to LEAF, of which $6.9 million was funded as of September 30, 2011, with additional funding of $3.1 million prior to the November 16, 2011 deconsolidation.  The loan bears interest at a fixed rate of 8.0% per annum on the unpaid principal balance, payable quarterly.  The loan was secured by the commercial finance assets of LEAF and LEAF’s interest in LRF3.  In the November 2011 LCC Transaction, RCC received  $8.5 million from LCC in payment of the $10.0 million outstanding balance and extinguished the loan.

Debt repayments

Annual principal payments on the Company’s aggregate borrowings over the next five years ending December 31, and thereafter, are as follows (in thousands):

2013	$	761
2014		15,729
2015		197
2016		1,888
2017		222
Thereafter		9,674
	$	28,471

19

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 11 – BORROWINGS – (Continued)

Covenants

The TD Bank credit facility is subject to certain financial covenants, which are customary for the type and size of the facility, including debt service coverage and debt to equity ratios.  The debt to equity ratio restricts the amount of recourse debt the Company can incur based on a ratio of recourse debt to net worth.

The mortgage on the Company’s hotel property contains financial covenants related to the net worth and liquid assets of the Company. Although non-recourse in nature, the loan is subject to limited standard exceptions (or “carveouts”) which the Company has guaranteed.  These carveouts will expire as the loan is paid down over the next ten years.  The Company has control over the operations of the underlying property, which mitigates the potential risk associated with these carveouts, and accordingly, no liabilities for these obligations have been recorded in the consolidated financial statements.  To date, the Company has not been required to make any carveout payments.

The Company was in compliance with all of its debt covenants as of December 31, 2011.

NOTE 12 – COMPREHENSIVE INCOME

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

	Three Months Ended December 31,
	2011			2010
Net income (loss)	$	563		$	(1,192	)
Other comprehensive income (loss):
Unrealized gains on investment securities available-for-sale, net of tax of $616 and $(634)		985			1,013
Less:  reclassification for realized losses, net of tax of $0 and $564		−			906
		985			1,919
Minimum pension liability adjustment, net of tax of $0 and $0		−			−
Less: reclassification for realized losses, net of tax of $36 and $32		47			43
Unrealized gains on hedging contracts, net of tax of $100 and $41		126			58
Less:  reclassification for realized foreign currency translation losses		−			368
Comprehensive income		1,721			1,196
Add:  Comprehensive (income) loss attributable to noncontrolling interests		(427	)		613
Comprehensive income attributable to common shareholders	$	1,294		$	1,809

The following are changes in accumulated other comprehensive loss by category (in thousands):

	Investment Securities Available-for-Sale			Cash Flow Hedges (1)			SERP Pension Liability			Total
Balance, beginning of year, net of tax of $(7,147), $(202), and $(2,271)	$	(11,421	)	$	(222	)	$	(2,970	)	$	(14,613	)
Current period changes		985			77			47			1,109
Balance, end of period, net of tax of $(6,531), $(101) and $(2,235)	$	(10,436	)	$	(145	)	$	(2,923	)	$	(13,504	)

(1) Included in accumulated other comprehensive loss as of December 31 and September 30, 2011 is a net unrealized loss of $30,000 (net of tax benefit of $21,000) and a net unrealized loss of $41,000 (net of tax benefit of $28,000), respectively, related to hedging instruments held by investment funds sponsored by LEAF Financial, in which the Company owns an equity interest.  In addition, at September 30, 2011, the Company had a net unrealized loss of $181,000 (net of tax benefit and noncontrolling interests of $223,000) included in accumulated other comprehensive loss for hedging activity of LEAF.  As of December 31, 2011, due to the November 2011 deconsolidation of LEAF, the Company owns an equity interest in LEAF and has included in accumulated other comprehensive loss its percentage of LEAF’s hedging activity of $115,000 (net of tax benefit of $80,000).  The Company has no other hedging activity as of December 31, 2011.

20

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 13 – NONCONTROLLING INTERESTS

The following table presents the rollforward of activity in noncontrolling interests that were included in the Company’s consolidated balance sheet for the three months ended December 31, 2011 (in thousands):

Noncontrolling interests, beginning of year	$	37,360
Net income		378
Other comprehensive income		49
Additional cash contribution made by the Company’s partner in the hotel property		85
Transactions related to LEAF:
Cash portion of LEAF preferred stock dividends to RCC		(98	)
Additional amounts attributed to management holdings		213
Deconsolidation of LEAF		(37,668	)
		(37,553	)
Noncontrolling interests, end of period	$	319

NOTE 14 − EARNINGS PER SHARE

Basic earnings per share (“Basic EPS”) is computed using the weighted average number of common shares outstanding during the period, inclusive of nonvested share-based awards that are entitled to receive non-forfeitable dividends.  The diluted earnings per share (“Diluted EPS”) computation takes into account the effect of potential dilutive common shares.  Potential common shares, consisting primarily of stock options, warrants and director deferred shares, are calculated using the treasury stock method.

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

	Three Months Ended
	December 31,
	2011		2010
Shares:
Basic shares outstanding		19,641		19,076
Dilutive effect of equity award plans		398		−
Dilutive shares outstanding		20,039		19,076

Diluted EPS for the quarter ended December 31, 2011 excluded the following antidilutive securities: outstanding options to purchase a total of 1.0 million shares of common stock at a weighted average price per share of $16.14 and warrants to purchase 3,690,000 shares of common stock at a weighted average exercise price per share of $5.11.

For the quarter ended December 31, 2010, Basic EPS and Diluted EPS shares were the same because the impact of potential dilutive securities would have been antidilutive.  Accordingly, the following were excluded from the Diluted EPS computation as of December 31, 2010: outstanding options to purchase a total of 2.5 million shares of common stock at a weighted average price per share of $9.03, warrants to purchase 3,690,000 shares of common stock at a weighted average exercise price per share of $5.11. Additionally excluded were 69,300 shares of restricted stock outstanding (at a fair value of $16.42 per share) that did not have participating rights and, as such, were excluded from the Diluted EPS calculation.

21

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 15 – BENEFIT PLANS

Supplemental Employment Retirement Plan (“SERP”). The Company established a SERP, which has Rabbi and Secular Trust components, for Mr. Edward E. Cohen (“Mr. E. Cohen”), while he was the Company’s Chief Executive Officer.  The Company pays an annual benefit equal to $838,000 during his lifetime or for a period of 10 years from June 2004, whichever is longer.  The Company held 6,992 and 33,509 shares of TBBK common stock, respectively, as of December 31, 2011 and September 30, 2011, to support the Rabbi Trust portion of the SERP.

The components of net periodic benefit costs for the SERP were as follows (in thousands):

	Three Months Ended December 31,
	2011			2010
Interest costs	$	80		$	92
Less: expected return on plan assets		(18	)		(17	)
Plus:  amortization of unrecognized loss		83			74
Net cost	$	145		$	149

NOTE 16 – 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,
	2011		2011
Receivables from managed entities and related parties, net:
Commercial finance investment entities (1)	$	27,765	$	29,725
Real estate investment entities (2)		20,182		19,796
Financial fund management investment entities		2,725		2,652
RCC		3,416		2,539
LEAF		101		−
Other		159		103
Receivables from managed entities and related parties	$	54,348	$	54,815
Payables due to managed entities and related parties, net:
Real estate investment entities	$	241	$	1,010
RCC		34		222
Payables to managed entities and related parties	$	275	$	1,232

(1) Reflects $10.3 million of reserves for credit losses related to management fees owed from three commercial finance investment entities that, based on a change in estimated cash distributions, are not expected to be collectible.

(2) Reflects $2.3 million of reserves for credit losses related to management fees owed from two real estate investment entities that, based on projected cash flows, are not expected to be collectible.

22

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 16 - 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,
	2011			2010
Fees from unconsolidated investment entities:
Real estate(1)	$	3,768		$	3,060
Financial fund management		850			1,594
Commercial finance (2)		−			−
RCC:
Management, incentive and servicing fees		3,830			3,910
Dividends		631			611
Reimbursement of costs and expenses		705			468
Resource Real Estate Opportunity REIT, Inc. – reimbursement of costs and expenses		105			443
Atlas Energy, L.P. – reimbursement of net costs and expenses		169			190
LEAF:
Reimbursement of net costs and expenses		60			−
Payment for rent and related costs		(120	)		−
Payment for sub-servicing the lease investment partnerships		(405	)		−
1845 Walnut Associates Ltd. – payment for rent and operating expenses		(106	)		(161	)
Ledgewood P.C. – payment for legal services		(155	)		(41	)
Graphic Images, LLC – payment for printing services		(8	)		(5	)
9 Henmar LLC – payment for broker/consulting fees		(18	)		(21	)
The Bancorp, Inc. – reimbursement of net costs and expenses		45			−

(1) Reflects discounts recorded by the Company of $76,000 and $113,000 recorded in the three months ended December 31, 2011 and 2010, respectively, in connection with management fees from its real estate investment entities that it expects to receive in future periods.

(2) During the three months ended December 31, 2011 and 2010, the Company waived $1.5 million and $2.4 million, respectively, of its fund management fees from its commercial finance investment entities, respectively.

Relationship with LEAF.  The Company maintains a shared service agreement with LEAF for the reimbursement of various costs and expenses it incurs on behalf of LEAF.  In addition, the Company subleases office space in Philadelphia, Pennsylvania from LEAF under a lease that expires in August 2013.

Sub-servicing agreement with LEAF for the commercial finance funds.  The Company entered into a sub-servicing agreement with LEAF to provide management services for the commercial finance funds.  The fee is equal to LEAF’s costs to provide these services up to a maximum of 1% of the net present value of all lease and loan contracts comprising each of the commercial finance funds respective borrowing bases under such commercial finance funds’ credit facilities or securitizations.  In addition, LEAF is entitled to an evaluation fee equal to one half of any acquisition or similar fee collected by the Company in connection with the acquisition of any new lease or loan contracts for which LEAF provides evaluation services.

23

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 17 − OTHER INCOME, NET

The following table details other income, net (in thousands):

	Three Months Ended December 31,
	2011			2010
RCC dividend income	$	631		$	611
Unrealized gains on trading securities		−			374
Interest income		124			125
Other expense, net		(196	)		(24	)
Other income, net	$	559		$	1,086

NOTE 18 – FAIR VALUE

Assets and liabilities are categorized into one of three levels based on the assumptions (inputs) used in valuing the asset or liability.  Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment.  The three levels are defined as follows:

Level 1 − Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. 

Level 2 − Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 − Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and that are, consequently, not based on market activity, but upon particular valuation techniques.

As of December 31, 2011, the fair value of the Company’s asset recorded at fair value on a recurring basis was as follows (in thousands):

	Level 1		Level 2		Level 3		Total
Asset:
Investment securities	$	14,349	$	−	$	2,981	$	17,330

As of September 30, 2011, the fair values of the Company’s assets and liability recorded at fair value on a recurring basis were as follows (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Investment securities	$	12,768	$	−	$	2,356	$	15,124
Retained financial interest – commercial finance		−		−		22		22
Total	$	12,768	$	−	$	2,378	$	15,146
Liability:
Interest rate swap	$	−	$	404	$	−	$	404

24

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 18 – FAIR VALUE – (Continued)

The following table presents additional information about assets which are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair (in thousands):

				Retained
	Investment			Financial
	Securities			Interest
For the Three Months Ended December 31, 2011:
Balance, beginning of year	$	2,356		$	22
Purchases		600			−
Income accreted		193			−
Payments and distributions received		(239	)		−
Deconsolidation of LEAF		−			(22	)
Change in unrealized losses - included in accumulated other comprehensive loss		71			−
Balance, end of period	$	2,981		$	−
For the Fiscal Year Ended September 30, 2011:
Balance, beginning of year	$	6,223		$	273
Purchases, sales, issuances and settlements, net		(2,946	)		−
Loss on sale of investment securities, net		(1,470	)		−
Income accreted		948			−
Payment and distributions received		(861	)		(251	)
Change in unrealized losses - included in accumulated other comprehensive loss		462			−
Balance, end of year	$	2,356		$	22

The following is a discussion of the assets and liabilities that are recorded at fair value on a recurring and non-recurring basis as well as the valuation techniques applied to each fair value measurement:

Receivables from managed entities.  The Company recorded a discount on certain of its receivable balances due from its real estate and commercial finance managed entities due to the extended term of the repayment to the Company.  The discount was computed based on estimated inputs, including the repayment term (Level 3).

Investment securities.  The Company uses quoted market prices (Level 1) to value its investments in RCC and TBBK common stock.  The fair value of CDO investments is based primarily on internally generated expected cash flow models that require significant management judgments and estimates due to the lack of market activity and unobservable pricing inputs.  Unobservable inputs into these models include default, recovery, discount and deferral rates, prepayment speeds and reinvestment interest spreads (Level 3).

Investment in LEAF.  The Company’s investment in LEAF was valued at $1.7 million based on a third-party valuation in conjunction with the November 16, 2011 deconsolidation of LEAF (see Note 1).

The following items are included in the Company’s fair value disclosures at September 30, 2011; however, due to the LEAF transaction, they are no longer included in the consolidated financial statements.

Retained interest - commercial finance.  During fiscal 2010, the Company sold leases and loans to third-parties in which portions of the proceeds were retained by the purchasers.  The purchasers have the right to return leases and loans that default within periods ranging from approximately six to forty-eight months after the date of sale and to deduct the applicable percentage from the retained proceeds.  The Company determines the fair value of these retained interests by calculating the present value of future expected cash flows using key assumptions for credit losses and discount rates based on historical experience and repayment terms (Level 3).

25

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 18 – FAIR VALUE – (Continued)

Interest rate swaps.  These instruments are valued by a third-party pricing agent using an income approach and utilizing models that use as their primary basis readily observable market parameters.  This valuation process considers factors including interest rate yield curves, time value, credit factors and volatility factors.  Although the Company determined that the majority of the inputs used to value its derivatives fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these derivatives utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.  However, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of these derivative positions and  determined that the credit valuation adjustments were not significant to the overall valuation of these derivatives.  As a result, the Company determined that these derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

Guggenheim - secured revolving facility.  The proceeds from this loan were allocated to the revolving facility and the warrants issued to the lender based on their relative fair values, as determined by an independent third-party appraiser.  The appraiser determined the fair value of the debt based primarily on the interest rates of similarly rated notes with similar terms.  The appraiser assessed the fair value of the equity of LEAF in making its determination of the fair value of the warrants.

Impaired loans and leases - commercial finance.  Leases and loans are considered impaired when they are 90 or more days past due and are placed on non-accrual status.  The Company records an allowance for the impaired loans and leases based upon historical experience (Level 3).

The Company recognized the following changes in carrying value of the assets and liabilities measured at fair value on a non-recurring basis, as follows (in thousands):

	Level 1		Level 2		Level 3		Total
For the Three Months Ended December 31, 2011:
Assets:
Receivables from managed entities – commercial finance and real estate	$	−	$	−	$	30,331	$	30,331
Investment in LEAF		−		−		1,749		1,749
Total	$	−	$	−	$	32,080	$	32,080
For the Fiscal Year Ended September 30, 2011:
Assets:
Investments in commercial finance – impaired loans and leases	$	−	$	−	$	310	$	310
Receivables from managed entities		−		−		18,941		18,941
Total	$	−	$	−	$	19,251	$	19,251
Liabilities:
Guggenheim – secured revolving credit facility	$	−	$	−	$	49,266	$	49,266
Total	$	−	$	−	$	49,266	$	49,266

For cash, receivables and payables, the carrying amounts approximate fair value because of the short-term maturity of these instruments.

26

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 18 – FAIR VALUE – (Continued)

The fair value of financial instruments is as follows (in thousands):

	December 31, 2011				September 30, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Receivables from managed entities (1)	$	54,348	$	49,135	$	54,815	$	39,224
Investments in commercial finance – loans held for investment		−		−		19,640		19,550
	$	54,348	$	49,135	$	74,455	$	58,774
Borrowings:(2)
Corporate secured credit facilities and note	$	5,303	$	5,303	$	8,743	$	8,743
Real estate debt		10,660		10,660		10,700		10,700
Senior Notes		10,000		10,210		16,263		17,438
Other debt		2,508		2,084		3,807		2,909
Commercial finance debt		−		−		183,146		183,146
	$	28,471	$	28,257	$	222,659	$	222,936

(1) Certain of the receivables from managed entities at December 31, 2011 and September 30, 2011 have been valued using a present value discounted cash flow where market prices were not available.  The discount rate used in these calculations is the estimated current market rate, as adjusted for liquidity risk.

(2) The carrying value of the Company’s corporate secured revolving credit facilities and term note approximates their fair values because of their variable interest rates.  The carrying value of the Company’s real estate debt approximates fair value due to its recent issuance.  The Company estimated the fair value of the Senior Notes by applying the percentage appreciation in a high-yield fund with approximately similar quality and risk attributed as the Senior Notes.  The carrying value of the Company’s other debt was estimated using current interest for similar loans at December 31, 2011 and September 30, 2011.  The carrying value of the Company’s commercial finance debt approximated its fair value due to its recent issuance at September 30, 2011 and was deconsolidated during the Company’s first quarter ended December 31, 2011.  This disclosure excludes instruments valued on a recurring basis.

NOTE 19 - COMMITMENTS AND CONTINGENCIES

LEAF lease valuation commitment.  In accordance with the November 2011 LCC Transaction, the Company and RCC have undertaken a contingent obligation with respect to the value of the equity on the balance sheet of LRF3.  To the extent that the value of the equity on the balance sheet of LRF3 is less than $18.7 million (the value of the equity of LRF3 on the date it was contributed by RCC to LEAF), as of the final testing date within 90 days of December 31, 2013, the Company and RCC have agreed to be jointly and severally obligated to contribute cash to LEAF to the extent of any shortfall.

Broker-dealer capital requirement.  Resource Securities serves as a dealer-manager for the sale of securities of direct participation investment programs, both public and private, sponsored by subsidiaries of the Company who also serve as general partners and/or managers of these programs.  Additionally, Resource Securities serves as an introducing agent for transactions involving sales of securities of financial services companies, REITs and insurance companies for the Company and for RCC.  As a broker-dealer, Resource Securities is required to maintain minimum net capital, as defined in regulations under the Securities Exchange Act of 1934, as amended, which was $100,000 as of December 31, 2011 and September 31, 2011.  As of December 31, 2011 and September 30, 2011, Resource Securities net capital was $295,000 and $254,000, respectively, which exceeded the minimum requirements by $195,000 and $154,000, respectively.

Clawback liability.  On November 1, 2009 and January 28, 2010, the general partners of two of the Trapeza entities, which are owned equally by the Company and its co-managing partner, repurchased substantially all of the remaining limited partnership interests in the two Trapeza entities, with potential clawback liabilities for $4.4 million.  The Company contributed $2.2 million (its 50% share). The clawback liability was $1.2 million at December 31 and September 30, 2011, respectively.

27

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 19 – COMMITMENTS AND CONTINGENCIES – (Continued)

Legal proceedings.  In September 2011, First Community Bank, (“First Community”) filed a complaint against First Tennessee Bank and approximately thirty other defendants consisting of investment banks, rating agencies, collateral managers, including Trapeza Capital Management, LLC (“TCM”), and issuers of CDOs, including Trapeza CDO XIII, Ltd. and Trapeza CDO XIII, Inc.  TCM and the Trapeza CDO issuers are collectively referred to as Trapeza.  The complaint includes causes of action against TCM for fraud, negligent misrepresentation, violation of the Tennessee Securities Act of 1980 and unjust enrichment.  First Community alleges, among other things, that it invested in certain CDOs, that the defendant rating agencies assigned inflated investment grade ratings to the CDOs, and that the defendant investment banks, collateral managers and issuers (including Trapeza) fraudulently and/or negligently made “materially false and misleading representations and omissions” that First Community relied on in investing in the CDOs, including both written representations in offering materials and unspecified oral representations.  Specifically, with respect to Trapeza, First Community alleges that it purchased $20 million of notes in the D tranche of the Trapeza CDO XIII transaction from J.P. Morgan.  Trapeza believes that none of First Community’s claims have merit and intends to vigorously contest this action.

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

Real estate commitments.  As a specialized asset manager, the Company sponsors and manages investment funds in which it may make an equity investment along with outside investors.  This equity investment is generally based on a percentage of funds raised and varies among investment programs.  With respect to RRE Opportunity REIT, the Company is committed to invest 1% of the equity raised to a maximum amount of $2.5 million.

In July 2011, the Company entered into an agreement with one of the tenant in common (“TIC”) programs it sponsored and manages.  This agreement requires the Company to fund up to $1.9 million, primarily for capital improvements, for the underlying property over the next two years.  The Company advanced funds totaling $1.4 million as of December 31, 2011.

The liabilities for the real estate commitments will be recorded in the future as the amounts become due and payable.

General corporate commitments. The Company is also party to employment agreements with certain executives that provide for compensation and other benefits, including severance payments under specified circumstances.

As of December 31, 2011, except for the clawback liability recorded for the two Trapeza entities, the real estate commitments, and executive compensation, the Company did not believe it was probable that any payments would be required under any of its commitments and contingencies, and accordingly, no liabilities for these obligations were recorded in the consolidated financial statements.

28

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

DECEMBER 31, 2011

(unaudited)

NOTE 20 − OPERATING SEGMENTS

The Company’s operations include three reportable operating segments that reflect the way the Company manages its operations and makes its business decisions.  In addition to its reporting operating segments, certain other activities are reported in the “all other” category.  Summarized operating segment data is as follows (in thousands) (unaudited):

	Real Estate			Financial Fund Management			Commercial Finance			All Other (1)			Total
Three Months Ended December 31, 2011
Revenues from external customers	$	8,060		$	5,913		$	4,134		$	−		$	18,107
Equity in earnings (losses) of unconsolidated entities		606			666			(715	)		−			557
Total revenues		8,666			6,579			3,419			−			18,664
Segment operating expenses		(7,192	)		(5,804	)		(1,963	)		−			(14,959	)
General and administrative expenses		(78	)		(869	)		−			(1,949	)		(2,896	)
Gain on sale of leases and loans		−			−			37			−			37
Provision for credit losses		(104	)		−			(2,146	)		−			(2,250	)
Depreciation and amortization		(323	)		(37	)		(1,556	)		(145	)		(2,061	)
Gain on deconsolidation of LEAF		−			−			8,749			−			8,749
Loss on extinguishment of debt		−			−			−			(2,190	)		(2,190	)
Gain on sale of investment securities, net		−			41			−			17			58
Interest expense		(215	)		−			(1,691	)		(1,068	)		(2,974	)
Other income (expense), net		117			577			−			(135	)		559
Pretax income attributable to noncontrolling interests (2)		(25	)		−			(224	)		−			(249	)
Income (loss) including noncontrolling interests before intercompany interest expense and taxes		846			487			4,625			(5,470	)		488
Intercompany interest (expense) income		−			−			(29	)		29			−
Income (loss) from continuing operations including noncontrolling interests before taxes	$	846		$	487		$	4,596		$	(5,441	)	$	488
Three Months Ended December 31, 2010
Revenues from external customers	$	6,791		$	6,675		$	1,787		$	−		$	15,253
Equity in earnings (losses) of unconsolidated entities		83			1,655			(311	)		−			1,427
Total revenues		6,874			8,330			1,476			−			16,680
Segment operating expenses		(5,461	)		(6,720	)		(4,273	)		−			(16,454	)
General and administrative expenses		(97	)		(994	)		−			(2,025	)		(3,116	)
Gain on sale of leases and loans		−			−			11			−			11
Provision for credit losses		−			−			(1,606	)		−			(1,606	)
Depreciation and amortization		(315	)		(45	)		(628	)		(137	)		(1,125	)
Gain on sale of management contract		−			6,520			−			−			6,520
(Loss) gain on sale of investment securities, net		−			(1,470	)		−			9			(1,461	)
Interest expense		(275	)		−			(611	)		(1,483	)		(2,369	)
Other income, net		122			659			2			303			1,086
Pretax (income) loss attributable to noncontrolling interests (2)		(4	)		−			967			−			963
Income (loss) including noncontrolling interests before intercompany interest expense and taxes		844			6,280			(4,662	)		(3,333	)		(871	)
Intercompany interest (expense) income		−			−			(1,554	)		1,554			−
Income (loss) from operations including noncontrolling interests before taxes	$	844		$	6,280		$	(6,216	)	$	(1,779	)	$	(871	)

29

RESOURCE AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS − (Continued)

December 31, 2011

(unaudited)

NOTE 20 − OPERATING SEGMENTS – (Continued)

	Real Estate		Financial Fund Management		Commercial Finance		All Other (1 )			Total
Segment assets:
December 31, 2011	$	162,757	$	36,927	$	30,516	$	(51,865	)	$	178,335
December 31, 2010	$	155,930	$	41,889	$	76,646	$	(41,291	)	$	233,174

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

(2) In viewing its segment operations, management includes the pretax (income) loss attributable to noncontrolling interests.  However, these interests are excluded from (loss) income from operations as computed in accordance with U.S. GAAP and should be deducted to compute (loss) income from operations as reflected in the Company’s consolidated statements of operations.

Geographic Information.  During the three months ended December 31, 2010, the Company recognized a $5.1 million net gain on the sale of its management contract with, and equity investment in, Resource Europe CLO I.  There were no other revenues generated from the Company’s European operations for the three months ended December 31, 2011 and 2010.  Included in the segment assets are European assets of $1.5 million and $10.4 million as of December 31, 2011 and 2010, respectively.

Major Customer.  For the three months ended December 31, 2011, the total of the management, incentive and servicing fees that the Company received from RCC were 21% of its consolidated revenues as compared to 23% for the three months ended December 31, 2010.  These fees have been reported as revenues by the Company’s reporting segments.

NOTE 21 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events and determined that no events have occurred which would require an adjustment to the consolidated financial statements.

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

This report contains certain forward-looking statements.  Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.  In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will” and “would” or the negative of these terms or other comparable terminology.  Such statements are subject to the risks and uncertainties more particularly described in Item 1A, under the caption “Risk Factors,” in our Annual Report on Form 10-K for the year ended September 30, 2011 and in other of our public filings with the Securities and Exchange Commission.  These risks and uncertainties could cause our actual results and financial position to differ materially from those anticipated in such statements.  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 revise or update these forward-looking statements to reflect events or circumstances after the date of this report, except as may be required under applicable law.

Overview of the Three Months Ended December 31, 2011 and 2010

           We are a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through our real estate, commercial finance and financial fund management sectors.  As a specialized asset manager, we seek to develop investment funds for outside investors for which we provide asset management services, typically under long-term management arrangements either through a contract with, or as the manager or general partner of, our sponsored investment funds.  We typically maintain an investment in the funds we sponsor.  As of December 31, 2011, we managed $13.3 billion of assets.

We limit our fund development and management services to asset classes where we own existing operating companies or have specific expertise.  We believe this strategy enhances the return on investment we can achieve for our funds.  In our real estate operations, we concentrate on the ownership, operation and management of multifamily and commercial real estate and real estate mortgage loans including whole mortgage loans, first priority interests in commercial mortgage loans, known as A notes, subordinated interests in first mortgage loans, known as B notes, mezzanine loans, investments in discounted and distressed real estate loans and investments in “value-added” properties (properties which, although not distressed, need substantial improvements to reach their full investment potential).  In our financial fund management operations, we concentrate on trust preferred securities of banks, bank holding companies, insurance companies and other financial companies, bank loans and asset backed securities, or ABS.

In our real estate segment, we have focused our efforts primarily on acquiring and managing a diversified portfolio of commercial real estate and real estate related debt that has been significantly discounted due to the effects of current economic conditions and high levels of leverage.  We expect to continue to expand this business by raising investor funds through our retail broker channel for investment programs, principally through RRE Opportunity REIT.  We also continue to monetize our legacy real estate portfolio.

In our financial fund management segment, we have sponsored and manage issuers of collateralized debt and loan obligations, or CDOs and CLOs, respectively, for which we continue to receive fees.  In fiscal 2012, we expect to continue to focus on managing our existing assets and, to the extent market conditions permit, expand our CLO business.  In October 2011, on behalf of RCC and third-party investors, we closed Apidos CLO VIII, a $350.0 million CLO, for which we will receive asset management fees in the future.  On December 29, 2011, we entered into a sale and purchase agreement to sell our equity interests of Apidos Capital Management, LLC, or Apidos, our CLO management subsidiary, for (i) $25.0 million in cash and partnership interests in a joint venture that includes the Apidos portfolios as well as the portfolios contributed by our venture partner. Additionally, we will retain a preferred equity interest in Apidos, which will entitle us to receive incentive management fees from the legacy Apidos portfolios. We anticipate that, subject to government approvals, the sale will be consummated in our next fiscal quarter ending March 31, 2012, or shortly thereafter.

Our commercial finance operations underwent significant restructuring and recapitalization during fiscal 2011 and the first quarter of fiscal 2012.  These transactions provided substantial amounts of both equity and debt financing to the lease origination and servicing platform, which is now held by LEAF Commercial Capital, Inc., or LEAF. Our subsidiary, LEAF Financial Corporation, retained the partnership management operations.  As a result of the recapitalization, our equity interest in LEAF was reduced to 15.7% on a fully diluted basis, and we have deconsolidated LEAF from our financial statements as of November 16, 2011.  We have recorded a $8.7 million gain on the deconsolidation of LEAF, inclusive of a $1.7 million remeasurement gain to reflect our investment in LEAF at fair value.  Due to the deconsolidation of LEAF, we have decreased our total assets at December 31, 2011 by $227.9 million and our outstanding borrowings by $184.7 million from the corresponding balances reported at September 30, 2011.  We will account for our future interests in LEAF as an equity investment.

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During the three months ended December 31, 2011, we further improved our balance sheet and liquidity by refinancing our existing corporate debt.  In November, we redeemed $8.8 million of our Senior Notes and modified the remaining $10.0 million of notes to reduce the interest rate to 9% from 12% and to extend the maturity to October 2013.  In conjunction with the modification of the notes, we accelerated the amortization of the warrant cost associated with the original issuance and, accordingly, recorded a loss on extinguishment of $2.2 million during the three months ended December 31, 2011.  In addition, we amended our corporate credit facility with TD Bank to extend the maturity from August 2012 to August 2013 and amended our Republic Bank facility to extend its maturity from December 2012 to December 2013.

Assets Under Management

Our assets under management increased by $1.3 billion to $13.3 billion at December 31, 2011 from $12.0 billion at December 31, 2010.  The following table sets forth information relating to our assets under management by operating segment (in millions): (1)

	As of December 31,				Increase (Decrease)
	2011		2010		Amount			Percentage
Financial fund management	$	11,145	$	9,703	$	1,442	(2)		15%
Real estate		1,610		1,563		47			3%
Commercial finance		549		779		(230	) (3)		(30)%
	$	13,304	$	12,045	$	1,259			10%

(1) For information on how we calculate assets under management, see the table and related notes at the end of this section.

(2) Increase primarily related to subadvisory agreement with Resource Capital Corp., or RCC, to provide sub-advisory management services on five CLOs ($1.7 billion) that was entered into in February 2011 and a $355.6 million increase in bank loans for Apidos CLO VIII, which we closed in October and manage on behalf of RCC.  These increases were offset primarily by decreases in the eligible collateral bases of our ABS ($370.6 million) and trust preferred portfolios ($269.7 million) resulting from defaults, paydowns, sales and calls.

(3) Reduction primarily reflects the paydowns of existing leases and loans in our commercial finance funds.

Assets under management are primarily managed through the investment entities we sponsor.  Our financial fund management and real estate segments manage assets on behalf of RCC.  The following table sets forth the number of entities we manage by operating segment, including tenant in common, or TIC, property interests:

	CDOs		Limited Partnerships		TIC Property Interests		Other Investment Funds
As of December 31, 2011:
Financial fund management		38		13		−		1
Real estate		2		8		6		5
Commercial finance		−		4		−		2
		40		25		6		8
As of December 31, 2010:
Financial fund management		32		13		−		1
Real estate		2		8		7		4
Commercial finance		−		4		−		1
		34		25		7		6

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As of December 31, 2011 and 2010, we managed $13.3 billion and $12.0 billion of assets, respectively, for the accounts of institutional and individual investors, RCC and for our own account in the following asset classes (in millions):

	December 31, 2011								December 31, 2010
	Institutional and Individual Investors		RCC		Company		Total		Total
Trust preferred securities (1)	$	3,869	$	−	$	−	$	3,869	$	4,139
Bank loans (1)		2,700		2,966		−		5,666		3,619
Asset-backed securities (1)		1,490		−		−		1,490		1,861
Real properties (2)		607		108		14		729		606
Mortgage and other real estate-related loans (2)		23		839		19		881		957
Commercial finance assets (3)		323		−		226		549		779
Private equity and other assets (1)		84		36		−		120		84
	$	9,096	$	3,949	$	259	$	13,304	$	12,045

(1) We value these assets at their amortized cost.

(2) We value our managed real estate assets as the sum of:  (i) the amortized cost of commercial real estate loans; and (ii) the book values of each of the following: (a) real estate and other assets held by our real estate investment entities, (b) our outstanding legacy loan portfolio, and (c) our interests in real estate.

(3) We value our commercial finance assets as the sum of the book values of the equipment and leases and loans financed.

Employees

As of December 31, 2011, we employed 552 full-time workers, a decrease of 136, or (20%), from 688 employees at December 31, 2010.  The following table summarizes our employees by operating segment:

	Total		Real Estate		Financial Fund Management		Corporate/ Other		Commercial Finance (1)
December 31, 2011:
Investment professionals		69		39		28		2		−
Other		70		19		12		39		−
		139		58		40		41		−
Property management		413		413		−		−		−
Total		552		471		40		41		−
December 31, 2010:
Investment professionals		100		34		28		2		36
Other		222		16		10		40		156
		322		50		38		42		192
Property management		366		366		−		−		−
Total		688		416		38		42		192

(1) Due to the LEAF deconsolidation in November 2011, we no longer have commercial finance employees.

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Revenues

The revenues in each of our reporting segments are generated by the fees we earn for structuring and managing the investment vehicles we sponsor on behalf of individual and institutional investors and RCC, 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,
	2011		2010
Fund management revenues (1)	$	8,449	$	9,262
Finance and rental revenues (2)		6,099		2,965
RCC management fees		3,689		3,807
Gain on resolution of loans (3)		60		85
Other (4)		367		561
	$	18,664	$	16,680

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

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

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

(4) Includes insurance fees, documentation fees and other charges earned by our commercial finance operations.

We provide a more detailed discussion of the revenues generated by each of our business segments under “Results of Operations:  Real Estate”, “Financial Fund Management,” and “Commercial Finance.”

Results of Operations: Real Estate

Through our real estate segment, we focus on four different areas:

● the acquisition, ownership and management of portfolios of discounted real estate and real estate related debt, which we have acquired through two sponsored real estate investment entities as well as through joint ventures with institutional investors;

● the sponsorship and management of real estate investment entities that principally invest in multifamily housing;

● the management, principally for RCC, of general investments in commercial real estate debt, including first mortgage debt, whole loans, mortgage participations, B notes, mezzanine debt and related commercial real estate securities; and

● to a significantly lesser extent, the management and resolution of a portfolio of real estate loans and property interests that we acquired at various times between 1991 and 1999, which we collectively refer to as our legacy portfolio.

The following table sets forth information related to real estate assets managed (1) (in millions):

	As of December 31,
	2011		2010
Assets under management:(1)
Commercial real estate debt	$	792	$	762
Real estate investment funds and programs		566		566
Distressed portfolios		114		155
Properties managed for RCC		60		−
RRE Opportunity REIT		44		−
Institutional portfolios		15		51
Legacy portfolio		19		29
	$	1,610	$	1,563

(1) For information on how we calculate assets under management, see the table and related notes at the end of “Assets Under Management,” above.

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We support our real estate investment funds by making long-term investments in them.  Fee income can be highly variable and, for the remainder of fiscal 2012, fee income will depend upon the success of the RRE Opportunity REIT and the timing of its acquisitions.

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,
	2011		2010
Revenues:
Management fees
Asset management fees	$	1,847	$	1,543
Resource Residential property management fees		1,637		1,350
REIT management fees - RCC		1,383		1,363
		4,867		4,256
Other revenues
Rental property income and revenues on consolidated VIE (1)		1,313		1,244
Master lease revenues		1,019		997
Fee income from sponsorship of partnerships, joint ventures and TIC property interests		801		209
Equity in earnings of unconsolidated entities		606		83
Gains and fees on the resolution of loans and other property interests		60		85
	$	8,666	$	6,874
Costs and expenses:
General and administrative expenses	$	3,747	$	2,138
Resource Residential expenses		1,598		1,355
Master lease expenses		1,016		1,105
Rental property expenses and expenses on consolidated VIEs		831		863
	$	7,192	$	5,461

(1) We generally consolidate a variable interest entity, or VIE, when we are deemed to be the primary beneficiary of the entity.

Revenues – Three Months Ended December 31, 2011 as Compared to the Three Months Ended December 31, 2010

Revenues from our real estate operations increased $1.8 million (26%) for the three months ended December 31, 2011.  We attribute the increase primarily to the following:

Management fees – increased by $611,000, principally due to the following:

● a $304,000 increase in asset management fees, reflecting the additional properties in the distressed portfolio we manage;

● a $287,000 increase in property management fees earned by our property manager, Resource Residential, reflecting a 1,790 unit increase (13%) in multifamily units under management to 15,918 units at December 31, 2011 from 14,128 at December 31, 2010; and

● a $20,000 increase in REIT management fees from RCC.  We receive a quarterly base management fee calculated on RCC’s equity capital.  Additionally, we earn an incentive management fee based on the adjusted operating earnings of RCC, which varies by quarter.  The base management fee increased by $198,000 for the three months ended December 31, 2011 as compared to the prior year period.  This increase was offset by a $178,000 decrease related to the incentive management fee.  We received $178,000 for the three months ended December 31, 2010; there was no incentive fee earned in the current year period.

Other revenues – increased by $1.2 million, principally due to the following:

● a $592,000 increase in fee income in connection with the purchase and third-party financing of property through our real estate investment entities.  During the three months ended December 31, 2011, we earned fees from the acquisition of one property and the sale of two properties and two loans, while in the prior year period we earned fees from the acquisition of two distressed notes during the three months ended December 31, 2010; and

● a $523,000 increase in equity in earnings of unconsolidated entities.  The three months ended December 31, 2011 includes a $750,000 equity gain for money released from escrow related to the fiscal 2011 sale of a Washington, DC office building by one of our legacy portfolio investments.  This increase was offset, in part, by the equity losses we incurred related to our real estate investment partnerships.

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Costs and Expenses – Three Months Ended December 31, 2011 as Compared to the Three Months Ended December 31, 2010

Costs and expenses of our real estate operations increased $1.7 million (32%) for the three months ended December 31, 2011.  We attribute these changes primarily to the following:

● a $1.6 million increase in general and administrative expenses related principally to the costs of fundraising and marketing for RRE Opportunity REIT; and

● a $243,000 increase in Resource Residential expenses due to increased wages and benefits, primarily in conjunction with the additional personnel needed to operate and manage the increase in properties.

Results of Operations:  Financial Fund Management

Financial Fund Management

   General.  We conduct our financial fund management operations primarily through six separate operating entities:

● Apidos Capital Management, LLC, or Apidos, finances, structures and manages investments in bank loans, high yield bonds and equity investments through CDO issuers, managed accounts and a credit opportunities fund;

● Trapeza Capital Management, LLC, or TCM, a joint venture between us and an unrelated third-party, manages investments in trust preferred securities and senior debt securities of banks, bank holding companies, insurance companies and other financial companies through CDO issuers and related partnerships.  TCM, together with the Trapeza CDO issuers and Trapeza partnerships, are collectively referred to as Trapeza;

● Resource Financial Institutions Group, Inc., or RFIG, serves as the general partner for seven company-sponsored affiliated partnerships which invest in financial institutions;

● Ischus Capital Management, LLC, or Ischus, finances, structures and manages investments in ABS including residential mortgage-backed securities, or RMBS, and commercial mortgage-backed securities, or CMBS;

● Resource Capital Markets, Inc., or Resource Capital Markets, through our registered broker-dealer subsidiary, Resource Securities, Inc., or Resource Securities, (formerly Chadwick Securities, Inc.), acts as an agent in the primary and secondary markets for structured finance securities and manages accounts for institutional investors; and

● Resource Capital Manager, Inc., or RCM, an indirect wholly-owned subsidiary, provides investment management and administrative services to RCC under a management agreement between us, RCM and RCC.

The following table sets forth information relating to assets managed by our financial fund management operating entities on behalf of institutional and individual investors and RCC (in millions) (1):

	As of December 31, 2011
	Institutional and Individual Investors		RCC		Total by Type
Trapeza	$	3,869	$	−	$	3,869
Apidos (2)		2,700		2,966		5,666
Ischus		1,490		−		1,490
Other company-sponsored partnerships		84		36		120
	$	8,143	$	3,002	$	11,145

	As of December 31, 2010
	Institutional and Individual Investors		RCC		Total by Type
Trapeza	$	4,139	$	−	$	4,139
Apidos		2,679		940		3,619
Ischus		1,861		−		1,861
Other company-sponsored partnerships		77		7		84
	$	8,756	$	947	$	9,703

(1) For information on how we calculate assets under management, see the first table and related notes in Item 1, “Business – Assets Under Management”.

(2) In February 2011, we entered into a services agreement to provide subadvisory collateral management and administration services for five CDO issuers managed by RCC ($1.7 billion), and in October 2011, we closed Apidos VIII, a CLO we manage on behalf of RCC ($355.6 million).

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In our financial fund management operating segment, we earn monthly fees on assets managed on behalf of institutional and individual investors as follows:

● Collateral management fees − we receive fees for managing the assets held by CDO issuers we have sponsored, including subordinate and incentive fees.  These fees vary by CDO issuer, with our annual fees ranging between 0.05% and 0.50% of the aggregate principal balance of the eligible collateral owned by the CDO issuers.  CDO indentures require that certain overcollateralization test ratios, or O/C ratios, be maintained.  O/C ratios measure the ratio of assets (collateral) to liabilities (notes) of a given CDO issuer.  Losses incurred on collateral due to payment defaults, payment deferrals or rating agency downgrades reduce the O/C ratios.  If specified O/C ratios are not met by a CDO, subordinate or incentive management fees, which are discussed in the following sections, are deferred and interest collections from collateral are applied to outstanding principal balances on the CDO notes.

● Administration fees − we receive fees for managing the assets held by our company-sponsored partnerships and credit opportunities fund.  These fees vary by limited partnership or fund, with our annual fee ranging between 0.75% and 2.00% of the partnership or fund capital balance.

Based on the terms of our general partner interests, two of the Trapeza partnerships we manage as general partner include a clawback provision.

We discuss the basis for our fees and revenues for each area in more detail in the following sections.

Our financial fund management operations historically have depended upon our ability to sponsor CDO issuers and sell their CDOs.  During the past several years, the market for CDOs in the asset classes we manage has been extremely limited.  While we believe that the market has recently loosened, and we were able to sponsor Apidos CLO VIII, we cannot predict whether we will be able to sponsor other CDOs in the future.  Accordingly, we expect that the management fee revenues in this segment of our operations will remain stable or decline.

Apidos

We sponsored, structured and/or currently manage 17 CDO issuers for institutional and individual investors and RCC, which hold approximately $5.7 billion in bank loans at December 31, 2011, of which $3.0 billion are managed on behalf of RCC through nine CDO issuers.  In February 2011, we entered into a services agreement with a subsidiary of RCC to provide subadvisory collateral management and administration services for five CDO issuers which hold approximately $1.7 billion in bank loans.  In connection with the services provided, RCC will pay us 10% of all base and additional collateral management fees and 50% of all incentive collateral management fees collected.  In October 2011, we closed Apidos CLO VIII, a $350.0 million CLO, that we manage on behalf of RCC and third-party investors.  We previously sponsored, structured and managed one CDO issuer holding international bank loans.  In December 2010, we completed the sale of our management contract for this CDO issuer.

We currently derive revenues from our Apidos operations through base and subordinate management fees.  Base management fees vary by CDO issuer, but range from between 0.01% and 0.15% of the aggregate principal balance of eligible collateral held by the CDO issuers.  Subordinate management fees vary by CDO issuer, but range from between 0.04% and 0.40% of the aggregate principal balance of eligible collateral held by the CDO issuers, all of which are subordinated to debt service payments on the CDOs.  We are also entitled to receive incentive management fees; however, we did not receive any such fees in fiscal 2011 nor for the three months ended December 31, 2011.  Incentive management fees are subordinated to debt service payments on the CDOs.

Trapeza

We sponsored, structured and currently co-manage 13 CDO issuers holding approximately $3.9 billion in trust preferred securities of banks, bank holding companies, insurance companies and other financial companies.

We own a 50% interest in an entity that manages 11 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.  Additionally, we have invested as a limited partner in each of these limited partnerships.  On November 1, 2009 and January 28, 2010, those general partners repurchased substantially all of the remaining limited partnership interests in two of the Trapeza entities.

We derive revenues from our Trapeza operations through base management fees.  Base management fees vary by CDO issuer, but range from between 0.10% and 0.25% of the aggregate principal balance of the eligible collateral held by the CDO issuers.  These fees are shared with our co-sponsors.

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Company-Sponsored Partnerships

We sponsored, structured and, through RFIG, currently manage seven affiliated partnerships for individual and institutional investors, which hold approximately $57.0 million of investments in financial institutions.  We derive revenues from these operations through annual management fees, based on 2.0% of equity.  We also have invested as a general and limited partner in these partnerships.  We may receive a carried interest of up to 20% upon meeting specific investor return rates.

Since March 2009, we have sponsored and managed an affiliated partnership organized as a credit opportunities fund which holds approximately $26.9 million in bank loans, high yield bonds and uninvested capital.  We have invested as a general and limited partner in this partnership.  We derive revenues from this partnership through base and incentive management fees.  Base management fees are calculated at 1.5% of the partnership’s net assets and are payable quarterly in advance.  Incentive management fees are calculated annually at 20% of the partnership’s annual net profits, but are subject to a loss carryforward provision and an investor hurdle rate.

Ischus

We sponsored, structured and/or currently manage eight CDO issuers for institutional and individual investors, which hold approximately $1.5 billion in primarily real estate ABS including RMBS, CMBS and credit default swaps.

We derive revenues from our Ischus operations through base management fees.  Base management fees vary by CDO issuer, ranging from between 0.10% and 0.20% of the aggregate principal balance of eligible collateral held by the CDO issuer.

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,
	2011		2010
Revenues:
Fund management fees	$	3,827	$	4,294
RCC management fees		2,306		2,402
Introductory agent fees		151		1,078
Earnings from unconsolidated CDOs		194		413
Other		−		3
		6,478		8,190
Limited and general partner interests		101		140
	$	6,579	$	8,330
Costs and expenses:
General and administrative expenses	$	5,804	$	6,720

Introductory agent fees, recorded as of the trade date, vary by transaction and, accordingly, there may be significant variations in these revenues from period to period.

Revenues – Three Months Ended December 31, 2011 as Compared to the Three Months Ended December 31, 2010

Revenues decreased $1.8 million (21%) to $6.6 million for the three months ended December 31, 2011.  We attribute the decrease primarily to the following:

● a $467,000 decrease in fund management fees, principally from the following:

– a $683,000 decrease in incentive fees earned on the credit opportunities fund that we manage, related to the fee earned during the three months ended December 31, 2010.  No such fees were earned during the current year period; and

– a $123,000 decrease in management and incentive fees earned on separately managed accounts, principally related to fees we earned ($106,000) during the three months ended December 31, 2010 on an account that we no longer manage.

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     These decreases were partially offset by:

– a $216,000 increase in collateral management fees earned in connection with a services agreement with a subsidiary of RCC.  In February 2011, we entered into a services agreement with RCC to provide subadvisory collateral management and administrative services for five CDO issuers invested in bank loans; and

– a $133,000 increase in collateral management fees earned on Apidos CLO VIII. No such fees were earned during the prior year period.

● a $96,000 decrease in RCC management fees primarily due to a decrease in incentive management fees earned by Resource Capital Markets on managing a trading portfolio on behalf of RCC.  Incentive management fees earned on managing this portfolio for the three months ended December 31, 2011 totaled $1.9 million as compared to $2.1 million for the prior year period.  This decrease in incentive management fees was partially offset by a $169,000 increase in base management fees earned by our Apidos operations;

● a $927,000 decrease in introductory agent fees as a result of fees earned in connection with seven structured security transactions with an average fee of $22,000 for the three months ended December 31, 2011 as compared to 31 structured security transactions with an average fee of $35,000 for the prior year period; and

● a $219,000 net decrease in earnings from four unconsolidated CDO issuers invested in bank loans we previously sponsored and managed, primarily resulting from the sale of our equity interest in one of our European CLOs  in December 2010.

Costs and Expenses – Three Months Ended December 31, 2011 as Compared to the Three Months Ended December 30, 2010

Costs and expenses of our financial fund management operations decreased $916,000 (14%) for the three months ended December 31, 2011.  This decrease was primarily the result of a $572,000 decrease in compensation expense related to a reduction in personnel and an increase in severance costs associated with the sale of our European management contract in December 2010.  In addition, our structured security transaction commissions decreased by $395,000 as a result of reduced activity and profit-sharing relating to portfolio management activities conducted by Resource Capital Markets for RCC decreased by $305,000 as a result of a decrease in incentive management fees earned.  These decreases were partially offset by increases in professional fees ($152,000), other operating expenses ($111,000) and rent ($57,000).

Results of Operations: Commercial Finance

The commercial finance assets we manage, at December 31, 2011 decreased by $230.0 million to $549.0 million as compared to $779.0 million at December 31, 2010.  The decrease reflects a $314.0 million reduction in assets we managed for our four investment entities due to the natural runoff of the leases portfolios, which was partially offset by an increase in the LEAF portfolio.  As of December 31, 2011, we managed approximately 60,000 leases and loans for LEAF and our investment entities, with an average original finance value of $26,000 and an average term of 58 months as compared to approximately 80,000 leases and loans with an average original finance value of $25,000 and an average term of 56 months as of December 31, 2010.

The following table sets forth information related to commercial finance assets managed (1) (in millions):

	As of December 31,
	2011		2010
Commercial finance investment entities	$	319	$	633
LEAF		226		−
LEAF Financial		−		22
RCC		−		110
Other		4		14
	$	549	$	779

(1) For information on how we calculate assets under management, see the table and related notes at the end of “Assets under Management,” above.

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We consolidated the operating results of LEAF through November 16, 2011 and have recorded our equity interest in the losses of LEAF for the remainder of the three months ended December 31, 2011.  We continue to consolidate the operating results of LEAF Financial.  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,
	2011			2010
Revenues: (1)
Equity in losses of LEAF	$	(565	)	$	−
Finance revenues		3,767			724
Fund management fees		−			505
Equity in losses of commercial finance investment entities		(150	)		(311	)
Other		367			558
	$	3,419		$	1,476
Costs and expenses:
Wage and benefit costs	$	1,875		$	2,000
Other costs and expenses		740			2,273
Deferred initial direct costs and expenses		(652	)		−
	$	1,963		$	4,273

(1) Total revenues include RCC servicing and origination fees of $0 and $144,000 for the three months ended December 31, 2011 and 2010, respectively.

Revenues – Three Months Ended December 31, 2011 as Compared to the Three Months Ended December 31, 2010

Revenues increased by $1.9 million (132%) for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010.  We attribute this increase primarily to the following:

● a $3.0 million increase in finance revenues, which was primarily driven by an increase in the size of the LEAF portfolio.  Assets managed by LEAF increased from $22.0 million at December 31, 2010 to $209.0 million at November 16, 2011, the date it was deconsolidated.  We expect that finance revenues will significantly decrease in future periods as a result of the LEAF deconsolidation; and

● a $161,000 increase in revenues reflecting the reduction in equity losses of our commercial finance investment partnerships, primarily a result of continued run-offs and improved aging of their commercial finance assets, which led to a reduced provision for credit losses period over period.

This increase was partially offset by the following:

● a $565,000 increase in equity in losses of LEAF subsequent to its deconsolidation.  Our loss was based on our proportionate ownership of LEAF common stock from November 17, 2011 through December 31, 2011;

● a $505,000 decrease in fund management fees due to waived fees.  Commencing December 1, 2010, we agreed to waive all future management fees from our commercial finance investment partnerships due to their reduced equity distributions as a result of the impact of the recession on their respective cash flows.  Accordingly,  we waived $1.5 million of fund management fees from these entities for the three months ended December 31, 2011; and

● a $191,000 decrease in other income due principally to a decrease in insurance charges.

Costs and Expenses – Three Months Ended December 31, 2011 as Compared to the Three Months Ended December 31, 2010

Costs and expenses from our commercial finance operations decreased by $2.3 million (54%) for the three months ended December 31, 2011 as compared to the three months ended December 31, 2010.  This decrease is primarily a result of the LEAF deconsolidation on November 16, 2011.

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Results of Operations: Other Costs and Expenses

Provision for Credit Losses

The following table reflects the provision for credit losses reported by operating segment and by category of financing receivable (in thousands):

	Three Months Ended
	December 31,
	2011		2010
Commercial finance:
Receivables from managed entities	$	1,995	$	1,411
Leases, loans and future payment card receivables		151		195
Real estate:
Receivables from managed entities		90		−
Rent receivables		14		−
	$	2,250	$	1,606

We have estimated, based on projected cash flows, that three of the commercial finance funds and two of the real estate partnerships that we sponsored and manage will not have sufficient funds to pay a portion of their accrued management fees and, accordingly, we recorded a $2.1 million provision for the three months ended December 31, 2011, as compared to $1.4 million recorded in the three months ended December 31, 2010.

Depreciation and Amortization

Depreciation and amortization expense was $2.1 million for the three months ended December 31, 2011, an increase of $936,000 (83%) as compared to $1.1 million for the three months ended December 31, 2010.  The increase for the three months ended December 31, 2011 primarily reflects the $1.1 million increase in depreciation relating to the additional $23.6 million of operating leases held by LEAF prior to its deconsolidation in November 2011.

Interest Expense

Interest expense was $3.0 million for the three months ended December 31, 2011, an increase of $605,000 (26%) as compared to $2.4 million for the three months ended December 31, 2010, including LEAF for the period prior to its deconsolidation.  As a result of the deconsolidation of LEAF, we will not reflect any commercial finance interest expense in future periods.  The following table reflects interest expense (exclusive of intercompany interest charges) as reported by segment (in thousands):

	Three Months Ended
	December 31,
	2011		2010
Corporate	$	1,068	$	1,483
Commercial finance		1,691		611
Real estate		215		275
	$	2,974	$	2,369

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Facility utilization, our outstanding Senior Notes (in millions) and the corresponding interest rates on borrowings outstanding were as follows:

	Three Months Ended
	December 31,
	2011		2010
Corporate – secured credit facilities and term note:
Average borrowings	$	6.2	$	13.8
Average interest rates		6.0%		7.0%
Corporate – Senior Notes:
Average borrowings	$	15.5	$	18.8
Average interest rates		11.4%		12.0%
Commercial finance – secured credit facility (1):
Average borrowings	$	68.8	$	−
Average interest rates		4.2%		−%
Commercial finance – term securitizations (1):
Average borrowings	$	112.8	$	−
Average interest rates		4.2%		−%
Commercial finance – terminated short-term bridge facility (1):
Average borrowings	$	−	$	20.9
Average interest rates		−%		6.9%

(1) The amounts presented for commercial finance for the three months ended December 31, 2011 reflect for the period from October 1 to November 16, 2011.  Subsequently, these facilities have been deconsolidated from our consolidated financial statements.

Gain on the Deconsolidation of LEAF

In November 2011, we obtained an additional outside investment in LEAF by a third-party private investment firm.  Accordingly, we determined that we no longer control LEAF and, effective with that investment, we have deconsolidated it for financial reporting purposes.  As a result of that transaction, our equity interest in LEAF is 15.7% on a fully diluted basis.  We recorded a $7.0 million gain to bring the value of our negative investment in LEAF to zero.  In addition, we utilized several approaches, including discounted expected cash flows, market approach and comparable sales transactions to estimate the fair value of our investment in LEAF as of the transaction date.  These approaches required assumptions and estimates of many critical factors, including revenue and market growth, operating cash flows, market multiples, and discount rates, which were based on the current economic environment and credit market conditions.  Based on a third-party valuation, our investment in LEAF was valued at $1.7 million.  Accordingly, we recorded a total gain of $8.7 million in conjunction with the deconsolidation of LEAF.

Loss on Extinguishment of Debt

In September and October 2009, we issued $18.8 million of Senior Notes along with detachable 5-year warrants to purchase common stock.  The proceeds from the Senior Notes were allocated to the notes and the warrants based on their relative fair value.  The warrant fair value was recorded as a discount to the notes and was to be amortized over a 3-year period using the effective interest method.  In November 2011, we refinanced the Senior Notes through a partial redemption and modification.  Due to the modification, we expensed the remaining $2.2 million discount related to the warrant fair value.

Gain on Sale of Management Contract

In December 2010, we sold the management contract of Resource Europe CLO I, or REM I, and recorded a gain of $6.5 million.

Gain (Loss) on Investment Securities, Net

During the three months ended December 31, 2011, we sold 26,517 shares of The Bancorp, Inc., or TBBK, common stock and recognized a gain of $17,000.  In December 2010, we received proceeds of $2.9 million from the sale of our equity investment in REM I and recognized a $1.5 million loss on the sale.  In addition, we sold 20,225 of our shares of TBBK during the three months ended December 31, 2010, and recognized a gain of $9,000.

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Income Taxes

Our effective income tax rate (income taxes as a percentage of income from continuing operations, before taxes) was 21% for the three months ended December 31, 2011 as compared to 35% for the three months ended December 31, 2010. The decrease in the rate primarily relates to the recording of a discrete tax benefit for the partial reversal of a valuation allowance in the amount of $119,000 that is no longer needed.  Our effective income tax rate without this discrete item would have been 37% for the three months ended December 31, 2011.

Currently, we project our effective tax rate to be between 35% and 39% for the remainder of fiscal 2012. This rate can vary from period to period depending on, among other factors, the geographic and business mix of our earnings and the level of our tax credits. We take certain of these and other factors, including our history of pretax earnings, into account in assessing our ability to realize our net deferred tax assets.

We are subject to examination by the U.S. Internal Revenue Service, or IRS, and other taxing authorities in certain U.S. states in which we have significant business operations. We are currently undergoing a New York State examination for fiscal 2007 – 2009.  In addition, LEAF Ventures, LLC, an entity we consolidate, is currently undergoing an IRS examination for fiscal 2010.  We are no longer subject to U.S. federal income tax examinations for fiscal years before 2008 and are no longer subject to state and local income tax examinations by tax authorities for fiscal years before 2005.

Net (Income) Loss Attributable to Noncontrolling Interests

We record third-party interests in our earnings as amounts attributable to noncontrolling interests.  Included in commercial finance are noncontrolling interests in LEAF for the period prior to its deconsolidation.  The following table sets forth the net (income) loss attributable to noncontrolling interests (in thousands):

	Three Months Ended
	December 31,
	2011			2010
Commercial finance – RCC investment in LEAF preferred stock (1)	$	(571	)	$	−
Commercial finance – management restricted stock, net of tax of $130 and $338 (2)		218			629
Real estate – outside interest in our hotel property (3)		(25	)		(4	)
	$	(378	)	$	625

(1) In the January 2011 formation of LEAF, RCC received 3,743 shares of LEAF Series A preferred stock and warrants to purchase 4,800 shares of LEAF common stock at $0.01 per share.  The warrants were recorded as a discount to the preferred stock and amortized over the five-year term of the warrants.  As a result of the deconsolidation of LEAF, we will no longer record this noncontrolling interest in subsequent periods.

(2) Senior commercial finance executives held a 13.9% interest in LEAF Financial as of December 31, 2010, which in January 2011 was exchanged for a 21.98% interest in LEAF (10% on a fully diluted basis assuming the exercise of warrants outstanding for the purchase of LEAF common stock). As a result of the deconsolidation of LEAF, we will no longer record this noncontrolling interest in subsequent periods.

(3) A related party holds a 19.99% interest in the hotel property we own in Savannah, Georgia.

Liquidity and Capital Resources

As an asset management company, our liquidity needs consist principally of capital needed to make investments and to pay our operating expenses (principally wages and benefits and interest expense).  Our ability to meet our liquidity needs will be subject to our ability to generate cash from operations, and, with respect to our investments, our ability to raise investor funds and to obtain debt financing.  However, the availability of any such financing will depend on market conditions.  We also may seek to obtain liquidity through the disposition discussed below of non-strategic investments, including our legacy real estate portfolio.

At December 31, 2011, our liquidity was comprised of the following primary sources:

● cash on hand of $12.8 million;

● the disposition of non-core assets;

● $5.2 million of availability under our two corporate credit facilities; and

● cash generated from operations.

Our consolidated balance sheet liquidity has significantly improved as of December 31, 2011, due principally to the disposition of non-core assets and the refinancing of our debt.

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We also completed the recapitalization of LEAF, including the $50.0 million growth equity investment by a third-party private investment firm.  The resulting deconsolidation of LEAF eliminated $202.5 million of borrowings from our balance sheet.

In connection with the agreements for the sale of our equity interests in Apidos, we expect to receive $25.0 million in cash, before costs and expenses, as well as continuing interests in the newly-formed joint partnership.  We anticipate the sale will close during the three months ending March 31, 2012, or shortly thereafter.

Disposition of Non-core Assets.  Our legacy portfolio at December 31, 2011 consisted of one loan and five property interests.  To the extent we are able to dispose of these assets, we will obtain additional liquidity.  The amount of additional liquidity we obtain will vary significantly depending upon the asset being sold and then-current economic conditions.  We cannot assure you that any dispositions will occur or as to the timing or amounts we may realize from any such dispositions.

Refinancing and paydown of our debt.  In addition to the elimination of LEAF’s debt on deconsolidation, we repaid $3.4 million of outstanding borrowings under the TD Bank facility and redeemed $8.8 million of our Senior Notes.  In November 2011, we extended the maturity of our TD facility from August 2012 to August 2013 and modified the remaining $10.0 million of our Senior Notes to reduce the interest rate to 9% and extend the maturity to October 2013.  We also amended our Republic Bank facility to extend the maturity of that facility to December 1, 2013.

As of December 31, 2011, our total borrowings outstanding of $28.5 million included $10.0 million of Senior Notes, $5.3 million of corporate revolving debt, $10.7 million of mortgage debt secured by the underlying property and $2.5 million of other debt.

Capital Requirements

Our capital needs consist principally of funds to make investments in the investment vehicles we sponsor or for our own account and to provide bridge financing or other temporary financial support to facilitate asset acquisitions by our sponsored investment vehicles.  Accordingly, the amount of capital we require will depend to a significant extent upon our level of activity in making investments for our own account or in sponsoring investment vehicles, all of which is largely within our discretion.

Contractual Obligations and Other Commercial Commitments

The following tables summarize our contractual obligations and other commercial commitments at December 31, 2011 (in thousands):

			Payments Due By Period
Contractual Obligations	Total		Less than 1 Year		1 – 3 Years		4 – 5 Years		After 5 Years
Non-recourse to RAI:
Senior  Notes	$	10,000	$	−	$	10,000	$	−	$	−
Mortgage – hotel property		10,660		171		382		433		9,674
		20,660		171		10,382		433		9,674
Recourse to RAI:
Secured credit facilities (1)	$	5,303	$	−	$	5,303	$	−	$	−
Other debt (1)		2,021		344		−		1,677		−
Capital lease obligations		487		246		241		−		−
		7,811		590		5,544		1,677		−
Operating lease obligations		10,640		1,811		2,693		2,417		3,719
Other long-term liabilities		10,492		2,427		2,153		1,503		4,409
Total contractual obligations	$	49,603	$	4,999	$	20,772	$	6,030	$	17,802

(1) Not included in the table above are estimated interest payments calculated at rates in effect at December 31, 2011, as follows: less than 1 year: $2.1 million; 1-3 years:  $2.5 million; 4-5 years:  $1.3 million; and after 5 years: $2.8 million.

			Amount of Commitment Expiration Per Period
	Total		Less than 1 Year		1 – 3 Years		4 – 5 Years		After 5 Years
Other commercial commitments:
Guarantees	$	−	$	−	$	−	$	−	$	−
Standby letters of credit		803		803		−		−		−
Total commercial commitments	$	803	$	803	$	−	$	−	$	−

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LEAF Valuation Commitment.  In accordance with the November 2011 LLC Transaction, we along with RCC have jointly undertaken a contingent obligation with respect to the value of the equity on the balance sheet of LEAF Receivables Funding 3, LLC, or LRF3, a wholly-owned subsidiary of LEAF which owns equipment, equipment leases and notes.  To the extent that the value of the equity on the balance sheet of LRF 3 is less than approximately $18.7 million (the value of the equity of LRF3 on the date it was contributed to LEAF by RCC), as of the final testing date within 90 days of December 31, 2013, we and RCC have agreed to be jointly and severally obligated to contribute cash to LEAF to make up the shortfall.
 

Broker-Dealer Capital Requirement.  Resource Securities (formerly Chadwick Securities, Inc.), our wholly-owned subsidiary, is a registered broker-dealer and serves as a dealer-manager for the sale of securities of direct participation investment programs, both public and private, sponsored by our subsidiaries who also serve as general partners and/or managers of these programs.  Additionally, Resource Securities serves as an introducing agent for transactions involving sales of securities of financial services companies, REITs and insurance companies for us and RCC.  As a broker-dealer, Resource Securities is required to maintain minimum net capital, as defined in regulations under the Securities Exchange Act of 1934, as amended, which was $100,000 as of December 31, 2011 and September 30, 2011, respectively.  As of December 31, 2011 and September 30, 2011, Resource Securities net capital was $295,000 and $254,000, respectively, which exceeded the minimum requirements by $195,000 and $154,000, respectively.

Clawback Liability.Two financial fund management investment entities that have incentive distributions, also known as carried interests, are structured so that there is a “clawback” of previously paid incentive distributions to the extent that such distributions exceed the cumulative net profits of the entities, as defined in the respective partnership agreements.  On November 1, 2009 and January 28, 2010, we, along with the co-manager of the general partner of those investment entities, repurchased substantially all the remaining limited partnership interests in these two partnerships, significantly reducing our potential clawback liability.  The clawback liability was $1.2 million at December 31, 2011 and September 30, 2011.

Legal Proceedings.  In September 2011, First Community Bank, or First Community, filed a complaint against First Tennessee Bank and approximately thirty other defendants, consisting of investment banks, rating agencies, collateral managers, including TCM, and issuers of CDOs, including Trapeza CDO XIII, Ltd. and Trapeza CDO XIII, Inc.  TCM and the Trapeza CDO issuers are collectively referred to as Trapeza.  The complaint includes causes of action against TCM for fraud, negligent misrepresentation, violation of the Tennessee Securities Act of 1980 and unjust enrichment.  First Community alleges, among other things, that it invested in certain CDOs, that the defendant rating agencies assigned inflated investment grade ratings to the CDOs, and that the defendant investment banks, collateral managers and issuers (including Trapeza), fraudulently and/or negligently made “materially false and misleading representations and omissions” that First Community relied on in investing in the CDOs, including both written representations in offering materials and unspecified oral representations.  Specifically, with respect to Trapeza, First Community alleges that it purchased $20 million of notes in the D tranche of the Trapeza CDO XIII transaction from J.P. Morgan.  Trapeza believes that none of First Community’s claims have merit and intends to vigorously contest this action.

           Real Estate Commitments. As a specialized asset manager, we sponsor investment funds in which we may make an equity investment along with outside investors.  This equity investment is generally based on a percentage of funds raised and varies among investment programs.  With respect to RRE Opportunity REIT, we are committed to invest 1% of the equity raised to a maximum amount of $2.5 million.

In July 2011, we entered into an agreement with one of the TIC programs we sponsored and manage.  This agreement requires us to fund up to $1.9 million, principally for capital improvements, for the underlying property over the next two years.  As of December 31, 2011, we have advanced funds totaling $1.4 million.

The liabilities for the real estate commitments will be recorded in the future as the amounts become due and payable.

General Corporate Commitments. We are also a party to employment agreements with certain executives that provide for compensation and other benefits, including severance payments under specified circumstances.

As of December 31, 2011, except for the clawback liability recorded for the two Trapeza entities, real estate commitments, and executive compensation, we do not believe it is probable that any payments will be required under any of our commitments and contingencies, and accordingly, no liabilities for these obligations have been recorded in the consolidated financial statements.

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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 financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues, costs and expenses, and related disclosure of contingent assets and liabilities.  We make estimates of the valuation allowance against our deferred tax assets, collectability of management fees, the valuation of stock-based compensation, and in determining whether a decrease in the fair value of an investment is an other-than-temporary impairment.  The financial fund management segment makes assumptions in determining the fair value of our investments in securities available-for-sale and in estimating the liability, if any, for clawback provisions on certain of our partnership interests.  We used assumptions, specifically inputs to the Black-Scholes pricing model and the discounted cash flow model, in computing the fair value of the Senior Notes and related warrants.  On an on-going basis, we evaluate our estimates, which are based on historical experience and on various other assumptions that we believe are 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 the year ended September 30, 2011, at Note 2 of the “Notes to Consolidated Financial Statements.”

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to various market risks from changes in interest rates.  Fluctuations in interest rates can impact our results of operations, cash flows and financial position.  We manage this risk through regular operating and financing activities.  We have not entered into any market sensitive instruments for trading purposes.  The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.  The range of changes presented reflects our view of changes that are reasonably possible over a one-year period and provides indicators of how we view and manage our ongoing market risk exposures.  Our analysis does not consider other possible effects that could impact our business.

The following analyzes the potential impact of a hypothetical change in interest rates as of December 31, 2011.  Our analysis does not consider other possible effects that could impact our business.

At December 31, 2011, we have two secured revolving credit facilities for general business use.  Weighted average borrowings on these facilities were $5.4 million for the three months ended December 31, 2011 at an interest rate of 6.0% on outstanding borrowings.  A hypothetical 10% change in the interest rate on these facilities would change our annual interest expense by $33,000.

Our $10.0 million of 9% Senior Notes outstanding are at a fixed rate of interest and are, therefore, not subject to interest rate fluctuation.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’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, 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.

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Internal Financial Control

During the quarter ended December 31, 2011, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.                      OTHER INFORMATION

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

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
October 1 to October 31, 2011		85,426	$	4.69		137,026	$	19,358,000
November 1 to November 30, 2011		70,263	$	4.83		207,289	$	19,019,000
December 1 to December 31, 2011		41,305	$	4.82		248,594	$	18,820,000
Total		196,994	$	4.77

(1) The average price per share as reflected above includes broker fees/commissions.

ITEM 6. EXHIBITS

Exhibit No.	Description
2.1	Resource America, Inc. and CVC Capital Partners SICAV-FIS S.A. Sales and Purchase Agreement, dated December 29, 2011.  Certain schedules and exhibits have been omitted in accordance with Item 601(b)(2) of Regulation S-K.  A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.
3.1	Restated Certificate of Incorporation of Resource America. (1)
3.2	Amended and Restated Bylaws of Resource America. (1)
4.1	Note Purchase Agreement (including the form of Senior Note and form of Warrant). (2)
4.2(a)	Indenture between LEAF Funding SPE 1, LLC and U.S. Bank National Association, dated August 20, 2010. (3)
4.2(b)	Supplemental Indenture Number One, dated April 27, 2011, to the Indenture, dated as of December 5, 2010, by and among LEAF Capital Funding SPE A, LLC, as Issuer, U.S. Bank National Association, as Trustee and Custodian, and Guggenheim Securities, LLC, as Administrative Agent. (7)
10.1(a)	Amended and Restated Loan and Security Agreement, dated March 10, 2011, between Resource America, Inc. and TD Bank, N.A. (6)
10.1(b)	First Amendment to the Amended and Restated Loan and Security Agreement, dated as of November 29, 2011, between Resource America, Inc. and TD Bank, N.A. (9)
10.2	Amended and Restated Employment Agreement between Michael S. Yecies and Resource America, Inc., dated December 29, 2008. (4)
10.3	Amended and Restated Employment Agreement between Thomas C. Elliott and Resource America, Inc., dated December 29, 2008. (4)
10.4	Amended and Restated Employment Agreement between Jeffrey F. Brotman and Resource America, Inc., dated December 29, 2008. (4)
10.5	Amended and Restated Employment Agreement between Jonathan Z. Cohen and Resource America, Inc., dated December 29, 2008. (4)
10.6	Amended and Restated Employment Agreement between Steven J. Kessler and Resource America, Inc., dated December 29, 2008. (4)
10.7(a)	Loan Agreement between and among Republic First Bank (d/b/a Republic Bank) and Resource Capital Investor, Inc. and Resource Properties XXX, Inc. (5)
10.7(b)	Loan Modification Agreement between and among Republic First Bank (d/b/a Republic Bank) and Resource Capital Investor, Inc. and Resource Properties XXX, Inc. (8)
10.7(c)	Second Loan Modification Agreement between and among Republic First Bank (d/b/a Republic Bank) and Resource Capital Investor, Inc. and Resource Properties XXX, Inc. (12)
10.8	Indenture between LEAF Receivables Funding 7, LLC and U.S. Bank National Association, dated as of September 7, 2011. (10)
10.9	Settlement Agreement, dated January 9, 2012, by and among Raging Capital Group and Resource America, Inc. (11)

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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.
99.1	Stock Purchase Agreement by and among LEAF Commercial Capital, Inc., LEAF Financial Corporation, Resource TRS, Inc., Resource Capital Corp., Resource America, Inc. and the Purchasers named therein, dated November 16, 2011.
99.2	Amended and Restated Certificate of Incorporation of LEAF Commercial Capital, Inc., dated November 16, 2011.
99.3	LEAF Commercial Capital, Inc. Stockholders’ Agreement, dated November 16, 2011.
101	Interactive Data Files

(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.

(2) Files previously as an exhibit to our Current Report on Form 8-K filed on October 1, 2009 and by this reference incorporated herein.

(3) Filed previously as an exhibit to our Annual Report on Form 10-K for the fiscal year ended September 30, 2010 and by this reference incorporated herein.

(4) Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 and by this reference incorporated herein.

(5) Filed previously as an exhibit to our Current Report on Form 8-K filed on March 3, 2011 and by this reference incorporated herein.

(6) Filed previously as an exhibit to our Current Report on Form 8-K filed on March 15, 2011 and by this reference incorporated herein.

(7) Filed previously as an exhibit to our Current Report on Form 8-K filed on May 3, 2011 and by this reference incorporated herein.

(8) Filed previously as an exhibit to our Current Report on Form 8-K filed on September 28, 2011 and by this reference incorporated herein.

(9) Filed previously as an exhibit to our Current Report on Form 8-K filed on December 2, 2011 and by this reference incorporated herein.

(10) Filed previously as an exhibit to our Annual Report on Form 10-K for the fiscal year ended September 30, 2011 and by this reference incorporated herein.

(11) Filed previously as an exhibit to our Current Report on Form 8-K filed on January 11, 2012 and by this reference incorporated herein.

(12) Filed previously as an exhibit to our Current Report on Form 8-K filed on January 17, 2012 and by this reference incorporated herein.

48

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 hereunto duly authorized.

	RESOURCE AMERICA, INC.
	(Registrant)
Date:  February 6, 2012	By:           /s/ Thomas C. Elliott
	THOMAS C. ELLIOTT
	Senior Vice President and Chief Financial Officer

Date:  February 6, 2012	By:           /s/ Arthur J. Miller
	ARTHUR J. MILLER
	Vice President and Chief Accounting Officer

49

EX-2.1

Exhibit 2.1

RESOURCE AMERICA, INC. AND CVC CAPITAL PARTNERS SICAV-FIS S.A.
	SALE AND PURCHASE AGREEMENT

CONTENTS

Clause Page

1.	Interpretation	1
2.	Conditions Precedent	5
3.	Completion	7
4.	Termination	7
5.	Locked Box and Unfunded Accrued Liabilities	9
6.	Warranties	12
7.	Limitations on Warranty Liability	13
8.	Pre-Completion Conduct	15
9.	Further Undertakings	15
10.	Transitional Services	18
11.	Confidentiality	18
12.	Announcements	18
13.	Costs	18
14.	General	18
15.	Entire Agreement	19
16.	Assignment	20
17.	Notices	21
18.	Governing Law	21
19.	Counterparts	22
Schedule 1 Completion obligations		23
Schedule 2 Indemnification and Warranty Claims and Miscellaneous		27
Schedule 3 Warranties		29
Schedule 4 Pre-completion conduct		35
Schedule 5 Transitional Services		37
Schedule 6 Non-Regulatory Condition		42
Schedule 7 Business Assets		45
Schedule 8 Equity Structure		47

Agreed Form Documents:

Announcements

Apidos Data Room Index

Apidos Employees list

Apidos Revised LLC Agreement

Cordatus Data Room Index

Cordatus Employees list

Limited Partnership Agreement

Shareholders Agreement

Consent Agreement between RSO, RCAM and Apidos

Fee agreement between RCAM and Apidos

List of Unsettled Trades

Board Resolutions of GPCo

Entity Name Changes

THIS AGREEMENT is dated 29 December 2011

BETWEEN

(1) RESOURCE AMERICA, INC., whose registered address is at One Crescent Drive, Suite 203, Navy Yard Corporate Center, Philadelphia, PA 19112 USA ("RA"); and

(2) CVC CAPITAL PARTNERS SICAV-FIS S.A., whose registered address is at 30 Avenue Monterey, L-2163 Luxembourg ("CVC").

RECITALS:

This Agreement sets out the basis upon which CVC has agreed to purchase the debt management business Apidos from RA.

1. INTERPRETATION

1.1 In this Agreement:

"ACA Guarantee" means RA's guarantee to ACA in relation to the performance by Apidos of all its obligations under the Master Assignment Agreement dated 11 April 2008;

"Apidos" means Apidos Capital Management, LLC and/or, as the Agreement may require, the business of the Apidos Group Companies;

"Apidos Data Room" means the virtual data room containing the documents listed on the Apidos Data Room Index;

"Apidos Data Room Index" means the index with that name in the agreed form;

"Apidos Financial Information means the consolidated balance sheet of Apidos as at 30th September 2011 and the consolidated income statement of Apidos for the annual period then ended in respect of the Apidos Group Companies, as contained in the Apidos Data Room;

"Apidos Funds" means each of Apidos CDO I; Apidos CDO II; Apidos CDO III; Apidos CDO IV; Apidos Quattro CDO; Apidos CDO V; Apidos Cinco CDO; Apidos CLO VIII; ACA CLO 2005-1, LTD; ACA CLO 2006-1, LTD; ACA CLO 2006-2, LTD; ACA CLO 2007-1, LTD; Olympic CLO1, LTD; Whitney CLO1, LTD; Sierra CLO II, LTD; Shasta CLO I, LTD; San Gabriel CLO I, LTD; Saratoga (GSC CLO 2007); First American International Bank Managed Account; and Apidos Select Corporate Credit Master Fund, L.P.;

"Apidos Group Companies" means Apidos Capital Management, LLC; Apidos Select Corporate Credit Fund GP, LLC; and Apidos Partners, Inc;

"Apidos Shares" means all of the outstanding membership interests in Apidos, other than in Schedule 1, where "Apidos Shares" means all those interests other than the preferred interests referred to in the amended and restated limited liability company agreement of Apidos in the agreed form;

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"Apidos Employees" means the persons whose names are listed in the document in the agreed form with that heading;

"Business Day" means a day other than a Saturday or a Sunday or a public holiday in England or New York;

"Completion" means completion of the transaction contemplated by this Agreement;

"Conditions" means the conditions set out in clause 2;

"Cordatus" means CVC Cordatus Group Limited, in the process of changing its name to CVC Credit Partners Group Limited and/or, as the context may require, the business of the Cordatus Group Companies;

"Cordatus Data Room" means the virtual data room containing the documents listed on the Cordatus Data Room Index;

"Cordatus Data Room Index" means the index with that name in the agreed form;

"Cordatus Employees" means the persons whose names are listed in the document in the agreed form with that heading;

"Cordatus Financial Information" means the balance sheet of the Cordatus Group Companies as at 31 December 2010 and  the profit and loss account of the Cordatus Group Companies for the financial year ended 31 December 2010,  as contained in the Cordatus Data Room;

"Cordatus Funds" means each of Cordatus Loan Fund I, Cordatus Loan Fund II, Cordatus Recovery Partners I, Cordatus Capital Partners;

"Cordatus Group Companies" means CVC Cordatus Group Limited, CVC Cordatus Limited, Cordatus Recovery Partners II General Partner Limited, CVC Cordatus Investment Management Limited and Cordatus CP Investments Limited and Cordatus Mezzanine Partners General Partner Limited (which is intended to be liquidated);

"Cordatus Shares" means all of the ordinary shares issued by CVC Cordatus Group Limited, including, for the avoidance of doubt, any ordinary shares to be issued on conversion of the existing preference shares issued by such company;

"Costs" means losses, damages, payments, costs (including legal costs), liabilities and expenses (including tax), in each case of any nature whatsoever;

"CVC Group Company" means CVC or any entity which is from time to time its direct or indirect subsidiary undertaking other than, as the context requires, a Cordatus Group Company;

"CVC Warranty" means a statement contained in Part B of Schedule 3 and "CVC Warranties" means all those statements;

"CVC Fundamental Warranty Claim" means a claim by CVC under or pursuant to the provisions of clause 6.1 in respect of a Warranty set out in paragraph 1, 2, 3, 5, 6, or 12 of Part A of  Schedule 3;

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"CVC General Warranty Claim" means a CVC Warranty Claim other than a CVC Fundamental Warranty Claim;

"CVC Warranty Claim" means a claim by CVC under or pursuant to the provisions of clause 6.1;

"Encumbrance" means a mortgage, charge, pledge, lien, right of first refusal, right of pre-emption, or other encumbrance or security interest of any kind;

"Final Long-Stop Date" means 31 August 2012;

"Force Majeure"means an act or circumstance which is outside the reasonable control of the party affected by it, including act of God, act of government, fire, terrorism or civil unrest;

"GPCo" means a company to be incorporated by CVC in Jersey, which is to be the general partner of the Partnership;

"Key Man Provisions" means the additional termination event, contained in the schedule to the ISDA 1992 Master Agreement, dated 27 September, 2011, between Credit Suisse International and Apidos Select Corporate Credit Master Fund, L.P., which will occur if any two or more of Gretchen L. Bergstresser, Vincent M. Ingato, Oscar K. Anderson or Christopher D. Allen cease to be involved in the day-to-day operations of the Apidos Select Corporate Credit Fund, Ltd. for any reason and have not been replaced by persons acceptable to Credit Suisse International within 30 calendar days;

"Limited Partnership Agreement"means the partnership agreement in the agreed form to be entered into at Completion by CVC, RA and GPCo in respect of the Partnership;

"Managed Account Agreements" means each of the Services Agreement between Apidos Capital Management, LLC and Saratoga Investment Advisors, LLC, dated 9 September 2010; and the Investment Management Agreement between First American International Bank and Apidos Capital Management, LLC, dated 30 June 2010;

"Newco" means a company to be incorporated by CVC in England and Wales, which is to be a shareholder in GPCo and a limited partner in the Partnership;

"Partnership" means the partnership constituted by the Limited Partnership Agreement;

"RA Group Company" means RA or any entity which is from time to time its direct or indirect subsidiary undertaking (other than, as the context requires, an Apidos Group Company);

"RA Warranty" means a statement contained in Part A of Schedule 3 and "RA Warranties" means all of those statements;

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"RA Fundamental Warranty Claim" means a claim by RA under or pursuant to the provisions of clause 6.2 in respect of a Warranty set out in paragraph 1, 2, 3, 5, 6, or 12 of Part B of Schedule 3;

"RA General Warranty Claim" means an RA Warranty Claim other than an RA Fundamental Warranty Claim;

"RA Warranty Claim" means a claim by RA under or pursuant to the provisions of clause 6.2;

"Regulatory Long-Stop Date" means 31 May 2012;

"RSO" means Resource Capital Corp.;

"Shareholders Agreement" means the shareholders agreement in the agreed form to be entered into at Completion between CVC, Newco, Resource Financial Fund Management, Inc., and RA in relation to GPCo;

"Sub-Advisory Agreement" means the Services Agreement between Resource Capital Asset Management LLC and Apidos Capital Management, dated 24 February 2011;

"Transactional Documents" means this Agreement, the Shareholders Agreement and the Limited Partnership Agreement and any other document to be entered into between a CVC Group Company and an RA Group Company on the date hereof or at Completion; and

"Warranty" means a statement contained in Schedule 3 and "Warranties" means all those statements.

1.2 In this Agreement, a reference to:

1.2.1 a "subsidiary undertaking" is to be construed in accordance with section 1162 (and Schedule 7) of the Companies Act 2006.  A subsidiary and a subsidiary undertaking shall include any person the shares or ownership interests in which are subject to security and where the legal title to the shares or ownership interests so secured are registered in the name of the secured party or its nominee pursuant to such security;

1.2.2 liability under, pursuant to or arising out of (or any analogous expression) any agreement, contract, deed or other instrument includes a reference to contingent liability under, pursuant to or arising out of (or any analogous expression) that agreement, contract, deed or other instrument;

1.2.3 a party being liable to another party, or to liability, includes any liability in equity, contract or tort (including negligence) or under the Misrepresentation Act 1967;

1.2.4 a document in the "agreed form" is a reference to a document in a form approved and for the purposes of identification initialled by or on behalf of each party ;

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1.2.5 a statutory provision includes a reference to the statutory provision as modified or re enacted or both from time to time before the date of this Agreement and any subordinate legislation made under the statutory provision (as so modified or re enacted) before the date of this Agreement;

1.2.6 a "person" includes a reference to any individual, firm, company, corporation or other body corporate, government, state or agency of a state or any joint venture, association or partnership, works council or employee representative body (whether or not having separate legal personality);

1.2.7 a "party" includes a reference to that party's successors;

1.2.8 a clause, paragraph or schedule, unless the context otherwise requires, is a reference to a clause or paragraph of, or schedule to, this Agreement;

1.2.9 any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates in that jurisdiction to the English legal term and to any English statute shall be construed so as to include equivalent or analogous laws of any other jurisdiction;

1.2.10 times of the day is to London time;

1.2.11 singular includes the plural and vice versa;

1.2.12 "EUR" or "€" means Euro, the lawful currency from time to time of the countries that are members of the European Monetary Union;

1.2.13 "US$"  or "$" means United States dollars, the lawful currency of the United States of America; and

1.2.14 "GBP" means pounds sterling, the lawful currency of the United Kingdom.

1.3 The ejusdem generis principle of construction shall not apply to this Agreement.  Accordingly, general words shall not be given a restrictive meaning by reason of their being preceded or followed by words indicating a particular class of acts, matters or things or by examples falling within the general words.  Any phrase introduced by the terms "other", "including", "include" and "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.

1.4 The headings in this Agreement do not affect its interpretation.

1.5 A reference in Part A of Schedule 3 to "so far as RA is aware" means the knowledge as at the date of this Agreement of each of Jonathan Cohen, Jeffrey Brotman, Thomas Elliott, Christopher Allen and Gretchen Bergstresser having made reasonable enquiries in relation to matters, facts and circumstances the subject of the RA Warranty.  A reference in Part A of Schedule 3 to "so far as CVC is aware" means the knowledge as at the date of this Agreement of each of Marc Boughton, Jonathan Bowers, Ben Edgar and Trevor Wright having made reasonable enquiries in relation to matters, facts and circumstances the subject of the CVC Warranty.

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2. CONDITIONS PRECEDENT

2.1 Subject to clause 2.4, Completion of the transactions contemplated by this Agreement is conditional upon satisfaction of each of the following conditions:

2.1.1 the UK Financial Services Authority approving unconditionally or approving subject to conditions reasonably acceptable to both parties, or being treated under section 189(6) of the Financial Services and Markets Act 2000 ("FSMA") as having granted approval of, the acquisition of control over CVC Cordatus Limited and CVC Cordatus Investment Management Limited by Newco, the Partnership, GPCo, Resource Financial Fund Management, Inc., RA, and each parent undertaking of RA, such approval, in the case of each such acquisition of control, being effective under s191(1) FSMA for a period ending not earlier than the 10th Business Day after the Regulatory Long-Stop Date. For the purposes of this Condition, "acquisition of control" shall have the meaning given to it in Part XII of FSMA and parent undertaking" is to be construed in accordance with section 420 of FSMA;

2.1.2 the Jersey Financial Services Commission has notified each of Edward E Cohen, Jonathan Z Cohen, Resource America Inc, CVC Holdco and GP Co, that it does not object to that person becoming a principal person or a key person (as those terms are defined in the Financial Services (Jersey) Law 1998 in relation to each of Cordatus Mezzanine Partners General Partner Limited, Cordatus Recovery Partners II General Partner Limited and Cordatus CP Investments Limited;

2.1.3 the unconditional consents set out in Part A of Schedule 6 being received (the "Non-Regulatory Condition"); and

2.1.4 the Sub-Advisory Agreement has not been terminated and no notice to terminate the Sub-Advisory Agreement has been issued (the "Sub-Advisory Condition").

2.2 Both parties shall use all reasonable endeavours to achieve satisfaction of the Conditions listed in clauses 2.1.1 and 2.1.2 (the "Regulatory Conditions") as soon as possible after execution of this Agreement. In the case of each of the Regulatory Conditions, the application to the relevant authority shall be drafted by Clifford Chance LLP ("CC") and shall take account of the reasonable comments of RA and Covington & Burling LLP ("Covington"). The parties shall promptly provide all information required by CC in order to prepare such applications, and to respond to requests for further information from the relevant authority, and shall keep each other informed promptly of any communication from a relevant authority in relation to such applications. Any filing fee payable to a relevant authority in connection with an application to an authority pursuant to this clause shall initially be borne by CVC, but RA shall on request (and whether or not the deal proceeds to Completion) reimburse CVC for 33% of such filing fees paid by CVC and for 33% of CC's costs incurred in connection with the preparation of such applications.

2.3 Both parties shall use all reasonable endeavours to achieve satisfaction of the Non-Regulatory Condition as soon as possible after execution of this Agreement, subject to the terms of Part B of  Schedule 6.

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2.4 If by 10am London time on the Regulatory Long-Stop Date the Regulatory Conditions and the Sub-Advisory Condition have been satisfied in full but the Non-Regulatory Condition has not been satisfied in full, then unless the parties agree otherwise in writing, the parties will proceed to Completion on the 10th Business Day after the Regulatory Long-Stop-Date but on the basis that the  price payable pursuant to Schedule 1 shall be reduced in accordance with Part C of Schedule 6, provided that if the aggregate price reduction in accordance with this clause 2.4 (when taken together with any price reduction in clause 8.6) is to be more than $2,500,000, this Agreement will automatically terminate on the Regulatory Long-Stop Date with immediate effect.

2.5 If any of the Regulatory Conditions or the Sub-Advisory Condition has not been satisfied by 10am London time on the Regulatory Long-Stop Date (or such later time and date as both parties may agree in writing) this Agreement shall automatically terminate with immediate effect.

2.6 Any termination of this Agreement pursuant to this clause 2 shall be without prejudice to a party's accrued liability for antecedent breach.

3. COMPLETION

3.1 Completion will take place at the New York offices of CC on the later of (i) the fifth Business Day after the date on which all of the Conditions have been satisfied and (ii) 28 February 2012, or on the Business Day determined by clauses 2.4 if applicable, or on such other date as may be agreed in writing by the parties.

3.2 At Completion the parties shall do those things respectively required of them in ‎Schedule 1.

3.3 If Completion does not take place because either party (the "defaulting party") fails to comply in all respects with its obligations under Schedule 1, whether or not such failure amounts to a repudiatory breach, the other party (the "non-defaulting party") may by notice to the defaulting party:

3.3.1 proceed to Completion; or

3.3.2 postpone Completion to a Business Day specified by the non-defaulting party, which may not be later than the Final Long Stop Date; or

3.3.3 terminate this Agreement.

3.4 Following Completion this Agreement is incapable of being terminated or rescinded. Subject to clause 4.4, for the avoidance of doubt Completion shall not affect a party's accrued rights in relation to breaches of this Agreement by the other party which have occurred prior to Completion.

4. TERMINATION

4.1 CVC may by notice terminate this Agreement prior to Completion:

4.1.1 if CVC becomes aware of a breach by RA of any provision of this Agreement, whether or not such breach would amount to a repudiatory breach, provided that, if the breach is a breach of Warranty, CVC reasonably considers that such breach would give rise to claim of more than $5,000,000; or

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4.1.2 if CVC becomes aware of any fact, matter or circumstance occurring between the date of this Agreement and Completion which would, if the RA Warranties were to be repeated at any time up to Completion, constitute a breach of Warranty by reference to such time and CVC reasonably considers that such breach would give rise to a claim of more than $5,000,000; or

4.1.3 if CVC becomes aware of any matter, fact or circumstance which it reasonably considers, whether taken on its own or together with any other matter fact or circumstance of which CVC is aware, has or is likely to have a material adverse effect on the condition (financial, legal or business) or prospects of Apidos other than any matter, fact or circumstance relating to, arising out of, resulting from or attributable to any of (or any combination of):

(a) (A) any change to the global, European or United States of America economy generally, or capital or financial markets generally, including changes in interest or exchange rates; or (B) any change to the global, European or United States of America CLO/CDO market generally, not having a materially disproportionate and adverse effect on the condition (financial, legal or business) or prospects of Apidos, as compared with other participants in the respective CLO/CDO market;

(b) any changes or prospective changes in applicable law or regulation;

(c) any hostilities, acts of war, sabotage, terrorism or military action; and

(d) any change, circumstance, condition, development, effect, event, occurrence or state of facts that is cured by RA prior to Completion; or

4.1.4 in the circumstances set out in  clause 3; or

4.1.5 if there is any order of a court or governmental or regulatory authority which prohibits consummation of this Agreement.

4.2 RA may by notice terminate this Agreement prior to Completion:

4.2.1 if RA becomes aware of a breach by CVC of any provision of this Agreement, whether or not such breach would amount to a repudiatory breach, provided that, if the breach is a breach of Warranty, RA reasonably considers that such breach would give rise to a claim of more than $5,000,000; or

4.2.2 if RA becomes aware of any fact matter or circumstance occurring between the date of this Agreement and Completion which would, if the CVC Warranties were to be repeated at any time up to Completion, constitute a breach of Warranty by reference to such time and RA reasonably considers that such breach would give rise to a claim of more than $5,000,000; or

4.2.3 if RA becomes aware of any  matter, fact or circumstance which it reasonably considers, whether taken on its own or together with any other matter, fact or circumstance of which RA is aware, has or is likely to have a material adverse effect on the condition (financial, legal or business) or prospects of Cordatus other than any matter, fact or circumstance relating to, arising out of, resulting from, or attributable to any of (or any combination of) the matters set out in clauses 4.1.3(a) to 4.1.3(d) inclusive, provided that for the purposes of this clause 4.2.3 the references in clause 4.1.3(a) and 4.1.3(d) to "Apidos" and "RA" shall be deemed to be references to "Cordatus" and "CVC", respectively); or

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4.2.4 in the circumstances set out in clause 3; or

4.2.5 if there is any order of a court or governmental or regulatory authority which prohibits consummation of this Agreement.

4.3 If this Agreement is terminated pursuant to clause 2, 3 or 4 all the parties' rights and obligations under this Agreement shall cease, other than pursuant to clauses 4.3, 11, 12, 13, 15 and 18, but without prejudice to any liability of a party for antecedent breach.

4.4 If:

4.4.1 CVC becomes entitled to terminate this Agreement pursuant to clause 4.1.1 but proceeds to Completion CVC waives any right to make a claim in respect of the breach giving rise to such termination right but only to the extent that the magnitude of such breach has been fairly disclosed by RA prior to Completion; and

4.4.2 RA becomes entitled to terminate this Agreement pursuant to clause 4.2.1 but proceeds to Completion RA waives any right to make a claim in respect of the breach giving rise to such termination right but only to the extent that the magnitude of such breach has been fairly disclosed by CVC prior to Completion.

5. LOCKED BOX AND UNFUNDED ACCRUED LIABILITIES

5.1 RA undertakes as follows:

5.1.1 between 30 September 2011 and Completion no costs or expenses in connection with the transactions contemplated by this Agreement will be paid or incurred by the Apidos Group Companies;

5.1.2 as at 1 January 2012 the aggregate of the Apidos Group Companies' (i) freely available cash (which shall be deemed to include any cash which a regulator requires to be held) plus (ii) fee income receivables accrued to that date will be greater than the aggregate of the Apidos Group Companies' (a) indebtedness plus (b) accrued tax liabilities plus (c) all other liabilities, whether to RA Group Companies or otherwise, all at that date. The unsettled trades set out in the agreed form document entitled "Unsettled Trades" shall not be treated as either indebtedness, receivables or liabilities for the purposes of this clause except to the extent that a counterparty has entered into insolvency proceedings or announced an intention to enter into a composition with its creditors generally;

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5.1.3 between 1 January 2012 and Completion, the RA Group Companies will only levy charges on the Apidos Group Companies for (i) the services and at the rates set out in Schedule 5 and only in respect of services provided after 1 January 2012 and (ii) for salary and benefits  (excluding, for the avoidance of doubt, bonuses and incentives) at levels previously disclosed in writing to CVC and arising after 1 January 2012 in respect of the Apidos Employees, and employer's portion of payroll taxes in respect thereof. Charges for matters referred to in this clause 5.1.3 may only be levied quarterly in arrears, with payment within 30 days;

5.1.4 all fee income of the Apidos Group Companies which arises or accrues in respect of the period between 1 January 2012 and Completion shall be retained by the Apidos Group Companies, and so, for the avoidance of doubt, it shall not be used to settle liabilities of the Apidos Group Companies which arise in respect of the period prior to 1 January 2012;

5.1.5 between 1 January 2012 and Completion the Apidos Group Companies shall not declare make or pay any dividend or distribution, or make any other payment whatsoever, to any RA Group Company, save only to the extent such payment, dividend or distribution is in respect of (i) fee income of the Apidos Group Companies received in respect of the period prior to 1 January 2012 or (ii) intercompany liabilities accrued as at 1 January 2012; and

5.1.6 at Completion the Apidos Group Companies shall have (i) no net indebtedness, (ii) no liability to taxation except in respect of income profit or gains earned or accrued since 1 January 2012 and (iii) no liabilities to any RA Group Company other than in respect of services supplied since 1 January 2012 in accordance with clause 5.1.3. The unsettled trade liabilities set out in the agreed form document entitled "Unsettled Trades" shall not be treated as indebtedness for the purposes of this clause, except to the extent that a counterparty has entered into insolvency proceedings or announced an intention to enter into a composition with its creditors generally

5.2 If and to the extent that RA settles a liability of the Apidos Group Companies to federal taxation in respect of income, profit or gains earned or accrued since 1 January 2012, the Partnership shall procure that Apidos shall reimburse RA for such amount within 30 days after RA has filed the relevant return (which shall not be prior to 31 December 2012) and certified to the Partnership that such liability has been settled.

5.3 In the event of a breach by RA of any of the undertakings set out in clause 5.1, RA shall on demand made at any time prior to the expiry of 3 months after the publication of the audited accounts of Apidos for the financial year ending 31 December 2012   pay to the Partnership such amount as is needed to remedy such breach, together with interest on such amount calculated on a daily basis from the date of Completion to the date of payment at the rate of Barclays Bank plc base rate from time to time plus 2 per cent. per annum.   The Partnership may enforce the terms of this clause 5.3 subject to and in accordance with the provisions of The Contracts (Rights of Third Parties) Act 1999.

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5.4 CVC undertakes as follows:

5.4.1 between 30 September 2011 and Completion no costs or expenses in connection with the transactions contemplated by this Agreement will be paid or incurred by the Cordatus Group Companies;

5.4.2 as at 1 January 2012 the aggregate of the Cordatus Group Companies' (i) freely available cash (which shall be deemed to include any cash which a regulator requires to be held) plus (ii) fee income receivables accrued to that date will be greater than the aggregate of the Cordatus Group Companies' (a) indebtedness plus (b) accrued tax liabilities plus (c) all other liabilities, whether to CVC Group Companies or otherwise, all at that date;

5.4.3 between 1 January 2012 and Completion, the CVC Group Companies will only levy charges on the Cordatus Group Companies for (i) the services and at the rates set out in ‎Schedule 5, and only in respect of services provided after 1 January 2012 and (ii)  for salary and benefits  (excluding, for the avoidance of doubt, bonuses and incentives) at levels previously disclosed in writing to RA and arising after 1 January 2012 in respect of the Cordatus Employees, and employer's NICs in respect thereof. Charges for matters referred to in this clause 5.4.3 may only be levied quarterly in arrears, with payment within 30 days;

5.4.4 all fee income of the Cordatus Group Companies which arises or accrues in respect of the period between 1 January 2012 and Completion shall be retained by the Cordatus Group Companies, and so, for the avoidance of doubt, it shall not be used to settle liabilities of the Cordatus Group Companies which arise in respect of the period prior to 1 January 2012;

5.4.5 between 1 January 2012 and Completion the Cordatus Group Companies shall not declare make or pay any dividend or distribution to any CVC Group Company or make any other payment whatsoever, save only to the extent such payment, dividend or distribution is in respect of (i) fee income of the Cordatus Group Companies received in respect of the period prior to 1 January 2012 or (ii) intercompany liabilities accrued as at 1 January 2012; and

5.4.6 at Completion the Cordatus Group Companies shall have (i) no net indebtedness, (ii) no liability to taxation except in respect of income profit or gains earned or accrued since 1 January 2012 and (iii) no liabilities to any CVC Group Company other than in respect of services supplied since 1 January 2012 in accordance with clause 5.1.3.

5.5 If and to the extent that CVC settles a liability of the Cordatus Group Companies to taxation in respect of income, profit or gains earned or accrued since 1 January 2012, the Partnership shall following Completion reimburse CVC for such amount within 30 days  after CVC has filed the relevant return and certified to the Partnership that such liability has been settled .

5.6 Subject to clause 5.7 in the event of a breach by CVC of any of the undertakings set out in clause 5.4, CVC shall on demand made at any time prior to the expiry of 3 months after the publication of the audited accounts of Cordatus for the financial year ending 31 December 2012 pay to the Partnership such amount as is needed to remedy such breach, together with interest on such amount calculated on a daily basis from the date of Completion to the date of payment at the rate of Barclays Bank plc base rate from time to time plus 2 per cent. per annum.   The Partnership may enforce the terms of this clause 5.6 subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.

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5.7 None of the following shall constitute a breach of the undertakings set out in clause 5.4 or clause 8.2:

5.7.1 the removal of the existing preference shares in CVC Cordatus Group Limited;

5.7.2 the sale by Cordatus Group Companies of Cordatus Investments Limited to a CVC Group Company at original cost plus any accrued note income (with the intention, for the avoidance of doubt, that none of the existing incentives other than currently unallocated incentives for Cordatus Credit Partners will be included in the business of the Partnership);

5.7.3 repayment by the Cordatus Group Companies of any amount of their intercompany balances with the CVC Group Companies;

5.7.4 the proposed transaction between the Cordatus Group Companies and the third party whose name has been disclosed to RA, and the extraction from the Cordatus Group Companies of any incentive arrangements in relation to such transaction;

5.7.5 the liquidation of Cordatus Mezzanine Partners General Partner Limited.

6. WARRANTIES

6.1 RA warrants to CVC that each RA Warranty is true, accurate and not misleading as at the date of this Agreement.

6.2 CVC warrants to RA that each CVC Warranty is true, accurate and not misleading as at the date of this Agreement.

6.3 Each of RA and CVC undertakes that it will not make any claim against any employee of Apidos or Cordatus (respectively), on whom it may have relied for information in relation to the Warranties, except in the case of fraud.

6.4 Each Warranty is to be construed independently and except where this Agreement provides otherwise, is not limited by any provision of this Agreement or by any other Warranty.

6.5 RA undertakes to notify CVC immediately if it becomes aware of any fact matter or circumstance which constitutes a breach of clause 6.1 or which would cause such a breach if the RA Warranties were to be repeated by reference to the facts, matters and circumstances occurring between the date of this Agreement and Completion.

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6.6 CVC undertakes to notify RA immediately if it becomes aware of any fact matter or circumstance which constitutes a breach of clause 6.2 or which would cause such a breach if the CVC Warranties were to be repeated by reference to the facts, matters and circumstances occurring between the date of this Agreement and Completion.

6.7 With effect from Completion:

6.7.1 the benefit of the CVC Warranties shall be assigned by RA to the Partnership;

6.7.2 the benefit of the RA Warranties shall be assigned by CVC to the Partnership;

6.7.3 the Partnership must make any Warranty Claim pursuant to the terms of this Agreement, as if the Partnership had, for the purposes of the RA Warranties, at all times been a party to this Agreement in place of CVC, and, as if the Partnership had, for the purposes of the CVC Warranties, at all times been a party to this Agreement in place of RA;

6.7.4 RA shall not, subject to the terms of the Shareholders Agreement, be able to bring any CVC Warranty Claim;

6.7.5 CVC shall not, subject to the terms of the Shareholders Agreement, be able to bring any RA Warranty Claim;

6.7.6 RA shall perform its obligations in relation to the RA Warranties in every way as if the Partnership had, for the purposes of the RA Warranties, at all times been a party to this Agreement in place of CVC;

6.7.7 CVC shall perform its obligations in relation to the CVC Warranties in every way as if the Partnership had, for the purposes of the CVC Warranties, at all times been a party to this Agreement in place of RA.

The Partnership may enforce the terms of this clause 6.7 subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.

7. LIMITATIONS ON WARRANTY LIABILITY

7.1 RA shall not be liable in respect of a CVC Warranty Claim unless and until the amount that would be recoverable (when aggregated with the amount recoverable in respect of any other CVC Warranty Claim) exceeds $500,000, in which event RA shall be liable in respect of the total aggregated amount(s) and not the excess only.

7.2 RA's total liability in respect of CVC Fundamental Warranty Claims shall not exceed $50,000,000.  RA's total liability in respect of CVC General Warranty Claims shall not exceed $5,000,000.  RA's total overall liability in respect of CVC Warranty Claims shall not exceed $50,000,000.

7.3 Any liability of RA in respect of CVC Warranty Claims will be satisfied first by payment in cash for same day value to such account as is notified by CVC to RA for the purpose, up to an amount of $25,000,000.  Thereafter, any liability may at RA's option, as an alternative to cash, be satisfied by the transfer of such number of ordinary shares in GPCo by RA to CVC as is determined by Part C of Schedule 2, together with an equal number of units in the Partnership.

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7.4 RA shall not be liable for a CVC Warranty Claim unless CVC has notified RA of the CVC Warranty Claim, stating in reasonable detail the nature of the CVC Warranty Claim and, if practicable, the amount claimed, before the first anniversary of the date of Completion.

7.5 RA shall not be liable for a CVC Warranty Claim to the extent that the matter giving rise to the CVC Warranty Claim:

7.5.1 would not have arisen but for a change in law or regulation happening after Completion; or

7.5.2 is specifically provided for in the Apidos Financial Statements.

7.6 If CVC becomes aware of a claim or action by, or liability to, a third party which gives rise to a CVC Warranty Claim it will give notice to RA as soon as reasonably practicable after becoming aware of the same, shall consult with RA in relation thereto and not admit liability in respect of, or settle, the same without the prior written consent of RA, such consent not to be unreasonably withheld or delayed.

7.7 CVC shall not be liable in respect of an RA Warranty Claim unless and until the amount that would be recoverable (when aggregated with the amount recoverable in respect of any other RA Warranty Claim) exceeds $500,000, in which event CVC shall be liable in respect of the total aggregated amount(s) and not the excess only.

7.8 CVC's total liability in respect of RA Fundamental Warranty Claims shall not exceed $30,000,000.  CVC's total liability in respect of RA General Warranty Claims shall not exceed $5,000,000.  CVC's total overall liability in respect of RA Warranty Claims shall not exceed $30,000,000.

7.9 Any liability of CVC in respect of RA Warranty Claims may be satisfied, at CVC's option, either by payment in cash for same day value to such account as is notified by RA to CVC for the purpose, or by the transfer of such number of ordinary shares in GPCo as is determined by Part C of Schedule 2, together with an equal number of units in the Partnership.

7.10 CVC shall not be liable for an RA Warranty Claim unless RA has notified CVC of the RA Warranty Claim, stating in reasonable detail the nature of the RA Warranty Claim and, if practicable, the amount claimed, before the first anniversary of the date of Completion.

7.11 CVC shall not be liable for an RA Warranty Claim to the extent that the matter giving rise to the RA Warranty Claim:

7.11.1 would not have arisen but for a change in law or regulation happening after Completion; or

7.11.2 is specifically provided for in the Cordatus Financial Statements.

7.12 If RA becomes aware of a claim or action by, or liability to, a third party which gives rise to an RA Warranty Claim it will give notice to CVC as soon as reasonably practicable after becoming aware of the same, shall consult with CVC in relation thereto and not admit liability in respect of, or settle, the same without the prior written consent of CVC, such consent not to be unreasonably withheld or delayed.

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7.13 Nothing in this Agreement shall have the effect of limiting a liability of CVC or RA in respect of fraud.

7.14 No party shall not be entitled to recover damages or otherwise obtain reimbursement or restitution more than once in respect of the same loss.

8. PRE-COMPLETION CONDUCT

8.1 Between the date hereof and Completion RA shall comply, and procure that the Apidos Group Companies comply, with Schedule 4.

8.2 Between the date hereof and Completion CVC shall comply, and procure that the Cordatus Group Companies comply, with Schedule 4, mutatis mutandis, with references to "Apidos" being deemed to be references to "Cordatus" and references to "RA" being deemed to be references to "CVC" and references to "CVC" being deemed to be references to "RA", provided that this clause shall not prevent CVC introducing or amending any CVC incentive scheme or its application to any Cordatus Employee, or taking any of the action listed in clause 5.7.

8.3 RA undertakes that pending Completion it will not, directly or indirectly, solicit interest in, enter into or be involved in any discussion with, or provide any information to, or enter into any agreement (whether or not conditional) with, any potential purchaser other than CVC in relation to a sale of all or part of the membership interests of Apidos or any part of the Apidos business.

8.4 CVC undertakes that pending Completion it will not, directly or indirectly, solicit interest in, enter into or be involved in any discussion with, or provide any information to, or enter into any agreement (whether or not conditional) with, any person other than RA in relation to a sale of all or part of the shares of Cordatus or any part of the Cordatus business (other than disposals of shares held by employees or as part of an internal reorganisation of CVC and disposals listed in clause 5.7).  For the avoidance of doubt this clause shall not apply to any minority investment in CVC or a CVC Group Company by one or more third parties or an issue of shares by CVC or a CVC Group Company in connection with an acquisition.

8.5 RA undertakes that on or before Completion it will:

8.5.1 procure that the assets set out in ‎Schedule 7 will be held by and be under the sole control of an Apidos Group Company free from any Encumbrance, on and from Completion; and

8.5.2 effect the steps set out in ‎Schedule 8.

8.6 Both parties shall use all reasonable endeavours to procure the unconditional consents set out in Part D of Schedule 6 subject to the terms of Part B of Schedule 6.  If at 10am London time on the date when all of the Regulatory Conditions, the Non-Regulatory Condition and the Sub-Advisory Condition are satisfied, the consents set out in Part D of Schedule 6 have not been received, the price payable pursuant to Schedule 1 shall be reduced in accordance with Part C of Schedule 6 provided that if the aggregate price reduction pursuant to this clause 8.6 (when taken together with any price reduction pursuant to clause 2.4) is more than $2,500,000 this Agreement  will immediately terminate on such date.

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9. FURTHER UNDERTAKINGS

9.1 RA undertakes to CVC that:

9.1.1 for a period of three years starting on the date of this Agreement it will not, and will procure that no RA Group Company will, directly or indirectly, solicit, engage or employ any  Apidos Employee;

9.1.2 for a period of seven years starting on the date of this Agreement it will, and will procure that the RA Group Companies will, preserve all information relating to Apidos currently in its or their possession, and allow CVC  to have access to the same and to take such copies as CVC may reasonably require, at CVC's cost; and

9.1.3 it will not, and will procure that no RA Group Company will, disclose to any person any confidential information relating to Apidos, other than:

(a) to its professional advisers to the extent required for the purpose of advising RA in relation to this Agreement; or

(b) to the extent required by law or any regulatory authority.

9.2 CVC undertakes to RA that for a period of three years starting on the date of this Agreement it will procure that if Marc Boughton or Jonathan Bowers are employees of any CVC Group Company their principal tasks shall be on carrying on the business of (i) until Completion, the Cordatus Group Companies and (ii) starting on Completion, the Partnership and its subsidiary undertakings, subject to Marc Boughton's responsibilities as a board member of CVC. CVC also undertakes to RA that for a period of  three years starting on the date of this Agreement it will not, and will procure that no CVC Group Company will, directly or indirectly, solicit engage or employ any of Gretchen Bergstresser, Chris Allen, Vincent Ingato, Phillip Raciti or Oscar Anderson.

9.3 RA undertakes that, as long as CVC holds an indirect interest of at least 50% in GPCo and RA holds an indirect interest of at least 15% in GPCo, it will procure that no RA Group Company issues, arranges, sponsors, manages or sub-manages a CLO or any other investment vehicle investing predominately in non-investment grade corporate credit.

9.4 CVC undertakes that, as long as CVC holds an indirect interest of at least 50% in GPCo and RA holds an indirect interest of at least 15% in GPCo, it will procure that no CVC Group Company issues, arranges, sponsors, manages or sub-manages a CLO or any other investment vehicle investing predominately in non-investment grade corporate credit.

9.5 Neither clause 9.3 or 9.4 shall prevent or restrict:

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9.5.1 any private equity, real estate or infrastructure fund advised or managed by a CVC Group Company or a RA Group Company, or any investee of any such fund, engaging in any debt-related activity;

9.5.2 any alternative investment fund or debt underwriting fund advised or managed by a CVC Group Company or a RA Group Company, or any investee of any such fund, engaging in any debt-related activity, provided that such fund does not invest predominantly in non-investment grade credit;

9.5.3 any CVC Group Company or RA Group Company making an acquisition of a business or entity which issues, manages, arranges, sub-manages or sponsors CLOs or CDOs as a part (but not the largest part) of its business activities;

9.5.4 any business or entity referred to in 9.5.3 above continuing, after the acquisition by a CVC Group Company or RA Group Company, to do anything referred to in this clause 9.4; or

9.5.5 for the avoidance of doubt, an investments in a CLO or other fund (including the purchase of equity tranches) of which  no CVC Group Company or as the case may be RA Group Company is engaged in the management.

9.6 RA undertakes to CVC to indemnify and hold harmless CVC, GPCo and the Partnership and each of its subsidiary undertakings (each an "Indemnity Beneficiary") from and against, and to pay on demand to the Indemnity Beneficiary an amount equal to any and all Costs incurred of suffered by such Indemnity Beneficiary to the extent that such Costs arise from any of the matters listed in Part A of Schedule 2. GPCo and the Partnership and each of such subsidiary undertakings may enforce the terms of this clause 9.6 subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.

9.7 CVC undertakes to RA to indemnify and hold harmless RA, GPCo and the Partnership and each of its subsidiary undertakings (each an "Indemnity Beneficiary") from and against, and to pay on demand to the Indemnity Beneficiary an amount equal to any and all Costs incurred of suffered by such Indemnity Beneficiary to the extent that such Costs arise from the matter listed in Part B of Schedule 2. GPCo and the Partnership and each of such subsidiary undertakings may enforce the terms of this clause 9.6 subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.

9.8 RA and CVC shall use their reasonable endeavours (which shall not extend to the provision of a replacement guarantee or other surety from the RA Group or the CVC Group, or the payment of money) to procure that within 60 days of Completion RA is released in full from the ACA Guarantee given by RA in respect of obligations of Apidos Group Companies.  Pending release of the ACA Guarantee, CVC and RA shall procure that the Partnership shall indemnify RA against any and all Costs, caused by an act or omission of an Apidos Group Company, arising after Closing pursuant to the ACA Guarantee

9.9 RA undertakes to use its reasonable endeavours to settle before Completion the trades set out in the document in the agreed form called "Unsettled Trades".

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9.10 The amended and restated  Limited Liability Company Agreement of Apidos in the agreed form deals with 75% of the Relevant Incentive Arrangements Income (as defined therein) received by Apidos.  Part D of Schedule 2 shall apply to the remaining 25%.

9.11 For the avoidance of doubt, it is acknowledged that incentive income arising after Completion from transactions with the counterparty with whom Cordatus is currently in discussions, whose name has been disclosed to RA prior to the date hereof, will not form part of the business owned by the Partnership, and CVC may allocate some of those incentives to Cordatus Employees.

9.12 RA undertakes that if any Apidos Employees own shares or share options in RA they will not be cancelled or forfeited as a result of the transaction contemplated by this Agreement.

10. TRANSITIONAL SERVICES

With effect from Completion, the parties will perform their respective obligations set out in Schedule 5.

11. CONFIDENTIALITY

11.1 The parties undertake that they shall keep confidential the terms of this Agreement, and not disclose them to any person other than:

11.1.1 to their professional advisers to the extent required for the purpose of advising such party in relation to this Agreement;

11.1.2 to such of the directors, officers and employees of the party or of their respective groups whose function requires them to have such information; and

11.1.3 to the extent required by law or any regulatory authority.

12. ANNOUNCEMENTS

12.1 Neither party shall make any announcement, before or after Completion, concerning the transactions referred to in this Agreement, other than the announcements in the agreed form, without the prior consent of the other party, other than any announcement required by law or a regulatory authority provided that an announcement in such a case shall only be made, to the extent reasonably practicable, after consultation with and taking into account the reasonable comments of, the other party as to the content of such announcement.  The parties may make, without consent, the announcements in the agreed form or use in announcements the detail set out in such announcements in the agreed form.

13. COSTS

Except where this Agreement provides otherwise, each party shall pay its own costs relating to the negotiation, preparation, execution and enforcement of this Agreement and of each document referred to herein.

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14. GENERAL

14.1 A variation of this Agreement is valid only if it is in writing and signed by or on behalf of each party.   The parties to this Agreement do not require the consent of any person having a right under the Contracts (Rights of Third Parties) Act 1999 to rescind, vary or terminate this Agreement.

14.2 Subject to clauses 5.1, 7.4 and 7.10 the failure to exercise or delay in exercising a right or remedy provided by this Agreement or by law does not impair or constitute a waiver of the right or remedy or an impairment of or a waiver of other rights or remedies.  No single or partial exercise of a right or remedy provided by this Agreement or by law prevents further exercise of the right or remedy or the exercise of another right or remedy.

14.3 The parties' rights and remedies contained in this Agreement are cumulative and not exclusive of rights or remedies provided by law.

14.4 Except to the extent that they have been performed and except where this Agreement provides otherwise, the obligations contained in this Agreement remain in force after Completion.

14.5 All payments made by the parties under this Agreement shall be made gross, free of right of counterclaim or set off and without deduction or withholding of any kind other than any deductions or withholding required by law.

14.6 Except as expressly provided in this Agreement (including the Schedules) a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

14.7 Each of the parties agrees to perform (or procure the performance of) all such acts and things and/or to execute and deliver (or procure the execution and delivery of) all such documents, as may be required by law or as may be necessary or reasonably requested by the other party for giving full effect to this Agreement.  Unless otherwise agreed, each party shall be responsible for its own costs and expenses incurred in connection with the provisions of this clause 14.7.

15. ENTIRE AGREEMENT

In this clause 15, "Representation" means an assurance, commitment, condition, covenant, guarantee, indemnity, representation, statement, undertaking or warranty of any sort whatsoever (whether contractual or otherwise, oral or in writing, or made negligently or otherwise).

15.1 The Transactional Documents constitute the entire agreement between the parties.  They supersede any previous agreements relating to the subject matter of the Transactional Documents, and set out the complete legal relationship of the parties arising from or connected with that subject matter.

15.2 CVC:

15.2.1 agrees that

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(a) no RA Group Company or adviser to RA has made any Representation which is not set out in the Transactional Documents, and

(b) it has not entered into the Transactional Documents in reliance on any Representation except those set out in the Transactional Documents,

and will not contend to the contrary; and

15.2.2 for the avoidance of doubt agrees that

(a) no RA Group Company (except RA) or adviser to RA has any liability to CVC for any Representation;

(b) RA has no liability of any kind to CVC for any Representation except in respect of those set out in the Transactional Documents; and

(c) its only rights and remedies in respect of any Representations are those rights and remedies set out in the Transactional Documents.

15.3 RA:

15.3.1 agrees that

(a) no CVC Group Company or adviser to CVC has made any Representation which is not set out in the Transactional Documents, and

(b) it has not entered into the Transactional Documents in reliance on any Representation except those set out in the Transactional Documents,

and will not contend to the contrary; and

15.3.2 for the avoidance of doubt agrees that:

(a) no CVC Group Company (except CVC) or adviser to CVC has any liability to RA for any Representation,

(b) CVC has no liability of any kind to RA for any Representation except in respect of those set out in the Transactional Documents, and

(c) its only rights and remedies in respect of any Representations are those rights and remedies set out in the Transactional Documents.

15.4 Each CVC Group Company, each RA Group Company and advisers to CVC and RA may enforce the terms of this clause 15 subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.

15.5 Nothing in this clause shall have the effect of limiting any liability arising from fraud.

16. ASSIGNMENT

16.1 This Agreement is personal to the parties.  Accordingly, neither party shall assign, transfer, declare a trust of the benefit of or in any other way alienate any of its rights under this Agreement whether in whole or in part without the consent of the other party, provided that a party may assign its rights under this Agreement to a wholly-owned subsidiary undertaking on condition that if the assignee ceases to be a wholly-owned subsidiary undertaking of the assignor all such rights will be deemed to be immediately re-assigned to the assignor.

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17. NOTICES

17.1 A notice or other communication under or in connection with this Agreement (a "Notice") shall be:

17.1.1 in writing; and

17.1.2 delivered personally or sent by registered air courier to the party  due to receive the Notice to the address set out in this clause or to an alternative address specified by that party by written notice to the other party.

17.2 Unless there is evidence that it was received earlier, a Notice is deemed given if:

17.2.1 delivered personally, when left at the address referred to in clause 17.1.2; and

17.2.2 sent by registered air courier, two Business Days after delivery to the courier;

17.3 The address referred to in clause 17.1.2 is:

17.3.1 in the case of RA, to the address set out at the head of this Agreement, marked for the attention of Jonathan Cohen, copied to Covington & Burling LLP, 265 Strand, London WC2R 1BH marked for the attention of Gregor Frizzell; and

17.3.2 in the case of CVC, to the address set out at the head of this Agreement, marked for the attention of Marc Boughton, copied to CVC Capital Partners Limited, 111 Strand, London WC2R OAG, marked for the attention of Richard Perris.

18. GOVERNING LAW

18.1 This Agreement (including a dispute relating to its existence, validity or termination) and any non contractual obligation or other matter arising out of or in connection with it are governed by English law.

18.2 The courts of England have exclusive jurisdiction to settle any dispute (a "Dispute")  arising from or connected with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement or relating to any non contractual or other obligation arising out of or in connection with this Agreement) or the consequences of its nullity.

18.3 The parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.

18.4 The parties agree that the documents which start any proceedings relating to a Dispute ("Proceedings") and any other documents required to be served in relation to those Proceedings may be served by delivery in accordance with clause 17 to the following addresses in England:

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18.4.1 in the case of RA, to Covington & Burling LLP, 265 Strand, London WC2R 1BH marked for the attention of Gregor Frizzell, copied to Resource America, Inc. to the address set out at the head of this Agreement marked for the attention of Jonathan Cohen; and

18.4.2 in the case of CVC, to CVC Cordatus Investment Management Limited, 111 Strand, London WC2R OAG, marked for the attention of Marc Boughton, copied to CVC Capital Partners Limited, 111 Strand, London, WC2R OAG, marked for the attention of Richard Perris.

These documents may, however, be served in any other manner allowed by law.

19. COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original and all of which together evidence the same agreement.

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SCHEDULE 1

COMPLETION OBLIGATIONS

1. INITIAL STEPS

RA shall deliver to CVC:

1.1 evidence in a form reasonably satisfactory to CVC (by way of a certificate of RA or otherwise) of satisfaction of the Regulatory Conditions (in respect of RA Group Company, the Non-Regulatory Condition and the Sub-Advisory Condition;

1.2 certified copy of duly executed by Resource Financial Fund Management, Inc. ("RFFM") amended and restated limited liability company agreement of Apidos, in the agreed form;

1.3 as evidence of the authority of each person executing a document referred to in this Schedule 1 on behalf of a RA Group Company or an Apidos Group Company:

1.3.1 a copy of the minutes of a duly held meeting of the directors of the respective RA Group Company or Apidos Group Company (or a duly constituted committee thereof) authorising the execution by the respective RA Group Company or Apidos Group Company of the document and, where such execution is authorised by a committee of the board of directors of, a copy of the minutes of a duly held meeting of the directors constituting such committee or the relevant extract thereof; or

1.3.2 a copy of any power of attorney conferring the authority; and

CVC shall deliver to RA:

1.4 certified copy of the certificate of incorporation for Newco;

1.5 certified copy of the certificate of incorporation for GPCo;

1.6 certified copy of the certificate of registration and original limited partnership agreement for the Partnership;

1.7 evidence in a form reasonably satisfactory to RA that all the issued and outstanding preference shares of no par value in the capital of Cordatus (the "Preference Shares") have been cancelled or converted into ordinary shares and transferred to a CVC Group Company, or otherwise dealt with such that, if they are still in existence, they are no longer held by a person other than a CVC Group Company; and

1.8 as evidence of the authority of each person executing a document referred to in this Schedule 1 on behalf of a CVC Group Company or a Cordatus Group Company:

1.8.1 a copy of the minutes of a duly held meeting of the directors of the respective CVC Group Company or Cordatus Group Company (or a duly constituted committee thereof) authorising the execution by the respective CVC Group Company or Cordatus Group Company of the document and, where such execution is authorised by a committee of the board of directors of, a copy of the minutes of a duly held meeting of the directors constituting such committee or the relevant extract thereof; or

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1.8.2 a copy of any power of attorney conferring the authority.

1.9 a certified copy of duly executed by CVCCPAL transfer(s) in favour of Newco in respect of the Cordatus Shares; and

1.10 a certified copy of the minutes of a meeting of the board of directors of Cordatus at which the directors vote in favour of the registration of Newco as a member of Cordatus in respect of the Cordatus Shares.

2. FIRST CONTRIBUTION

2.1 CVC shall deliver to RA:

2.1.1 a certified copy of a duly executed by Newco transfer(s) in favour of the Partnership in respect of all of the outstanding shares in the capital of Cordatus;

2.1.2 a certified copy of a duly executed by Newco, transfer agreement transferring with full title guarantee, free from any Encumbrance, the Cordatus Shares to the Partnership;

2.1.3 a certified copy of the minutes of a meeting of the board of directors of GPCo at which the directors vote in favour of the registration of Newco as a limited partner of the Partnership and issue to Newco of at least 3,300 Units (as defined in and under the Limited Partnership Agreement);

2.1.4 a certified copy of a letter of contribution pursuant to which CVC contributes the Cordatus Shares to the Partnership in return for the issue of Units; and

2.1.5 a certified copy of the minutes of a meeting of the board of directors of Cordatus at which the directors vote in favour of the registration of the Partnership as a member of Cordatus in respect of the Cordatus Shares.

3. FIRST TRANSFER

3.1 RA shall deliver to CVC:

3.1.1 duly executed by RFFM, transfer agreement transferring with full title guarantee, free from any Encumbrance, the Apidos Shares to Newco and any certificates in respect of such interests;

3.1.2 duly executed releases with effect from Completion of any Apidos Group Company from any indebtedness by way of borrowing or guarantee by an Apidos Group Company in favour of any RA Group Company, including pursuant the Surety and Guaranty Agreement, Guarantor Security Agreement (as amended) and the Amended and Restated Loan and Security Agreement between RA, TD Bank, N.A. and the financial institutions listed on schedule A thereto dated 10 March  2011, as amended on 29 November 2011, in each case in a form reasonably acceptable to CVC;

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3.1.3 duly executed by RFFM, deed of assignment and assumption agreement transferring from Newco to RFFM 3,300 Units (as defined in and under the Limited Partnership Agreement) in the Partnership;

3.1.4 evidence in a form reasonably acceptable to CVC of the termination of any cash-pooling arrangement or shared bank account existing between an RA Group Company and an Apidos Company;

3.1.5 agreements duly executed by Apidos  Employees and  "Inside Investors" (meaning RA employees and directors and each of their affiliates) accounting for in aggregate at least 80% of investments made by Apidos Employees and Inside Investors in the Apidos Select Corporate Credit Master Fund ,L.P., that they will not transfer for a period of one year any such investment.

3.2 CVC shall deliver to RA:

3.2.1 evidence in a form reasonably satisfactory to RA (by way of certificate of RA or otherwise) of satisfaction of the Regulatory Condition (in respect of any CVC Company and Cordatus Group Company);

3.2.2 duly executed transfer in favour of RFFM in respect of 3,300 ordinary shares of nil par value in the capital of GPCo; and

3.2.3 duly executed by Newco, deed of assignment and assumption agreement transferring from Newco to RFFM 3,300 Units (as defined in and under the Limited Partnership Agreement) in the Partnership.

3.3 CVC shall pay in cash by transfer of funds for same day value to such account as notified by RA (such account to be notified by RA to CVC at least five Business Days prior to Completion) the amount of $25,000,000.

3.4 RA shall deliver to CVC such information and in such form, in each case, as may be reasonably required by CVC, to commence on Completion operating the payroll for Apidos Employees.  Such information shall be requested by CVC by notice in writing no later than five Business Days prior to Completion.

4. SECOND CONTRIBUTION

4.1 CVC shall deliver to RA:

4.1.1 a certified copy of a duly executed by Newco, transfer agreement transferring with full title guarantee, free from any Encumbrance, the Apidos Shares to the Partnership;

4.1.2 a certified copy of duly executed by Newco transfer(s) in favour of the Partnership in respect of the Apidos Shares;

4.1.3 a certified copy of the minutes of a meeting of the board of directors of GPCo at which the directors vote in favour of the registration of the issue to Newco of such number of Units (as defined in and under the Limited Partnership Agreement) as will result in Newco holding 6,600 Units in aggregate (following the issue of Units in accordance with paragraph 2.1.3 and 2.1.4 and subsequent transfer by Newco of Units in accordance with paragraph 3.1.4); and

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4.1.4 a certified copy of a letter of contribution pursuant to which CVC contributes the Apidos Shares to the Partnership in return for the issue of Units as set out in paragraph 4.1.3 and the exit of any initial limited partner.

5. FINAL STEPS

5.1 RA shall deliver to CVC:

5.1.1 duly executed by RFFM, the Limited Partnership Agreement; and

5.1.2 duly executed by RA and RFFM, the Shareholders Agreement.

5.2 CVC shall deliver to RA:

5.2.1 duly executed by Newco, the Limited Partnership Agreement; and

5.2.2 duly executed by CVC and Newco, the Shareholders Agreement.

5.3 RA and CVC shall, in so far as they are able, exercise their rights as shareholders in GPCo, to procure that GPCo shall (to extent not already done):

5.3.1 appoint each of Marc Boughton and Fred Watt (with Iain Parham as his alternate director)  to its board as CVC Investor Directors;

5.3.2 appoint Jonathan Cohen to its board as a RA Investor Director;

5.3.3 appoint Douglas MacCabe and another Jersey resident director, as may be agreed by the parties, to its board as Independent Directors;

5.3.4 appoint Jonathan Cohen as the Chairman;

5.3.5 adopt the Articles of Association (as defined in and under the Shareholders' Agreement);

5.3.6 procure that each of its subsidiary undertakings changes its name as set out in the document headed "Entity Name Changes", in the agreed form; and

5.3.7 hold a meeting of its board of directors to approve the board resolutions of GPCo in the agreed form.

A reference in this Schedule to a certified copy shall mean a copy of the original document certified as a true copy of the original by a director or secretary of the relevant party.  Any requirement in this Schedule to deliver minutes of a meeting of directors or shareholders may be satisfied by delivery of written resolutions having the same effect.

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SCHEDULE 2

INDEMNIFICATION AND WARRANTY CLAIMS AND MISCELLANEOUS

[Omitted in accordance with Item 601(b)(2) of Regulation S-K.  A copy of any omitted schedule and/or will be furnished supplementally to the Securities and Exchange Commission upon request.]

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SCHEDULE 3

WARRANTIES

PART A – RA WARRANTIES

1. Capacity and authority

1.1 RA has the right, power and authority, and has taken all corporate action necessary, to execute, deliver and perform its obligations under this Agreement and each Transactional Document.

1.2 RA's obligations under this Agreement and each other Transactional Document are, or when the document is executed will be, enforceable in accordance with their terms.

2. Ownership

2.1 The sole legal and beneficial owner of the Apidos Shares is Resource Financial Fund Management, Inc., which is indirectly wholly-owned by RA. The Apidos Shares comprise the only shares allotted by Apidos. Except for the guarantees from Apidos and Apidos Partners Inc to TD Bank, which will be released at Completion, there is no Encumbrance over the Apidos Shares, and there is no obligation to create an Encumbrance over the Apidos Shares.

2.2 There is no obligation requiring the creation, allotment, transfer or redemption, or the grant to any person of any right (conditional or otherwise) to require the allotment, transfer or redemption of any membership or other equity interests of Apidos, including any option or right of pre-emption or conversion.

2.3 Apidos has no interest in the capital of any corporate body other than the Apidos Group Companies. The entire share capital of each Apidos Group Company is legally and beneficially owned by Apidos or by another Apidos Group Company.

2.4 There is no Encumbrance over the shares in any Apidos Group Company, and there is no obligation to create an Encumbrance over the same.

2.5 There is no obligation requiring the creation, allotment, transfer or redemption, or the grant to any person of any right (conditional or otherwise) to require the allotment, transfer or redemption of any share in the capital of any Apidos Group Company, including any option or right of pre-emption or conversion.

3. Funds

3.1 The Apidos Data Room contains true and complete copies of each material document in relation to the Apidos Funds.

3.2 No document relating to an Apidos Fund contains a change of control or key man provision other than as specifically identified in the Apidos Data Room.

3.3 No Apidos Group Company has breached any provision of any document relating to an Apidos Fund, and no notice has been received by any of them or by any member of the RA Group alleging any such breach.  Each Apidos Group Company and each Apidos Fund conducts its business in accordance with the Tax policies set out in the documents relating to the applicable Apidos Fund.

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3.4 Save as disclosed in Part C of the Apidos Data Room no Apidos Group Company has entered into any commitment, or mandate or engagement letter with any third party in relation to any future fund-raising.

3.5 No Apidos Group Company has entered into any advisory, management or fee agreement with any third party in relation to an Apidos Fund, except as contained in the Apidos Data Room.

4. Litigation

No Apidos Group Company is a party to any civil or criminal litigation or arbitration, none is pending or has been threatened in writing by or against an Apidos Group Company and so far as RA is aware there are no facts or circumstances which might be reasonably likely to give rise to any of the same.

5. Compliance with laws and regulations

The Apidos Group Companies conduct their business in all material respects in accordance with all applicable laws and regulations. So far as RA is aware, save as disclosed in Part S of the Apidos Data Room, there is no regulatory investigation or proceeding threatened or pending and so far as RA is aware there are no facts or circumstances which might be reasonably likely to give rise to any of the same.

6. Financial Information

The Apidos Financial Information has been prepared on a consistent basis in accordance with US GAAP and presents fairly in all material respects the financial condition and results of operations of the Apidos Group Companies as at 30 September 2011 and for the annual period then ended.

7. Changes

Since 30 September 2011 there has been no material adverse change in the financial position of the Apidos Group Companies.

8. Employees

8.1 At Completion the only employees of the Apidos Group Companies will be the Apidos Employees, minus anyone on that list who has resigned or whose employment has been terminated with the consent of CVC, plus anyone who has been hired with the consent of CVC   or with total potential annual remuneration of less than $100,000.

8.2 The terms of employment of the Apidos Employees, including notice periods, entitlement to remuneration, benefits and incentive payments, have been accurately disclosed in writing to CVC.

8.3 Save as disclosed in Part K of the Apidos Data Room, no Apidos Group Company has any liability under a pension arrangement or other benefit plan.

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8.4 Save in respect of the agreement with LMG disclosed in Part D of the Apidos Data Room no person other than an Apidos Employee has any entitlement to an incentive or commission or performance payment (howsoever described) from an Apidos Group Company).

9. Agreements with RA

The Apidos Data Room contains true and complete copies of all agreements between an Apidos Group Company and any RA Group Company.

10. Real Estate

No Apidos Group Company uses or has any ownership or tenant interest in any real estate other than the offices located at 712 Fifth Avenue, 12th Floor, New York, NY 10019.

11. Divestments and Acquisitions

No Apidos Group Company has any ongoing liability in relation to any payment obligations or any representations warranties, undertakings or indemnities or given by them in respect of divestments or acquisitions made by them, except as specifically identified in the Apidos Data Room. In relation to the aforesaid, no claims have been made, no claim is pending or threatened, and, so far as RA is aware, there are no facts or circumstances which might be reasonably likely to give rise to such a claim.

12. Other Business

The Apidos Group Companies do not carry on any business activity other than in respect of the Apidos Funds, and have no liabilities under any document or agreement which is not contained in the Apidos Data Room, which is individually more than $5,000, or in aggregate with any such other liabilities under any document or agreement which is not contained in the Apidos Data Room, more than $50,000.

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PART B – CVC WARRANTIES

1. Capacity and authority

1.1 CVC has the right, power and authority, and has taken all action necessary, to execute, deliver and perform its obligations under this Agreement and each Transactional Document.

1.2 CVC's obligations under this Agreement and each other transactional Document are, or when the document is executed will be, enforceable in accordance with their terms.

2. Ownership

2.1 The sole legal and beneficial owner of the Cordatus Shares is CVC Capital Partners Advisory Company Limited, which is indirectly wholly-owned by CVC. The Cordatus Shares comprise the only shares allotted by Cordatus (other than the preference shares referred to in Schedule 1). There is no Encumbrance over the Cordatus Shares, and there is no obligation to create an Encumbrance over the Cordatus Shares.

2.2 There is no obligation requiring the creation, allotment, transfer or redemption, or the grant to any person of any right (conditional or otherwise) to require the allotment, transfer or redemption of any share in the capital of Cordatus (other than the preference shares referred to in Schedule 1), including any option or right of pre-emption or conversion.

2.3 Cordatus has no interest in the capital of any corporate body other than the Cordatus Group Companies and CVC Cordatus Investments Limited. The entire share capital of each Cordatus Group Company is legally and beneficially owned by Cordatus or by another Cordatus Group Company.

2.4 There is no Encumbrance over the shares in any Cordatus Group Company, and there is no obligation to create an Encumbrance over the same.

2.5 There is no obligation requiring the creation, allotment, transfer or redemption, or the grant to any person of any right (conditional or otherwise) to require the allotment, transfer or redemption of any share in the capital of any  Cordatus Group Company, including any option or right of pre-emption or conversion.

3. Funds

3.1 The Cordatus Data Room contains true and complete copies of each material document in relation to the Cordatus Funds.

3.2 No document relating to a Cordatus Fund contains a change of control or key man provision other than as disclosed in writing to RA.

3.3 No Cordatus Group Company has breached any provision of any document relating to a Cordatus Fund, and no notice has been received by any of them or by any member of the CVC Group alleging any such breach.

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3.4 No Cordatus Group Company has entered into any commitment, or mandate or engagement letter with any third party in relation to any future fund-raising, other than as disclosed in Part Z of the Cordatus Data Room.

3.5 No Cordatus Group Company has entered into any advisory, management or fee agreement with any third party in relation to a Cordatus Fund, except as contained in the Cordatus Data Room.

4. Litigation

No Cordatus Group Company is involved in any civil or criminal litigation or arbitration, none is pending or threatened by or against a Cordatus Group Company and so far as CVC are aware there are no facts or circumstances which might be reasonably likely to give rise to any of the same.

5. Compliance with laws and regulations

The Cordatus Group Companies conduct their business in accordance with all applicable laws and regulations. So far as CVC is aware, there is no regulatory investigation or proceeding threatened or pending and so far as CVC is aware there are no facts or circumstances which might give rise to any of the same.

6. Financial Information

The Cordatus Financial Information has been prepared on a consistent basis in accordance with UK GAAP and gives a true and fair view of the state of affairs of the Cordatus Group Companies as at 31 December 2010 and of their profits and losses for the financial period then ended.

7. Changes

7.1 Since 31 December 2010 there has been no material adverse change in the financial position of the Cordatus Group Companies.

8. Employees

8.1 At Completion the only employees of the Cordatus Group Companies will be the Cordatus Employees, minus anyone on that list who has resigned or whose employment has been terminated, plus anyone who has been hired with the consent of RA or with total potential annual remuneration of less than $100,000.

8.2 The terms of employment of the Cordatus Employees, including notice periods entitlement to remuneration, benefits and incentive payments, have been accurately disclosed to RA.

8.3 No Cordatus Group Company has any liability under a pension arrangement or other benefit plan.

8.4 No person other than a Cordatus Employee has any entitlement to an incentive or commission or performance payment (howsoever described) from a Cordatus Group Company, other than the holders of preference shares in Cordatus), other than as disclosed in Part Z of the Cordatus Data Room.

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9. Agreements with CVC

The Cordatus Data Room contains true and complete copies of all agreements between a Cordatus Group Company and a member of the CVC Group.

10. Real Estate

No Cordatus Group Company uses or has any ownership or tenant interest in any real estate other than the space used at 111 Strand, London, WC2R OAG.

11. Divestments and Acquisitions

No Cordatus Group Company has any ongoing liability in relation to any payment obligations or any representations warranties, undertakings or indemnities given by them in respect of divestments or acquisitions made by them, except as specifically identified in the Cordatus Data Room. In relation to the aforesaid, no claims have been made, no claim is pending or threatened, and so far as CVC are aware there are no facts or circumstances which might be reasonably likely to give rise to such a claim.

12. Other Business and other Liabilities

The Cordatus Group Companies do not carry on any business activity other than in respect of the Cordatus Funds, and have no liabilities pursuant to any document or agreement which is not contained in the Cordatus Data Room, which is individually more than $5,000, or in aggregate with any such other liabilities under any document or agreement which is not contained in the Cordatus Data Room, more than $50,000.

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SCHEDULE 4

PRE-COMPLETION CONDUCT

RA will procure that no Apidos Group Company shall do any of the following without the prior written consent of CVC, provided that no consent shall be required for the matters listed in the agreed form document entitled "Pre-Approved Matters".  In respect of matters listed in paragraphs 12 and 16 CVC's consent shall not be unreasonably withheld or delayed; for the avoidance of doubt, CVC will not be deemed to be unreasonable in withholding or delaying its consent if the economics of a new Apidos CLO/CDO are less beneficial to Apidos than Apidos CLO VIII:

1. alter its share capital or grant any right which is referable to its share capital (other than the creation of preferred membership interests in Apidos as set out in the Apidos membership agreement in the agreed form and their allotment to an RA Group Company);

2. pay or make a dividend or other distribution, save to the extent permitted by clause 5;

3. pay a management fee to any member of the RA Group, save to the extent permitted by clause 5;

4. enter into or vary the terms of any transaction or agreement with any member of the RA Group;

5. create any Encumbrance;

6. acquire an interest in the share capital of any corporate body;

7. dispose of any interest in the shares of any Apidos Group Company;

8. enter into a partnership with any person;

9. hire or terminate any employee with potential annual remuneration greater than $250,000;

10. amend the terms of employment or incentive arrangements of any Apidos Employee; with potential annual remuneration greater than $250,000;

11. amend any of the agreements in the Apidos Data Room relating to the Apidos Funds, or the RSO Consent Agreement, the Fee Agreement between RCAM and Apidos, or the Amended and Restated Membership Agreement relating to Apidos (the latter three all being dated on or around the date of this agreement);

12. mandate or engage any third party relating to a future CLO/CDO/fund;

13. resign or otherwise vote, consent to or take any other action to terminate or otherwise remove Apidos as manager or service provider under any of the Apidos Funds;

14. take any action or give any notice or direction that would result in the termination of the replenishment period of any Apidos Fund;

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15. take any action to initiate, assist, solicit, receive, negotiate, participate in, facilitate, encourage or otherwise seek to procure the early redemption or cancellation of the securities of any Apidos Fund in any way whether in connection with a refinancing or otherwise;

16. enter into any commitment in respect of a new CLO/CDO/fund;

17. commence any litigation where the amount in dispute is (or potential costs may be) greater than $100,000; or

18. enter into any new trade, on its own account, of any corporate credit.

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SCHEDULE 5

TRANSITIONAL SERVICES

PART A– OBLIGATIONS

1. The Services

1.1 CVC will provide, or will procure the provision of, the services described in column 1 of Part B of this Schedule 5 (the "CVC Services") to the Cordatus Group Companies and to any other entity which becomes a subsidiary undertaking of Cordatus whilst the CVC Services are provided.

1.2 RA will provide, or will procure the provision of, the services described in column 1 of Part C of this Schedule 5 (the "RA Services" and together with the CVC Services, the "Services") to the Apidos Group Companies and to any other entity which becomes a subsidiary undertaking of Apidos whilst the RA Services are being provided.

1.3 CVC and RA shall perform the CVC Services and RA Services, respectively, to at least the same standard and with the same scope as the relevant Service was provided to the Cordatus Group Companies, or as the case may be, the Apidos Group Companies in the 12 months prior to the date of this Agreement and to a standard no worse than the standard to which such Service is provided to any CVC Group Company or as the case may be any RA Group Company.

2. Payment

2.1 The prices payable for the Services are set out in Part B and Part C of this Schedule 5.

2.2 CVC and RA shall invoice Cordatus and Apidos respectively quarterly in arrears.  Invoices will be payable to CVC within 30 days  and to RA within 60 days of the date of the invoice, provided that (i) if there is no working capital facility provided to Cordatus by CVC then the payment time to CVC shall be within 180 days of the date of invoice; (ii) the payment time to RA may be extended to up to 180 days if necessary for the Group's working capital purposes and iii) the payment time to RA shall be 30 days if RA provides or procures the provision of a working capital facility to Apidos.

2.3 Every three months the parties will meet to discuss the prices for the Services. If the cost to a party of providing the Services has changed by 10 per cent. or more from the amount for which it is being paid under this Schedule, or if Cordatus or Apidos have terminated a material proportion of the Services pursuant to paragraph 3 or 4, the parties shall discuss in good faith whether or not the prices should be amended.  For the avoidance of doubt, in the absence of any revised agreement, the prices set out in this Schedule shall continue to apply, subject to clause 3.2.

3. Duration

3.1 Subject to paragraph 3.2, each Service will be provided for the period, beginning from Completion and ending on 30 June 2013.

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3.2 GPCo may elect to terminate the provision of any Service early (in whole or in part) by delivery of at least one month's notice in writing to CVC or as the case may to RA, provided that any early termination of the use by GPCo of the premises set out in paragraph 3.3 shall be subject to notice requirement as set out in that paragraph.  In the event of the termination of any Service, the price payable shall be reduced if and to the extent that CVC or as the case may be RA no longer has out-of pocket costs to incur as a result thereof.

3.3 GPCo may by delivery of 6 month's prior notice terminate its use by the Apidos Group companies of premises leased by RA pursuant to a lease between RA and 712 Fifth Avenue, L.P., dated 19 March 2010 (as amended).  On termination of its occupation of the premises, GPCo and the Apidos Group Company will have no liability for any amount payable by RA under the lease or letter of comfort granted or other security granted in connection with the lease.

4. Force Majeure

4.1 If a party ("Affected Party") is prevented, hindered or delayed from or in performing any of its obligations under this Schedule by Force Majeure:

4.1.1 the Affected Party's obligations under this Schedule are suspended while the Force Majeure  continues and to the extent that it is prevented, hindered or delayed;

4.1.2 as soon as reasonably possible after the start of the Force Majeure the Affected Party shall notify the other parties in writing of the Force Majeure, the date on which the Force Majeure started and the effects of the Force Majeure on its ability to perform its obligations under this Schedule;

4.1.3 the Affected Party shall use its reasonable endeavours to mitigate the effects of the Force Majeure on the performance of its obligations under this Schedule;

4.1.4 the parties will discuss in good faith how the price for the Services payable to the Affected Party shall be reduced in respect of the affected period; and

4.1.5 as soon as reasonably possible after the end of the Force Majeure  the Affected Party shall notify the other Party in writing that the Force Majeure has ended and resume performance of its obligations under this Agreement.

4.2 If the Force Majeure continues for more than 3 months, Cordatus or as the case may be Apidos may terminate the relevant Service giving not less than 10 days' written notice to the relevant provider.

5. Liability

5.1 No party shall have any liability to a recipient of a Service for:

5.1.1 loss of profit, goodwill, business opportunity or anticipated saving suffered by the recipient in connection with the Services; or

5.1.2 any indirect or consequential loss or damage,

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provided that the parties acknowledge that the information technology systems are a material component of the business to be carried on by the Partnership and its subsidiaries.  The parties acknowledge and agree that any failure to have in place reasonable procedures and systems to back-up information technology systems and data will be likely to lead to material economic loss to the Partnership and its subsidiaries.

5.2 The aggregate liability of each of CVC and RA in relation to the provision of the CVC Services or as the case may be the RA Services whether in contract, tort (including negligence) or otherwise shall not exceed $1,000,000.

5.3 Nothing in this paragraph 5 shall limit any party's liability for death or personal injury resulting from negligence, or for wilful failure to comply with its obligations under this Schedule.

6. Third party consents

6.1 CVC and RA shall at their own cost and expense obtain and maintain any consent or approval from a third party which is necessary for the provision of the CVC Services and the RA Services respectively, including the use of any software. If  for any reason CVC or RA fails to obtain the  requisite consent from the relevant third party  and is therefore unable to provide the relevant Service, then CVC or as the case may be RA shall pay to Cordatus or Apidos, as the case may be, then RA will pay to Apidos, in each case such amount as is necessary for  Cordatus or Apidos to obtain directly from a third party, for itself and for its subsidiary undertakings, that service which it would have had under this Schedule, and the parties shall discuss in good faith how the price payable to CVC or as the case may be RA shall be reduced to take account of the failure to provide the relevant Service.

6.2 Regulatory

Each party shall co-operate fully with any inspection of the Services by a regulatory authority, and shall maintain all records generated by the party's group in connection with the provision of the Services in such manner and to such standard as may reasonably be required by the relevant recipients so as to enable the recipients to comply with applicable laws and regulations.

7. Termination indemnity

If on termination of a Service, whether on expiry or as a result of early termination in accordance with this Schedule, the employment of any employee of the RA Group or the CVC Group  who was engaged in the provision of the Services is transferred to a recipient of the Service pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006, or any analogous legislation or regulations, then RA or as the case may be CVC will indemnify the relevant recipient of the Service for any cost incurred by them or by their respective subsidiary undertakings as a result thereof, including the cost of termination of such employment.

8. Benefit

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Each recipient of a Service may enforce the terms of this Schedule subject to and in accordance with the provisions of the Contracts (Rights of Third Parties) Act 1999.

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PART B – CVC SERVICES

(1)	(3)
Service	Price
Legal, compliance accounting and taxation	EUR276,000
Premises
Rent	GBP240,168
Leasehold improvements	GBP35,748
Information Technology
Core IT	GBP144,000

Aggregate price: EUR69,000 and GBP 104,979 per quarter

PART C – RA SERVICES

(1)	(2)	(3)
Service	Duration	Price ($)
Legal and compliance		88,000
Accounting and taxation		250,000
Premises
Rent		295,000
Operating Expenses		60,000
Information Technology
Core IT		65,000
Intex Subscription		150,000
Bloomberg Subscription		110,000

Aggregate price $254,500 per quarter.

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SCHEDULE 6

NON-REGULATORY CONDITION

[Omitted in accordance with Item 601(b)(2) of Regulation S-K.  A copy of any omitted schedule and/or will be furnished supplementally to the Securities and Exchange Commission upon request.]

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SCHEDULE 7

BUSINESS ASSETS

Systems

User	Computer Name	Model	Service Tag	CPU	Memory
Amilano	r1863-gtodisco	Precision 490	DC45YF1	Xenon E5320	3.2GB
Dtomea	r1587-dtomea	Optiplex 745	GWQ03D1	Intel Core2 660	2GB
Eballantine	r2196-eballanti	Optiplex 780	82JJ9P1	Intel Core2 E8400	4GB
Fmanivel	r2198-fmanivel	Optiplex 780	43G9BP1	Intel Core2 E8400	4GB
Fcolen	r2205-fcolen	Optiplex 780	HKJBDP1	Intel Core2 E8400	4GB
Gbergstresser	r1837-gbergstre	Precision 390	3GS2CD1	Intel Core2 Quad 2.40	3.5GB
Jpatrickakos	r2183-jpatrick	Optiplex 780	9D4HQN1	Intel Core2 E8400	4GB
Jsughrue	r2181-jsughrue	Optiplex 780	7RQ0NN1	Intel Core2 E8400	4GB
Komeara	komeara	Optiplex 780	JM02WN1	Intel Core2 E8400	4GB
Mdragonetti	mdragoneti-apd	Optiplex 780	GXR8JN1	Intel Core2 E8400	4GB
Oanderson	r2219-oanderson	Optiplex 790	2PCL0R1	Intel Core i5-2400	4GB
Praciti	r2192-praciti	Optiplex 780	74LBNN1	Intel Core2 E8400	4GB
Rstevens	r1829-restevens	Optiplex 745	7YNSXC1	Intel Core2 6600	2GB
Smazin	r1151-smazin	Precision 390	BWX2D81	Pentium 4	3GB
Vingato	r2216-vingato	Optiplex 790	8V6XHQ1	Intel Core i5-2400	4GB

Software

Microsoft Windows XP

Microsoft Windows 7

Microsoft Office 2003

Microsoft Office 2007

Apidos Creditdatabase

FCS Compliance

Adobe Acrobat Professional 8

Adobe Acrobat Professional 9

Bloomberg

Wall Street Office Compliance Modules with respect to each of the CLOs managed by Apidos

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Assets

Desks	19
Chairs	17
Computers	19
Monitors	38
Printers	4
Phones	20
Drawers	19
Large cabinets	5
Conference table	1
Televisions	2

Intangibles

Logo

Brand name

ApidosCapital.com

Apidoscapitalmanagement.com

Apidoseurope.com

Records

Physical print-outs and reports from due diligence with regard to loan assets.

Others

POS Number	User	Vendor	Type of Service
212-203-8042	Oscar Anderson	T-Mobile	Blackberry
215-495-8591	Chris Allen	T-Mobile	Blackberry
267-315-3089	Phil Raciti	Verizon	Blackberry
267-467-6766	Justin Sughrue	T-Mobile	Blackberry
267-516-0113	Gretchen Bergstresser	Verizon	Data Card
267-516-0391	Chris Allen	Verizon	Data Card
646-338-7096	Fred Colen	T-Mobile	Blackberry
917-551-0541	Kevin Omeara	T-Mobile	Blackberry
917-582-1264	Eric Ballantine	T-Mobile	Blackberry
917-612-0273	Chris Allen	Verizon	Data Card-USB Stick
917-686-0142	Vincent Ingato	Verizon	Blackberry
917-710-8746	Michelle Dragonetti	Verizon	Blackberry

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SCHEDULE 8

EQUITY STRUCTURE

1. RA will incorporate a new company in Delaware ("RA Equityco"), which has two classes of shares, A shares and B shares.

2. On or before Completion, RA will transfer the subordinated notes which are the subject of the Apidos II Equity Retention Requirements to RA Equityco, in exchange for the issue of shares. On Completion, RA will transfer to the Partnership all issued and outstanding A shares.  The B shares will remain held by RA. RA Equityco will be a special purpose vehicle with no business other than the ownership of the relevant subordinated notes

3. The A shares will give the Partnership the right to appoint a majority of the board of directors of Equityco, but carry no right to income or capital and have no votes on anything other than appointment of a director.

4. The B shares will carry all the rights to income and capital and all the voting rights (except re appointments of directors).

5. The Partnership, RA and RA Equityco will enter into an agreement on terms reasonably satisfactory to CVC providing that, for as long as RA holds an indirect interest of at least 10% in GPCo:

5.1 the subordinated notes which are the subject of the Apidos II Equity Retention Requirements will not be transferred without the consent of the Partnership;

5.2 the subordinated notes which are the subject of the Apidos II Equity Retention Requirements will be voted upon instructions from the Partnership and will not otherwise be voted without Apidos consent;

5.3 RA will not transfer its shares in RA Equityco;

5.4 RA Equityco will not be wound up; and

5.5 RA will not use any other subordinated notes it holds in Apidos  II to terminate the relevant CLO, other than for cause.

6. In this Schedule 8:

6.1 "Apidos II Equity Retention Requirement" means the commitment set out in the relevant Offering Memorandum that  Apidos and/or its affiliates will retain, for so long as it or an affiliate acts as manager of Apidos CDO II, at least $2,000,000 of the equity securities issued by the related issuer at closing for the term of the related securities.

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EXECUTED BY THE PARTIES

Signed by                                                                           )

Duly authorised signatory                                                    )

for and on behalf of                                                            )

CVC CAPITAL PARTNERS SICAV-FIS S.A.             )

Signed by                                                                           )

Duly authorised signatory                                                    )

for and on behalf of                                                            )

RESOURCE AMERICA, INC.                                     )

- 45 -

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, 2011 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(s) 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(s) 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
Date:  February 6, 2012	Jonathan Z. Cohen
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Thomas C. Elliott, certify that:

1)   I have reviewed this report on Form 10-Q for the quarterly period ended December 31, 2011 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(s) 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(s) 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/ Thomas C. Elliott
Date:  February 6, 2012	Thomas C. Elliott
	Senior  Vice President and Chief Financial Officer

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, 2011 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
Date:  February 6, 2012	Jonathan Z. Cohen
	Chief Executive Officer

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, 2011 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas C. Elliott, Senior 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/ Thomas C. Elliott
Date:  February 6, 2012	Thomas C. Elliott
	Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

by and among

LEAF COMMERCIAL CAPITAL, INC.,

LEAF FINANCIAL CORPORATION,

RESOURCE TRS, INC.,

RESOURCE CAPITAL CORP.,

RESOURCE AMERICA, INC.

AND

THE PURCHASERS IDENTIFIED HEREIN

Dated as of November 16, 2011

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	1
ARTICLE II	PURCHASE AND SALE	16
Section 2.1.	Purchase of the Purchased Shares.	16
Section 2.2.	Purchase Price.	16
ARTICLE III	REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY AND ITS SUBSIDIARIES	16
Section 3.1.	Organization; Authorization; Subsidiaries.	16
Section 3.2.	Absence of Restrictions and Conflicts.	18
Section 3.3.	Brokers, Finders and Investment Bankers.	19
Section 3.4.	Facilities; Real Property.	19
Section 3.5.	Title to Assets; Related Matters.	20
Section 3.6.	Financial Statements.	21
Section 3.7.	No Undisclosed Liabilities.	22
Section 3.8.	Absence of Certain Changes.	22
Section 3.9.	Legal Proceedings.	23
Section 3.10.	Compliance with Laws.	23
Section 3.11.	Contracts.	24
Section 3.12.	Contributed Financing Contracts.	26
Section 3.13.	New Financing Contracts.	29
Section 3.14.	Terms of Contributed Financing Contracts and New Financing Contracts.	31
Section 3.15.	Insurance Policies.	33
Section 3.16.	Environmental, Health and Safety Matters.	34
Section 3.17.	Intellectual Property.	35
Section 3.18.	Transactions with Affiliates.	36
Section 3.19.	Intentionally Omitted.	36
Section 3.20.	Vendor/Dealer Relations.	36
Section 3.21.	Employee and Labor Matters.	37
Section 3.22.	Permits	39
Section 3.23.	Accounts Receivable and Accounts Payable.	39
Section 3.24.	Taxes.	40
Section 3.25.	Ethical Practices.	42
Section 3.26.	Contribution Agreement.	42
Section 3.27.	Sub-Servicing Arrangement.	42
Section 3.28.	Solvency, Etc.	42
Section 3.29.	Insurance Subsidiary	43
Section 3.30.	Protection of Customer Information.	44
Section 3.31.	Offer and Sale.	44
Section 3.32.	Credit Policies and Procedures.	44
Section 3.33.	Origination Parameters.	44
Section 3.34.	Officers and Directors.	45

Section 3.35.	Disclosure.	45
ARTICLE IV	REPRESENTATIONS AND WARRANTIES REGARDING  THE NON-COMPANY PARTIES	45
Section 4.1.	Organization.	45
Section 4.2.	Authorization.	45
Section 4.3.	Absence of Restrictions and Conflicts.	46
Section 4.4.	Brokers, Finders and Investment Bankers.	46
Section 4.5.	Legal Proceedings.	46
ARTICLE V	REPRESENTATIONS AND WARRANTIES REGARDING THE PURCHASERS	46
Section 5.1.	Organization.	46
Section 5.2.	Authorization.	47
Section 5.3.	Absence of Restrictions and Conflicts.	47
Section 5.4.	Brokers, Finders and Investment Bankers.	47
Section 5.5.	Investment Representations.	48
Section 5.6.	Legal Proceedings.	48
Section 5.7.	Disclaimer.	49
ARTICLE VI	CERTAIN COVENANTS AND AGREEMENTS	49
Section 6.1.	Public Announcements.	49
Section 6.2.	Confidentiality.	49
Section 6.3.	Use of Proceeds.	50
Section 6.4.	RCC Past Due Payables.	50
Section 6.5.	LRF 3 Leases Backstop.	50
Section 6.6.	Sub-Servicing Fees Backstop.	51
Section 6.7.	Servicing Rights; Non-Competition and Non-Solicitation.	51
Section 6.8.	Servicing Fees from the 2010-2 Securitization.	54
Section 6.9.	Fiscal Year of the Company	54
Section 6.10.	Moberly Property	54
ARTICLE VII	TAX MATTERS	54
Section 7.1.	Cooperation.	54
ARTICLE VIII	CLOSING DELIVERIES	55
Section 8.1.	Company’s Closing Deliveries.	55
Section 8.2.	Purchasers’ Closing Deliveries.	57
ARTICLE IX	CLOSING	57
ARTICLE X	MISCELLANEOUS PROVISIONS	58
Section 10.1.	Survival.	58
Section 10.2.	Indemnification.	58
Section 10.3.	Notices.	63
Section 10.4.	Assignment; Successors in Interest.	65
Section 10.5.	Number; Gender.	65

Section 10.6.	Captions.	65
Section 10.7.	Controlling Law.	65
Section 10.8.	Consent to Jurisdiction, Etc.	65
Section 10.9.	WAIVER OF JURY TRIAL.	66
Section 10.10.	Expenses.	66
Section 10.11.	Severability.	66
Section 10.12.	Counterparts; Facsimile Signatures.	66
Section 10.13.	Enforcement of Certain Rights.	67
Section 10.14.	Amendments; Waivers.	67
Section 10.15.	Integration.	67
Section 10.16.	Cooperation Following the Closing.	67
Section 10.17.	Interpretation; Construction.	67

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “Agreement”), is dated as of November 16, 2011, by and among LEAF COMMERCIAL CAPITAL, INC., a Delaware corporation (the “Company”), LEAF FINANCIAL CORPORATION, a Delaware corporation (“LFC”), RESOURCE TRS, INC., a Delaware corporation (“TRS”),  RESOURCE CAPITAL CORP., a Maryland real estate investment trust (“RCC” and, together with TRS, the “RCC Parties”), RESOURCE AMERICA, INC., a Delaware corporation (“Resource America”), and each of the parties identified on Schedule A hereto (the “Purchasers”), each of them individually and two or more of them collectively referred to as a “Party” or the “Parties”.

WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers desire to purchase, the number of shares of the Company’s Series A Preferred Stock (as defined below) set forth opposite each Purchaser’s name on Schedule A hereto, upon the terms and subject to the conditions set forth in this Agreement; and

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS

The following terms, as used herein, have the following meanings:

“2010-2 Indenture” means the Indenture, dated May 3, 2010, between LRF 3 and U.S. Bank National Association, as the same may be amended, modified, supplemented or restated from time to time.

“2010-2 Servicing Payments” has the meaning set forth in Section 6.8(a) hereof.

“2010-2 Servicing Agreement” means the Servicing Agreement, dated May 3, 2010, by and among LFC, TRS, Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), LRF 3 and U.S. Bank National Association, as the same may be amended, modified, supplemented or restated from time to time.

“Affiliate” means, with respect to any Person: (a) a director, manager, officer, partner, member, beneficiary or equity holder (whether direct or indirect) of such Person; (b) a spouse, parent, sibling or child of such Person (or spouse, parent, sibling or child of any director, manager or executive officer of such Person); and (c) any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with, such first Person.

“Agreement” has the meaning set forth in the introductory paragraph hereto.

“Amended and Restated Call Option Agreement” means the Amended and Restated Call Option Agreement to be entered into among the Company and the Management Parties.

 “Amended and Restated Non-Competition, Non-Solicitation and Confidentiality Agreements” means the Amended and Restated Non-Competition, Non-Solicitation and Confidentiality Agreements to be entered into between the Company and each of the individuals agreed by the Parties.

“Amended and Restated Non-Solicitation and Confidentiality Agreement” means the Amended and Restated Non-Solicitation and Confidentiality Agreements to be entered into between the Company and each of the individuals agreed by the Parties.

“Amended and Restated Sub-Servicing Agreement” means the Amended and Restated Sub-Servicing Agreement to be entered into by and among the Company, LFC and TRS.

“Announcement” has the meaning set forth in Section 6.1 hereof.

“Assumed Liabilities” has the meaning ascribed to such term in the Contribution Agreement.

“Assumed Obligations” has the meaning ascribed to such term in the Contribution Agreement.

“Auditor” means either (a) the Company’s independent auditors or (b) an independent accounting firm selected by the board of directors of the Company (including at least one Eos Director).

“Beneficial Ownership” has the meaning ascribed to it in Rule 13d-3 under the Exchange Act of 1934, as amended.

“Benefit Plan” means each plan, fund, program, agreement or arrangement (a) maintained, contributed to or required to be contributed to by the Company or any of its Subsidiaries or with respect to which the Company or any of its Subsidiaries has or may have any Liability and (b) which provides employee benefits  to or for the remuneration, direct or indirect, of employees, former employees, directors, managers, officers, consultants, independent contractors, contingent workers or leased employees (or any beneficiaries or dependents thereof) of the Company or any of its Subsidiaries or any Person that together with the Company or any of its Subsidiaries would be deemed a single employer pursuant to Section 414 of the Code (whether written or oral), including, without limitation, each “welfare” plan (within the meaning of Section 3(1) of ERISA) and each “pension” plan (within the meaning of Section 3(2) of ERISA).

“Business Day” means any date that is not a Saturday, Sunday or a day on which banking institutions in New York, New York are not required to be open.

“Cash Value of LRF 3 Leases” means, as of any Test Date, the sum of (i) the equity value of LRF 3 as reflected on any Test Date Balance Sheet and (ii) any amounts paid or distributed via a dividend by LRF 3 to the Company.

2

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and any rules or regulations promulgated thereunder.

 “Certificate of Designations” means the Certificate of Designations of Series C Redeemable Preferred Stock of the Company, substantially in the form attached hereto as Exhibit A.

“Change in Control” means, directly or indirectly, with respect to a Person, the acquisition by another Person (who is not an Affiliate of such first Person) of (A) 50% or more of the consolidated assets of such first Person or (B) Beneficial Ownership of capital stock or other equity or voting interests representing 50% or more of the voting power of all outstanding capital stock of or other equity or voting interests in such first Person.

“Claims Period” means the period during which a claim for indemnification under Article X hereof may be asserted thereunder by an Indemnified Party.

“Closing” has the meaning set forth in Article IX hereof.

“Closing Date” has the meaning set forth in Article IX hereof.

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

“Common Stock” means the Company’s common stock, par value $0.001 per share.

“Company” has the meaning set forth in the introductory paragraph hereto.

“Company Ancillary Documents” has the meaning set forth in Section 3.1(a) hereof.

“Company Deductible” has the meaning set forth in Section 10.2(f)(i) hereof.

“Company Fundamental Representations” means the representations and warranties of the Company set forth in Sections 3.1, 3.3 and 3.5(a) (solely with respect to the Company’s Financing Contracts and the Intellectual Property) hereof.

“Company General Representations” means the representations and warranties of the Company set forth in Article III hereof, other than the (i) representations and warranties set forth in Sections 3.12 and 3.14 hereof (solely as they relate to the Contributed Financing Contracts) and (ii) Company Fundamental Representations.

“Company Parties” means the Company, LFC, the RCC Parties and Resource America.

“Confidential Information” means non-public information concerning the Company’s or any of its Subsidiaries’ financial data, strategic business plans, proprietary product data, customer lists, Customer Information, information relating to governmental relations, discoveries, practices, processes, methods, marketing plans and other material non-public, proprietary and confidential information of the Company or any of its Subsidiaries that, in any case, is not otherwise generally available to the public and has not been disclosed by the Company or any of its Subsidiaries to others not subject to confidentiality agreements.

3

“Contract” means any written or oral contract, agreement, purchase order, commitment, Permit, loan or credit agreement, note, bond, mortgage, indenture, lease, sublease, purchase order or other agreement, instrument, concession, franchise or license, including customer contracts, customer orders and backlog, royalty and license agreements and rights, purchase agreements and rights to use technology owned by others.

“Contributed Financing Contracts” means the LEAF Financing Contracts, the LRF 3 Financing Contracts and the RCC Financing Contracts.

“Contribution Agreement” means the Transfer and Contribution Agreement, dated as of January 4, 2011, by and among the Company, LFC, the RCC Parties and the Management Parties thereto, as the same may be amended, modified, supplemented or restated from time to time.

“Contribution Agreement Amendment” means the amendment to the Contribution Agreement.

“Control” means (including, with correlative meanings, “controlled by” and “under common control with”), with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.  For the avoidance of doubt, LFC controls the LEAF Funds.

“Controlled Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, through one or more intermediaries, is Controlled by such first Person.  For the avoidance of doubt, none of the LEAF Funds are Controlled Affiliates of LFC.

“Copyrights” has the meaning set forth in the definition of Intellectual Property Right.

“Credit Policies and Procedures” has the meaning set forth in Section 3.32 hereof.

“Customer Information” means all non-public records, books, reports, data and other information concerning customers.

“DeMent Amended and Restated Employment Agreement” means the Amended and Restated Employment Agreement to be entered into between the Company and Crit DeMent.

“Direct Claim” has the meaning set forth in Section 10.2(e)(iii) hereof.

“Due Diligence Memorandum” means that certain document delivered by the Company to the Purchasers in connection with the due diligence performed by the Purchasers and any updates to such document such that the Due Diligence Memorandum is true and accurate as of the Closing Date.

“Employment Laws” has the meaning set forth in Section 3.21(k) hereof.

“Environmental Laws” means any federal, state, local or foreign Law (including common law), Order, Permit or governmental license or restriction or any agreement with any Governmental Entity or other third party, whether now or hereafter in effect, relating to the environment, human health and safety or to pollutants, contaminants, wastes or chemicals or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substances, wastes or materials.

4

“Environmental Liabilities” means and includes any Losses, Liabilities or obligations of any kind relating to (a) the failure or alleged failure to comply with all applicable Environmental Laws in connection with the operation of the business, (b) any unfulfilled remedial obligation imposed under applicable Environmental Laws or Contracts (including surface and subsurface restoration) or (c) any other alleged or potential Liability arising under applicable Environmental Laws.

“Eos Directors” has the meaning ascribed to such term in the Stockholders’ Agreement.

“Eos Warrants” means the Warrants to purchase Common Stock issued by the Company to the Purchasers.

“Equipment” has the meaning set forth in Section 3.20(a) hereof.

“Equity Interests” means (a) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether voting or nonvoting) of capital stock, including each class of common stock and preferred stock of such Person and all securities convertible into or exchangeable for shares of capital stock of such Person, and all options, warrants, and other rights to purchase or otherwise acquire from Person shares of such capital stock, including any stock appreciation or similar rights, contractual or otherwise and (b) with respect to any Person that is not a corporation, any and all general partnership interests, limited partnership interests, membership or limited liability company interests, beneficial interests or other equity interests of or in such Person (including any common, preferred or other interest in the capital or profits of such Person, and whether or not having voting or similar rights).

“Equity Securities” has the meaning ascribed to such term in the Stockholders’ Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Final Test Date” has the meaning set forth in Section 6.5 hereof.

“Financing Contract” means any loan or lease related to equipment or other property, including the Contributed Financing Contracts and the New Financing Contracts.

“Financial Statements” has the meaning set forth in Section 3.6(a) hereof.

“furnished” means, with respect to any document, that such document was either delivered to the Purchasers by the Company prior to the date of this Agreement or was otherwise made available.

“GAAP” means generally accepted accounting principles employed in the United States.

5

“Governmental Entity” means any national, federal, state, local or foreign court, tribunal, arbitral body, arbitrator, administrative agency or commission or other governmental or regulatory authority or instrumentality.

“Guggenheim Indenture” means the Indenture, dated as of December 5, 2010, by and among LEAF Capital Funding SPE A, LLC, U.S. Bank National Association and Guggenheim Securities, LLC.

“Guggenheim Warrant Amendment” means the amendment to the Warrant to purchase Common Stock issued by the Company to Guggenheim Securities, LLC.

“Hazardous Materials” mean any waste, pollutant, contaminant, hazardous substance, toxic, ignitable, reactive or corrosive substance, radioactive material, hazardous waste, special waste, industrial substance, by-product, process intermediate product or waste, petroleum or petroleum-derived substance or waste, chemical liquids or solids, liquid or gaseous products or any constituent of any such substance or waste, the use, handling or disposal of which by the Company or any of its Subsidiaries is in any way governed by or subject to any applicable Environmental Law.

“Indebtedness” means, without duplication, (a) all indebtedness of the Company or any of its Subsidiaries for borrowed money and all accrued interest thereon (other than accounts payable in the ordinary course of business that are not more than ninety (90) calendar days outstanding), including indebtedness arising from loans, advances, letters of credit, surety bonds and obligations related thereto, (b) all obligations of the Company or any of its Subsidiaries for the deferred purchase price of assets, property or services (other than operating or other leases of property (except as set forth in (d)), trade payables and other non-ordinary course third-party payables, accrued expenses and liabilities to current and/or former employees incurred in the ordinary course of business), (c) all obligations of the Company or any of its Subsidiaries evidenced by notes, bonds, debentures, hedging and swap arrangements or Contracts or other similar instruments (other than trade payables, accrued expenses and Liabilities to current and/or former employees incurred in the ordinary course of business), (d) all capital lease obligations of the Company or any of its Subsidiaries, (e) all accrued and unpaid interest on any Indebtedness referred to in clauses (a) through (d) above (except as set forth in (a) above) through the Closing Date and any prepayment penalties, premiums, consent or other fees, breakage costs on interest rate swaps and any other hedging obligations (including foreign exchange contracts) or other costs incurred in connection with the repayment or assumption of such Indebtedness and (f) all Indebtedness of others of the type referred to in clauses (a) through (e) above guaranteed directly or indirectly in any manner by the Company or any of its Subsidiaries.

“Indemnification Agreements” means the Indemnification Agreements to be entered into by the Company and each of the Eos Directors, the RCC Directors, the Management Director and the Independent Director (each as defined in the Stockholders Agreement) at the Closing.

“Indemnified Party” has the meaning set forth in Section 10.2(e)(i) hereof.

“Indemnifying Party” has the meaning set forth in Section 10.2(e)(i) hereof.

6

“Independent Director” has the meaning ascribed to such term in the Stockholders’ Agreement.

“Intellectual Property” means the Intellectual Property Rights which are used or useful in the business and which are used by the Company or any of its Subsidiaries.

“Intellectual Property Rights” means all (a) domestic and foreign trademarks, service marks, service names, trade names, trade dress, fictitious business names (d/b/a’s), telephone numbers, commercial symbols, logos, and slogans, internet domains and URLs, registered user names, and all goodwill associated with any of the foregoing (collectively, “Marks”), (b) patents, including all divisionals, continuations, continuations-in-part, extensions, substitutions, renewals, reexaminations, reissues, additions, any supplementary certificates of protection of or to any of the foregoing, and any registrations or applications for registration of any of the foregoing (collectively, “Patents”), (c) copyrights and any works of authorship, including literary works and all forms of software (whether in source code, object code, firmware, development tools, files, records, or data), marketing materials, advertising, all documentation related to any of the foregoing, and any registrations or applications for registration of any of the foregoing (collectively, “Copyrights”), (d) trade secrets, technology, industrial and other designs, inventions, discoveries, improvements, know-how, proprietary rights, formulae, confidential and proprietary information, technical information and documentation, customer and client information, client and customer lists, franchises, plans, advertising records, techniques, methods, instructions, research records, inventions, designs, drawings, procedures, processes, models, formulations, manuals and systems, data, research, whether or not patentable or copyrightable, including all chemical, biochemical, toxicological, and material and information and data relating thereto and formulation, analytical and stability information and data, and any other information which has actual or potential commercial value and is not available in the public domain, and any registrations or applications for registration of any of the foregoing (collectively, “Technology”), and (e) and all other going concern value, intellectual property or  proprietary right, whether or not subject to statutory registration or protection (collectively, “Other IP Rights”).

“Insurance Subsidiary” means Commerce Square Equipment Reinsurance Co. Ltd.

“Investor Shares” has the meaning ascribed to such term in the Stockholders’ Agreement.

“IPO” has the meaning ascribed to such term in the Restated Certificate.

“IRS” means the United States Internal Revenue Service.

“Knowledge” of any Person means, except as otherwise expressly modified in this Agreement, (a) the actual knowledge of such Person and (b) that knowledge which should have been acquired by such Person after making reasonable inquiry and exercising such due diligence as a prudent businessperson would have made or exercised in the management of his or her business affairs.  When used in the case of the Company, the term “Knowledge” shall include the Knowledge of those individuals set forth on Schedule B.

“Latest Balance Sheet” has the meaning set forth in Section 3.6(a) hereof.

7

 “Latest Balance Sheet Date” has the meaning set forth in Section 3.6(a) hereof.

“Law” means any law (both common and statutory law and civil and criminal law), treaty, convention, rule, directive, legislation, ordinance, regulatory code (including statutory instruments, guidance notes, circulars, directives, decisions, rules and regulations) or similar provision having the force of law or an Order, award or decree of any Governmental Entity, arbitrator or any self-regulatory organization.

“LEAF Financing Contract” has the meaning assigned to it in the Contribution Agreement.

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

“LEAF Funds” means (i) Lease Equity Appreciation Fund I, L.P., a Delaware limited partnership, (ii) Lease Equity Appreciation Fund II, L.P., a Delaware limited partnership, (iii) LEAF Equipment Finance Fund 4, L.P., a Delaware limited partnership, (iv) LEAF Equipment Leasing Income Fund III, L.P. a Delaware limited partnership, (v) LEAF Commercial Finance Fund, LLC, a Delaware limited liability company, and (vi) any other Person for which LFC is the general partner, manager or serves in a similar capacity or any Subsidiaries of any of the foregoing.

“LEAF Transferred Subsidiary” has the meaning assigned to it in the Contribution Agreement.

“Leased Real Property” has the meaning set forth in Section 3.4(a) hereof.

“LFC” has the meaning set forth in the introductory paragraph hereto.

“Liability” means any actual or potential liability or obligation (including as related to Taxes), whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, determined, determinable or otherwise, liquidated or unliquidated and whether due or to become due, regardless of when asserted.

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset,including any voting or other transfer restrictions, options, right of first refusal, encroachment, easement or other claim.  Without limiting the generality of the foregoing, for the purposes of this Agreement, a Person shall be deemed to own, subject to a Lien, any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.

“Losses” of any Person means any and all losses (including a diminution in value of assets or Equity Interests), claims, damages, Liabilities, expenses (including reasonable attorneys’ and accountants’ and other professionals’ fees, litigation expensesand other costs of investigation or defense) and assessments incurred in connection with the receipt of indemnification payments (including interest or penalties thereon) arising from or in connection with any such matter that is the subject of indemnification under Article X hereof, but excluding

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any (i) consequential damages, (ii) special damages, (iii) lost profits, (iv) punitive or exemplary damages, (v) damages to reputation or loss of goodwill and (vi) damages not a natural, probable and reasonably foreseeable consequence of a breach; provided, however, that the Losses of any Person in respect of any Third Party Claim shall be the amount awarded or otherwise paid to such Person in respect of such Third Party Claim (including any (i) consequential damages, (ii) special damages, (iii) lost profits, (iv) punitive or exemplary damages, (v) damages to reputation or loss of goodwill and (vi) damages not a natural, probable and reasonably foreseeable consequence of a breach).

“LRF 3” means LEAF Receivables Funding 3, LLC, a Delaware limited liability company.

“LRF 3 Financing Contract” has the meaning assigned to “LRF Financing Contract” in the Contribution Agreement.

“LRF 3 Servicing Assignment” means the assignment of the Servicing Agreement among LFC, TRS, Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), LRF 3 and U.S. Bank National Association.

“made available” means, with respect to any document, that such document was in the electronic data room at the close of business two calendar days prior to the date of this Agreement.

“Management Consulting Agreement” means the Management Consulting Agreement to be entered into by the Company and Eos Management, L.P. at the Closing.

“Management Director” has the meaning ascribed to such term in the Stockholders’ Agreement.

“Management Parties” has the meaning ascribed to such term in the Contribution Agreement.

“Management Rights Agreements” means the Management Rights Agreements to be entered into by the Company and each of Eos Capital Partners III, L.P. and Eos Capital Partners IV, L.P. at the Closing.

“Marks” has the meaning set forth in the definition of “Intellectual Property Right”.

“Material Adverse Effect” means any state of facts, change, event, effect or occurrence (whether or not constituting a breach of a representation, warranty or covenant set forth in this Agreement) that, individually or in the aggregate, is or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of the Company and its Subsidiaries taken as a whole; provided, however, that any change in Laws (other than changes in regulatory conditions affecting the industry in which the Company operates) or GAAP or the interpretations thereof by a Governmental Entity shall not be deemed to constitute a Material Adverse Effect.

“Material Contracts” has the meaning set forth in Section 3.11(a) hereof.

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“Moberly Property” means the building located at 1720A Crete Street, Moberly, Missouri and the land on which such building sits.

“New Financing Contract” means any Financing Contract originated or acquired by the Company or a Subsidiary of the Company since the Company’s or such Subsidiary’s incorporation or formation and held by the Company or such Subsidiary on the date of this Agreement, excluding any Contributed Financing Contracts.

“Non-Company Parties” means each of LFC, the RCC Parties and Resource America.

“Non-Company Parties Ancillary Documents” has the meaning set forth in Section 4.2 hereof.

“Non-Company Party Representations” means the representations and warranties of the Non-Company Parties set forth in Sections 4.1, 4.2, 4.3 and 4.4 hereof.

“Orders” means any judgment, writ, decree, compliance agreement, injunction or judicial or administrative order and any legally binding determination of any Governmental Entity or arbitrator.

“Origination Parameters” has the meaning set forth in Section 3.33 hereof.

“Other IP Rights” has the meaning set forth in the definition of “Intellectual Property Right”.

“Party” or Parties” has the meaning set forth in the introductory paragraph hereto.

“Patents” has the meaning set forth in the definition of “Intellectual Property Right”.

“Payables Test Date” has the meaning set forth in Section 6.4 hereof.

“Permits” means all permits, licenses, authorizations, filings or registrations, franchises, approvals, certificates (including certificates of need, construction and operation permits and safety certificates), exemptions, classifications, registrations, variances and similar documents, applications, rights obtained, or required to be obtained, from Governmental Entity.

“Permitted Debt Investment” means an investment in the debt securities of any Person engaged in the Subject Business, so long as such investment does not provide the investor or its Affiliates with Control of such Person or its Affiliates; provided, however, that to the extent the debt securities of such Person are convertible into equity securities of such Person or participate in any way with the equity securities of such Person, such investment will be a Permitted Debt Investment only if (i) no more than 10% of such Person’s total consolidated revenues in the last fiscal year ending or the trailing twelve months prior to the closing date of such investment are directly attributable to the Subject Business and (ii) so long as no more than 10% of such Person’s total projected consolidated revenues for the following fiscal year beginning on the closing date of such investment are directly attributable to the Subject Business.

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“Permitted Liens” means (a) Liens for Taxes, assessments and other governmental levies, fees or charges that are not yet due and payable or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and repairmen incurred in the ordinary course of business consistent with past practice and not yet delinquent and (c) minor defects in title, easements, permits, restrictive covenants and any other similar encumbrances of record that, individually or in the aggregate, would not reasonably be expected to adversely affect the ability of the Company or any of its Subsidiaries to use the encumbered property or asset in the conduct of their respective businesses.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“Pooled Investment Vehicle” has the meaning ascribed to it in Rule 206(4)-8 under the Investment Advisers Act of 1940, as amended.

“Portfolio Property” means any asset with respect to which the Company or a Subsidiary of the Company is the lessor, seller or secured party, as the case may be, pursuant to the terms of a Financing Contract (whether initially or as an assignee).

“Proceedings” means actions, suits, claims, reviews, audits and investigations and legal, administrative or arbitration proceedings.

“Pro Forma Balance Sheet” has the meaning set forth in Section 3.6(a) hereof.

“Properties” (or individually, a “Property”) means all assets and properties, whether real property, personal property, mixed or contractual property interests, fixtures or other interests, whether tangible or intangible, whether owned, leased or licensed.

“Purchased Shares” has the meaning set forth in Section 2.1 hereof.

“Purchaser Fundamental Representations” means the representations and warranties of the Purchasers set forth in Sections 5.1, 5.2, 5.3 and 5.4 hereof.

“Purchaser Representations” means the representations and warranties of the Purchasers set forth in Article V hereof.

“Purchaser Ancillary Documents” has the meaning set forth in Section 5.2.

“Purchaser Deductible” has the meaning set forth in Section 10.2(f)(iii) hereof.

“Purchaser Group” means the Purchasers and their respective successors and assigns, and each of their respective officers, directors, managers, employees, representatives and Affiliates.

“Purchasers” has the meaning set forth in the introductory paragraph hereto.

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“RCC” has the meaning set forth in the introductory paragraph hereto.

“RCC Directors” has the meaning ascribed to such term in the Stockholders’ Agreement.

“RCC Financing Contract” has the meaning assigned to it in the Contribution Agreement.

“RCC Parties” has the meaning set forth in the introductory paragraph hereto.

“RCC Past Due Payables” means all accounts payable of the Company and LFC that were greater than 45 calendar days past due as of the effective date of the Contribution Agreement.

“Receivables” means the accounts receivable and other receivables related to the business of the Company and its Subsidiaries as of the Latest Balance Sheet Date.

“Reference Test Date Payment” has the meaning set forth in Section 6.5 hereof.

“Registration Rights Agreement” means the Registration Rights Agreement to be entered into by the stockholders of the Company identified therein at the Closing.

“Related Documents” means

(i)              the DeMent Amended and Restated Employment Agreement;

(ii)             the Amended and Restated Non-Solicitation and Confidentiality Agreement;

(iii)            the Amended and Restated Non-Competition, Non-Solicitation and Confidentiality Agreement;

(iv)            the Stockholders’ Agreement;

(v)             the Management Consulting Agreement;

(vi)            the Management Rights Agreements;

(vii)           the Indemnification Agreements;

(viii)          the Servicing Fees Funds Flow Letter;

(ix)            the Company Ancillary Documents;

(x)             the Contribution Agreement Amendment;

(xi)            the Amended and Restated Call Option Agreement;

(xii)           the Registration Rights Agreement;

(xiii)          the Transition Services Agreement Termination;

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(xiv)          the TRS Exchange Agreement;

(xv)           the TRS Warrant Termination;

(xvi)          the Eos Warrants;

(xvii)         the Guggenheim Warrant Amendment;

(xviii)        the Shared Services Agreement;

(xix)          the Trademark Assignment;

(xx)           the Trademark License Agreement;

(xxi)          the Amended and Restated Sub-Servicing Agreement;

(xxii)         the Purchaser Ancillary Documents; and

(xxiii)        each other agreement, document, instrument or certificate contemplated by this Agreement or to be executed in connection with the consummation of the transactions contemplated by this Agreement.

“Residual” means, with respect to any item of Portfolio Property, its estimated value upon expiration of the Financing Contract to which it is subject, as determined by a Transferor, the Company or a Subsidiary of the Company, as applicable, and established on its books and records at the inception of such Financing Contract.

“Resource America” has the meaning set forth in the introductory paragraph hereto.

“Resource Obligations” has the meaning set forth in Section 3.6(b) hereof.

“Restated Certificate” means the Amended and Restated Certificate of Incorporation of the Company.

“Restricted Period” has the meaning set forth in Section 6.7(c) hereof.

“Revolving Facility” means any indenture, credit agreement, loan agreement or other agreement for the borrowing of money, the proceeds of which are, or were, used by the Company, any of the LEAF Funds or any of their Subsidiaries to originate or acquire Financing Contracts or to refinance any borrowing of money the proceeds of which were used by the Company, any of the LEAF Funds or any of their Subsidiaries to originate or acquire Financing Contracts.

“REXI/LFC Deductible” has the meaning set forth in Section 10.2(f)(ii) hereof.

“SCRA” means the Servicemembers Civil Relief Act of 2003, as amended.

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations promulgated thereunder.

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“Securitization” means any offering of notes, secured by and payable from assets consisting primarily of Financing Contracts, made by the Company, TRS, any of the LEAF Funds or any of their Subsidiaries.

“Series A Preferred Stock” means the Company’s Series A Participating Preferred Stock, $0.001 par value per share.

“Series B Preferred Stock” has the meaning set forth in Section 3.1(c) hereof.

“Series C Preferred Stock” means the Series C Redeemable Preferred Stock to be authorized by the Company pursuant to the Certificate of Designations.

“Series D Preferred Stock” has the meaning set forth in Section 3.1(c) hereof.

“Servicing Agreement” means each agreement obligating the Company or one of its Subsidiaries to provide services in connection with leases or loans, whether as a servicer or sub-servicer, including all Servicing Contracts (as defined in the Amended and Restated Sub-Servicing Agreement).

“Servicing Fees Funds Flow Letter” means the letter agreement among the Company, LFC, each of the LEAF Funds and any other relevant parties setting forth the flow of the servicing fees with respect to the Securitizations and Revolving Facilities that are connected with any of the LEAF Funds.

“Servicing Fee Shortfall” has the meaning set forth in Section 6.6 hereof.

“Shared Services Agreement” means the Shared Services Agreement to be entered into between the Company and Resource America.

“Statutory Representations” means the representations and warranties of the Company set forth in Sections 3.16 and 3.24 hereof.

“Stockholders’ Agreement” means the Stockholders’ Agreement of the Company to be entered into by the parties identified therein at the Closing.

“Subject Business” means the business of originating, acquiring and servicing leases, loans or notes that are used to finance commercial and industrial equipment for businesses in the United States, with an average transaction size of $250,000 or less.

“Sub-Servicing Agreement” means the Sub-Servicing Agreement, dated as of January 4, 2011, by and between the Company and LFC.

“Subsidiary” means, with respect to any Person, any other Person the majority of whose equity securities or voting securities are directly or indirectly owned or controlled by such Person; provided that the Parties acknowledge and agree that the LEAF Funds are not a “Subsidiary” of any Person for purposes of this Agreement.

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“Tax Return” shall mean any report, return, declaration or other information required to be supplied to a Governmental Entity in connection with Taxes, including estimated returns and reports of every kind with respect to Taxes.

“Taxes” means all taxes, assessments, charges, duties, fees, levies or other governmental charges (including interest, penalties or additions associated therewith), including income, franchise, capital stock, real property, personal property, unclaimed property, tangible, withholding, employment, payroll, social security, social contribution, unemployment compensation, disability, transfer, sales, use, excise, gross receipts, value-added and all other taxes of any kind imposed by any Governmental Entity, whether disputed or not, and any charges, interest or penalties imposed by any Governmental Entity.

“Technology” has the meaning set forth in the definition of “Intellectual Property Right”.

“Test Date” has the meaning set forth in Section 6.5 hereof.

“Test Date Deficit” has the meaning set forth in Section 6.5 hereof.

“Test Date Balance Sheet” has the meaning set forth in Section 6.5 hereof.

“Test Date Payment” has the meaning set forth in Section 6.5 hereof.

“Test Date Statement” has the meaning set forth in Section 6.5 hereof.

“Third Party Claim” has the meaning set forth in Section 10.2(e)(i) hereof.

“Top Vendors” has the meaning set forth in Section 3.20(a) hereof.

“Transfer Taxes” means all excise, sales, use, value added, registration stamp, recording, documentary, conveyancing, franchise, property, transfer, gains and similar Taxes, levies, charges and fees incurred in connection with the transactions contemplated by this Agreement.

“Trademark Assignment” means the Trademark Assignment by and between the Company and LFC.

“Trademark License Agreement” means the Trademark License Agreement to be entered into by and between the Company and LFC.

“Transferor” means LFC, RCC and any Subsidiary of LFC or RCC that contributed or transferred a Contributed Financing Contract pursuant to the Contribution Agreement.

“Transition Services Agreement Termination” means the termination of the Transition Services Agreement to be entered into by and between the Company and LFC.

“TRS” has the meaning set forth in the introductory paragraph hereto.

“TRS Exchange Agreement” means the Exchange Agreement to be entered into by and between the Company and TRS.

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“TRS Warrant Termination” means the termination of the Warrant to purchase Common Stock issued by the Company to TRS.

“UCC” means the Uniform Commercial Code as then in effect in the State of New York, or where the context otherwise requires, the jurisdiction the law of which governs the perfection or priority of any applicable security interest.

“Unpaid RCC Past Due Payables Amount” has the meaning set forth in Section 6.4 hereof.

ARTICLE II

PURCHASE AND SALE

Section 2.1.                      Purchase of the Purchased Shares.

Subject to the terms and conditions of this Agreement, at the Closing, the Company agrees to issue and sell to each Purchaser, free and clear of all Liens (other than those arising under the Stockholders’ Agreement), and each Purchaser agrees, severally and not jointly, to purchase from the Company, the number of shares of Series A Preferred Stock set forth opposite such Purchaser’s name on Schedule A hereto (the “Purchased Shares”).

Section 2.2.                      Purchase Price.

In full consideration for the issuance of the Purchased Shares, at the Closing, each Purchaser shall pay to the Company an aggregate amount equal to the amount set forth opposite such Purchaser’s name on Schedule A hereto.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

REGARDING THE COMPANY AND ITS SUBSIDIARIES

The Company hereby represents and warrants:

Section 3.1.                      Organization; Authorization; Subsidiaries.

(a)           The Company is a corporation duly incorporated and validly existing under the Laws of the State of Delaware and has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.  The Company is duly qualified or licensed to do business as a foreign entity and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure be so qualified or licensed, individually or in the aggregate, has not been or would not reasonably be expected to be materially adverse to the Company or its Subsidiaries.  The Company has furnished to the Purchasers true, correct and complete copies of the Company’s organizational documents as currently in effect, and the Company’s record books with respect to actions taken by its officers, stockholders and directors.  The Company has full power and authority to execute and deliver this Agreement and any other certificate, agreement, document or other instrument to be executed and delivered by it in connection with the transactions contemplated by this

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Agreement (collectively, the “Company Ancillary Documents”) and to perform its obligations under this Agreement and the Company Ancillary Documents and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Company Ancillary Documents by the Company and the performance by the Company of its obligations hereunder and thereunder and the consummation of the transactions provided for herein and therein have been duly and validly authorized by all necessary action on the part of the Company.  This Agreement and the Company Ancillary Documents have been duly executed and delivered by the Company, and do constitute the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms.

(b)           Each of the Company’s Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, incorporation or formation, as the case may be, set forth on Schedule 3.1(b) of the Due Diligence Memorandum.  Each of the Company’s Subsidiaries has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.  Each of the Company’s Subsidiaries is duly qualified or licensed to do business as a foreign entity and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to obtain such qualification or license would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.  The Company has furnished to the Purchasers true, correct and complete copies of each of the Company’s Subsidiaries’ organizational documents as currently in effect and each of the Company’s Subsidiaries’ record books with respect to actions taken by its officers, members, stockholders, directors and managers, as the case may be.

(c)           The authorized capital stock of the Company, immediately prior to the Closing and after giving effect to the filing and effectiveness of the Restated Certificate, consists of (i) 200,000 shares of Common Stock and (ii) 138,577 shares of preferred stock, $0.001 par value per share, (w) 81,341 shares of which are designated Series A Preferred Stock, (x) 4,872 shares, of which are designated Series B Redeemable Preferred Stock (the “Series B Preferred Stock”), (y) 2,364 shares of which are designated as Series D Redeemable Preferred Stock (the “Series D Preferred Stock”) and (z) 50,000 shares of which are available for designation in one or more classes or series.  The rights, privileges, preferences and restrictions of the Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series D Preferred Stock are as stated in the Restated Certificate.   Such rights, privileges, preferences and restrictions are valid, binding and enforceable and in accordance with all applicable Laws.  Immediately prior to the Closing and after giving effect to the filing and effectiveness of the Restated Certificate and the transactions contemplated by the TRS Exchange Agreement, there are validly issued and outstanding, fully paid and nonassessable, 23,391 shares of Common Stock, 31,341 shares of Series A Preferred Stock, 4,872 shares of Series B Preferred Stock and 2,364 shares of Series D Preferred Stock.  None of the Equity Securities of the Company were issued in violation of any purchase or call option, right of first refusal, subscription right, preemptive right or any similar right.  The Company has duly and validly reserved 93,991 shares of Common Stock for issuance upon (i) the conversion of the Series A Preferred Stock, (ii) the exercise of the Eos Warrant, (iii) the exercise of the Guggenheim Warrant and (iv) the vesting of the restricted Common Stock.  When issued, such shares of Common Stock will be duly authorized, validly issued, fully paid and nonassessable.  Immediately prior  to the Closing and after giving effect to the filing and

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effectiveness of the Restated Certificate, the stockholders of record and holders of subscriptions, warrants, options, convertible securities and other rights (contingent or other) to purchase or otherwise acquire Equity Interests of the Company, and the number of shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series D Preferred Stock and the number of such subscriptions, warrants, options, convertible securities and other such rights held by each, are as set forth on Schedule 3.1(c) of the Due Diligence Memorandum.  Other than as set forth on Schedule 3.1(c) of the Due Diligence Memorandum, there are no Equity Interests of the Company, reserved for issuance or outstanding and no outstanding options, warrants, convertible or exchangeable securities, subscriptions, rights (including any preemptive rights), equity appreciation rights, calls, limited liability company interests or other Equity Interests or commitments of any character whatsoever to which the Company is a party or may be bound requiring the issuance or sale of any Equity Interest of the Company.

(d)           Schedule 3.1(d) of the Due Diligence Memorandum sets forth, with respect to each of the Company’s Subsidiaries, the number of authorized Equity Interests, the number and class of Equity Interests thereof issued and outstanding, the names of all equity owners and the amount of equity owned by each equity owner.  All of the outstanding Equity Interests of the Company’s Subsidiaries were duly authorized for issuance, are validly issued, fully paid and nonassessable and were not issued in violation of any purchase or call option, right of first refusal, subscription right, preemptive right or any similar right.  Other than as set forth on Schedule 3.1(d) of the Due Diligence Memorandum, there are no Equity Interests of the Company’s Subsidiaries issued, reserved for issuance or outstanding and no outstanding options, warrants, convertible or exchangeable securities, subscriptions, rights (including any preemptive rights), equity appreciation rights, calls, limited liability company interests or other Equity Interests or commitments of any character whatsoever to which either the Company or any of its Subsidiaries is a party or may be bound requiring the issuance or sale of any Equity Interests of any of the Company’s Subsidiaries.  Other than as set forth on Schedule 3.1(d) of the Due Diligence Memorandum, the Company does not own any Equity Interests in any other Person.

(e)           After giving effect to the transactions contemplated hereby, the outstanding Equity Interests of the Company will be as set forth on Schedule 3.1(e) of the Due Diligence Memorandum.  Upon issuance, the Purchased Shares will have been duly authorized, and will be validly issued, fully paid and nonassessable.  Upon consummation of the transactions contemplated by this Agreement, the Purchasers will have acquired the Purchased Shares from the Company free and clear of all Liens (other than those arising under the Stockholders’ Agreement).  The Purchased Shares will be issued in material compliance with all applicable U.S. federal and state securities laws, including available exemptions therefrom.

Section 3.2.                      Absence of Restrictions and Conflicts.

The execution, delivery and performance of this Agreement, the Company Ancillary Documents and any other Related Document, the consummation of the transactions contemplated by this Agreement, the Company Ancillary Documents and any other Related Document and the fulfillment of and compliance with the terms and conditions of this Agreement, the Company Ancillary Documents and any other Related Document do not or will not, as the case may be, violate or conflict with, constitute a breach of or default under, result in the loss of any benefit under, permit the acceleration of any obligation under or create in any

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party the right to terminate, modify or cancel, or otherwise require any action, consent, approval, Order, authorization, registration, declaration or filing with respect to (a) any term or provision of the organizational documents of the Company, any of its Subsidiaries or any LEAF Fund, (b) any Material Contract, Permit or any Revolving Facility or Securitization, (c) any Order of any court or Governmental Entity or agency to which the Company, any of its Subsidiaries or any LEAF Fund is a party or by which any of their respective assets are bound or (d) any Permit, Law or arbitration award of any Governmental Entity or public or regulatory unit, agency or authority applicable to the Company, any of its Subsidiaries or any LEAF Fund (other than in the case of clauses (b), (c) or (d), any such violations, conflicts, breaches, defaults, losses, accelerations, creations of rights, actions, consents, approvals, authorizations, registrations, declarations or filings that, individually or in the aggregate, have not been and would not be reasonably expected to be materially adverse to the Company or its Subsidiaries), nor shall the execution, delivery and performance of this Agreement, the Company Ancillary Documents and any other Related Document the consummation of the transactions contemplated by this Agreement, the Company Ancillary Documents and any other Related Document and the fulfillment of and compliance with the terms and conditions of this Agreement, Company Ancillary Documents and any other Related Document, trigger any options, rights of first refusal, rights of first offer, or claims under applicable maintenance of uniform interest provisions in joint operating agreements, or similar rights or restrictions.

Section 3.3.                      Brokers, Finders and Investment Bankers.

Except as set forth on Schedule 3.3 of the Due Diligence Memorandum, neither the Company or any of its Subsidiaries nor any of their officers, directors, managers or employees of any of the foregoing has employed any broker, finder or investment banker or incurred any Liability for any investment banking fees, financial advisory fees, brokerage fees or finders’ fees in connection with the transactions contemplated by this Agreement, the Company Ancillary Documents or any of the Related Documents.

Section 3.4.                      Facilities; Real Property.

(a)           Schedule 3.4(a) of the Due Diligence Memorandum sets forth a complete and accurate list and description of all parcels of real property leased by the Company or any of its Subsidiaries (together with all fixtures and improvements thereon, the “Leased Real Property”).  Except as set forth on Schedule 3.4(a) of the Due Diligence Memorandum, the Company or one of its Subsidiaries has a valid leasehold interest in the Leased Real Property, free and clear of any Liens, except for Permitted Liens.  The leases of the Leased Real Property are in full force and effect.  There does not exist under any such lease any material default or any event which with notice or lapse of time or both would constitute a material default.

(b)           Other than the Moberly Property, neither the Company nor any of its Subsidiaries owns, legally or beneficially, any real property.

(c)           The improvements on the Leased Real Property are in good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are presently being used.  There are no condemnation or appropriation or similar proceedings pending or, to the Knowledge of the Company, threatened against any Leased Real Property or the improvements thereon.

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(d)           With respect to the Moberly Property:

(i)              no portion of the Moberly Property is subject to any condemnation or appropriation or similar proceedings, and to the Knowledge of the Company there is no threatened condemnation or appropriation or similar proceedings with respect to the Moberly Property;

(ii)              the improvements on the Moberly Property are generally in a good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are presently being used;

(iii)              there are no Contracts to which LFC, the Company or any of its Subsidiaries is a party granting to any other party the right of use or occupancy of any portion of the Moberly Property;

(iv)              there are no parties (other than LFC, the Company and its Subsidiaries) in possession of any portion of the Moberly Property; and

(v)              the Company owns, with good and marketable title, the Moberly Property, free and clear of all Liens, other than Permitted Liens, and is not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except (i) minor imperfections of title, none of which is substantial in amount, materially detracts from the value or impairs the use of the property subject thereto, or impairs the operations of the Company, and (ii) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto.

Section 3.5.                      Title to Assets; Related Matters.

(a)           Except as set forth on Schedule 3.5(a) of the Due Diligence Memorandum, the Company and its Subsidiaries have good, marketable and valid title to all of the Properties reflected in the Financial Statements as being owned by them, free and clear of all Liens, except for Permitted Liens.  Except as set forth on Schedule 3.5(a) of the Due Diligence Memorandum, the Company and its Subsidiaries have a valid and enforceable right to use all tangible items of personal property leased by or licensed to them (other than personal property subject to Financing Contracts), free and clear of all Liens, except for Permitted Liens.

(b)           The tangible assets of the Company and its Subsidiaries: (i) are generally in good operating condition and in a state of good maintenance and repair, ordinary wear and tear excepted;(ii) are usable in the regular and ordinary course of business; and (iii) materially conform to all applicable Laws, ordinances, codes, rules and regulations applicable thereto.  No Person, other than the Company or one of its Subsidiaries owns any equipment or other tangible personal property or assets situated on its premises which are necessary to the operation of the business of the Company and its Subsidiaries, except for the leased items that are subject to personal property leases.  Schedule 3.5(b) of the Due Diligence Memorandum sets forth a true, correct and complete list of the fixed assets of the Company and its Subsidiaries reflected on the balance sheet of the Company and its Subsidiaries as of the Latest Balance Sheet Date.  The building, structures and equipment of the Company and its Subsidiaries are sufficient for the continued conduct of the business of the Company and its Subsidiaries after the Closing in substantially the same manner in which the business was operated by or through LFC or the RCC Parties, as applicable, prior to the effective date of the Contribution Agreement.

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(c)           This Section 3.5 does not relate to intellectual property matters, which are the subject of Section 3.17 hereof.

Section 3.6.                      Financial Statements.

(a)           Schedule 3.6(a) of the Due Diligence Memorandum contains true, correct and complete copies of the unaudited consolidated balance sheet (the “Latest Balance Sheet”) of the Company and its Subsidiaries as of September 30, 2011 (the “Latest Balance Sheet Date”) and the related consolidated statements of income, changes in members’ capital and cash flows for the nine-month period then ended (collectively, the “Financial Statements”).  The Financial Statements fairly present in all material respects the financial condition and the results of operations, changes in members’ capital and cash flows of the Company and its Subsidiaries as of the respective dates of and for the periods referred to in the Financial Statements, all in accordance with GAAP, consistently applied and in accordance with past practices.  The Financial Statements are based on the books and records of the Company and its Subsidiaries (which are complete and accurate and have been maintained in accordance with GAAP).  The pro forma balance sheet of the Company and its Subsidiaries as of the date hereof after giving effect to the transactions contemplated by this Agreement (the “Pro Forma Balance Sheet”) takes into account adjustments resulting from the transactions contemplated by this Agreement and is based on the balance sheet of the Company and its Subsidiaries as of September 30, 2011.  As of the effective date of the Contribution Agreement, the Company did not have, and since the effective date of the Contribution Agreement, the Company has not identified, any material weakness in the design or operation of its internal controls over financial reporting.  Since the Latest Balance Sheet Date, except as set forth on Schedule 3.6(a) of the Due Diligence Memorandum, there has been no change in any of the accounting (or Tax accounting) policies, practices or procedures of the Company and its Subsidiaries.  The fiscal year of the Company ends on September 30 of each year.

(b)           Schedule 3.6(b) of the Due Diligence Memorandum sets forth as of the date hereof, all intercompany obligations and outstanding Indebtedness of LFC, the Company and its Subsidiaries, including all notes payable issued by the Company in favor of TRS, RCC or Resource America and any and all intercompany obligations existing by and between the Company, on the one hand, and any of TRS, RCC and Resource America, on the other hand, (the “Resource Obligations”).  Following the transactions contemplated by this Agreement, the Resource Obligations will be terminated and no further amounts will be owed by the Company to any of TRS, RCC or Resource America other than for amounts due to Resource America in respect of the Shared Services Agreement, consistent with the services and amounts reflected in the schedules thereto, which amounts shall not be materially greater than the amounts reflected in the Latest Balance Sheet.

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(c)           Schedule 3.6(c) of the Due Diligence Memorandum sets forth a true, correct and complete schedule of all of the cash contributions made by any Person to the Company since the Company’s incorporation.

Section 3.7.                      No Undisclosed Liabilities.

Neither the Company nor any of its Subsidiaries has any Liabilities, except for: (a) the Liabilities set forth on Schedule 3.7 of the Due Diligence Memorandum, (b) Liabilities on the Latest Balance Sheet and (c) Liabilities in connection with Financing Contracts in the ordinary course of business to the extent such Liabilities have historically been set forth on the Company’s balance sheet, including the Latest Balance Sheet.  Except as set forth on Schedule 3.7 of the Due Diligence Memorandum and except for the Assumed Liabilities, neither the Company nor any of its Subsidiaries has, either expressly or by operation of Law, assumed or undertaken any material Liability of any other Person.  The Company has no Liabilities with respect to the transactions consummated pursuant to the Contribution Agreement, including, without limitation, Tax Liabilities, except the Assumed Liabilities and the Assumed Obligations (which at the Closing shall not include any Liabilities owed to an Affiliate).

Section 3.8.                      Absence of Certain Changes.

Except as contemplated by this Agreement or as set forth in Schedule 3.8 of the Due Diligence Memorandum, since the effective date of the Contribution Agreement, there has not been:

(a)           any event, occurrence, development or state of circumstances or facts which, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect;

(b)           any damage, destruction, loss or casualty to property or assets of the Company, any of its Subsidiaries, ordinary wear and tear excepted, whether or not covered by insurance;

(c)           any sale, transfer, license, pledge, mortgage or other disposition of tangible or intangible assets by the Company or any of its Subsidiaries, other than pursuant to the Guggenheim Indenture or otherwise in excess of $150,000;

(d)           any transfer or grant of any license under any Intellectual Property Rights owned or used by the Company or any of its Subsidiaries;

(e)           any grant of any increase in the compensation or benefits of any of the employees of the Company or any of its Subsidiaries or entry into any employment, sale bonus, stay bonus or severance Contract with any officer, director, manager, consultant or employee of the Company or any of its Subsidiaries;

(f)           any failure to perform in all material respects any of the obligations of the Company or any of its Subsidiaries under all, or default or existence of any event or condition which with notice or lapse of time or both would constitute a default under any, Material Contract (except those being contested in good faith);

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(g)           any adoption, amendment or termination of any Benefit Plan or increase in the benefits provided under any Benefit Plan, or promise or commitment to undertake any of the foregoing in the future;

(h)           (i) any rescission or change of any election with respect to Taxes of the Company or any of its Subsidiaries; (ii) any change in respect of the Tax accounting period the Company or any of its Subsidiaries; (iii) any adoption or change of any method of Tax accounting of the Company or any of its Subsidiaries; (iv) any amendment to any Tax Returns of the Company or any of its Subsidiaries; (v) any entry into an agreement with respect to Taxes by the Company or any of its Subsidiaries with any Governmental Entity (including a “closing agreement” under Code Section 7121); (vi) any surrender of any right of the Company or any of its Subsidiaries to claim a refund for Taxes; (vii) any consent to an extension of the statute of limitations applicable to any Tax claim or assessment relating to the Company or any of its Subsidiaries; or (viii) any Contract entered into requiring the Company or any of its Subsidiaries to take any other similar action (or omit to take any commercially reasonable action), if such election, rescission, change, amendment, agreement, settlement, surrender, consent, action or omission could have the effect of  materially increasing the Taxes (or taxable income) of the Company or any of its Subsidiaries beginning on or after the Closing Date; or

(i)           any agreement of the Company or any of its Subsidiaries to take any of the actions specified in this Section 3.8.

Section 3.9.                      Legal Proceedings.

Except as set forth on Schedule 3.9 of the Due Diligence Memorandum:

(a)           There are no Proceedings (or any basis therefor) pending, or, to the Knowledge of the Company, threatened against, relating to or involving (i) the Company, any of its Subsidiaries or any of the LEAF Funds, (ii) any business or assets thereof or (iii) LFC, any of its Subsidiaries or the RCC Parties (solely with respect to the business conducted by the Company or any of its Subsidiaries) by or before any Governmental Entity.

(b)           There have been no Proceedings that have (i) resulted in any criminal sanctions or (ii) resulted in any payments, in each case by or against the Company or any of its Subsidiaries or any of their respective officers, directors or managers in their capacity as officers, directors or managers (whether as a result of a judgment, civil fine, settlement or otherwise).

Section 3.10.                      Compliance with Laws.

(a)           The Company, each of its Subsidiaries, LFC (with respect to the portion of the business contributed by it pursuant to the Contribution Agreement), each RCC Party (with respect to the portion of the business contributed by it pursuant to the Contribution Agreement) and each LEAF Fund are (and have been at all times) in material compliance with all Laws, ordinances and regulations of all Governmental Entities, whether or not the compliance with any such Laws is voluntary or involuntary.  Since the date of its organization, incorporation or formation, as the case may be, neither the Company, any of its Subsidiaries, LFC (with respect to the portion of the business contributed by it pursuant to the Contribution Agreement) nor any RCC Party (with respect to the portion of the business contributed by it pursuant to the Contribution Agreement) has: (a) been charged with, and none of them is now under investigation with respect to, any actual or alleged violation of any applicable Law, regulation, ordinance or other requirement of a Governmental Entity or (b) been a party to or bound by any judgment, decree or award of any Governmental Entity or arbitrator.  The Company, each of its Subsidiaries, LFC (with respect to the portion of the business contributed by it pursuant to the Contribution Agreement), each RCC Party (with respect to the portion of the business contributed by it pursuant to the Contribution Agreement)  and each LEAF Fund have filed all material reports required to be filed with any Governmental Entity and have all material Permits required to be held on or before the date hereof and all such reports are accurate and complete in all material respects and in material compliance with all applicable Laws.

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(b)           This Section 3.10 does not relate to (i) environmental, health and safety matters, which are the subject of Section 3.16 hereof, (ii) employee and labor matters, which are the subject of Section 3.21 hereof, or (iii) tax matters, which are the subject of Section 3.24 hereof.

Section 3.11.                      Contracts.

(a)           Schedule 3.11(a) of the Due Diligence Memorandum sets forth a true, correct and complete list of the following Contracts to which the Company or any of its Subsidiaries or any of their respective assets is bound (collectively, the “Material Contracts”):

(i)              any bond, debenture, note, loan, Securitization, credit or loan agreement or loan commitment, mortgage, indenture, guarantee or other Contract relating to the borrowing of money by the Company;

(ii)              any lease relating to the Leased Real Property or other lease or license involving any properties or assets (whether real, personal or mixed, tangible or intangible), including any purchase and sale or similar agreements, in which the Company is the lessee and in which the aggregate amount owed under the lease exceeds $150,000;

(iii)              any Contract which limits or restricts the Company or any of its Subsidiaries or any of their officers or key employees, from engaging in any business in any jurisdiction or competing with any Person;

(iv)              any material franchising and licensing agreements;

(v)              any material agreement related to any Securitization or Revolving Facility;

(vi)              any employment, consulting agreements or independent contractor agreements with annual compensation (including bonus payments) due to such employee, consultant or independent contractor in excess of $150,000;

(vii)              any Contract (other than Financing Contracts), obligation or commitment that involves a potential commitment, including, without limitation, all open purchase orders, in excess of $50,000;

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(viii)              any material Contract to which the Insurance Subsidiary is a party;

(ix)              the Sub-Servicing Agreement and any Servicing Agreement;

(x)              any Contract that restricts the origination or servicing of leases by the Company or any of its Subsidiaries;

(xi)              any Contract with the Top Vendors or any other contract with the Company’s vendors or dealers that are material to the Company’s business;

(xii)              any Contract for an individual capital expenditure or acquisition or construction of a fixed asset by the Company or any of its Subsidiaries in excess of $100,000;

(xiii)              any Contract that provides for an increased payment or benefit, or accelerated vesting or payment, upon the execution of this Agreement or in connection with the transactions contemplated hereby;

(xiv)              any Contract granting any Person a Lien on all or any part of any of the assets of the Company or any of its Subsidiaries (other than pursuant to any Securitization or Revolving Facility);

(xv)              any Contract for the cleanup, abatement or other actions in connection with any Hazardous Materials, the remediation of any existing environmental condition or relating to the performance of any environmental audit or study;

(xvi)              any Contract granting to any Person an option or a first refusal, first-offer or similar preferential right to purchase or acquire any assets other than pursuant to a Financing Contract;

(xvii)              any material Contract related to the Company’s or any of its Subsidiaries’ information technology systems;

(xviii)              any material Contract for the granting or receiving of a license or sublicense or under which any Person is obligated to pay or have the right to receive a royalty, license fee or similar payment;

(xix)              any material Contract (other than Financing Contracts) providing for the indemnification or holding harmless of any officer, manager, employee or other Person;

(xx)              any Contract that governs any joint venture, partnership or similar arrangement involving a sharing of profits or otherwise;

(xxi)              any Contract that includes a “most favored nations” or “exclusivity” provision;

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(xxii)              any material warranty, guaranty or similar undertaking with respect to contractual performance extended by the Company or any of its Subsidiaries, other than in the ordinary course of business;

(xxiii)              any outstanding power of attorney empowering any Person to act on behalf of the Company or any of its Subsidiaries; or

(xxiv)              any commitment to do any of the foregoing or any material amendment, modification or supplement in respect of any of the foregoing.

True, correct and complete copies of the Contracts required to be set forth on Schedule 3.11(a) of the Due Diligence Memorandum have been furnished to the Purchasers.  Neither the Company nor any of its Subsidiaries is party to or bound by any Contract that is material to its business, operations or assets other than those Contracts set forth on Schedule 3.11(a) of the Due Diligence Memorandum.

(b)           The Material Contracts (and the leases the Company or its Subsidiaries have entered into) are legal, valid, binding and enforceable in accordance with their respective terms with respect to the Company or its Subsidiaries, as applicable, and with respect to each other party to such Material Contracts, except as may be limited by any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Law affecting creditors’ rights and remedies generally.  There are no existing material defaults or material breaches by the Company or any of its Subsidiaries, as applicable, under any Material Contract (or events or conditions which, with notice or lapse of time or both would constitute a default or breach) (and the leases the Company or its Subsidiaries have entered into) and, to the Knowledge of the Company, there are no such material defaults (or events or conditions which, with notice or lapse of time or both, would constitute a default or breach) with respect to any third party to any Material Contract (nor the leases the Company or its Subsidiaries have entered into which would be material to the Company or its Subsidiaries).  To the Knowledge of the Company, there are no pending or threatened bankruptcy, insolvency or similar proceedings with respect to any party to such Material Contracts (nor the leases the Company or its Subsidiaries have entered into which would be material to the Company or its Subsidiaries).  There are no discussions or negotiations regarding modification of or amendment to any Material Contract or entry into any new Material Contract applicable to the business.  Schedule 3.11(b) of the Due Diligence Memorandum identifies each Material Contract set forth therein that requires the consent of or notice to the other party thereto to avoid any breach, default or violation of such Material Contract in connection with the transactions contemplated hereby.

Section 3.12.                      Contributed Financing Contracts.

(a)           Schedule 3.12(a) of the Due Diligence Memorandum sets forth a true correct and complete list of the Contributed Financing Contracts and the contract balance remaining on such Contributed Financing Contracts.

(b)           Except as set forth on Schedule 3.12(b) of the Due Diligence Memorandum, each Contributed Financing Contract (and each related guarantee, if any) (i) is a valid,

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binding and enforceable, non-cancelable obligation of the lessee, obligor or borrower thereunder (and guarantor thereof, if applicable) and is enforceable by the Company or any of its Subsidiaries against the lessee, obligor or borrower thereunder in accordance with its terms, except as may be limited by any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Law affecting creditors’ rights and remedies generally, and (ii) constitutes and arose out of a bona fide business transaction entered into in the ordinary and usual course of business of such Transferor consistent with such Transferor’s past practices.  Each of such obligors and guarantors is a bona fide party thereto and, to the Knowledge of the Company, has the requisite legal capacity to enter into the respective agreements to which it is a party.

(c)           Except as set forth on Schedule 3.12(c) of the Due Diligence Memorandum, (i) each Contributed Financing Contract is in full force and effect, free and clear of Liens other than Permitted Liens, and not subject to any defense, offset, claim, right of rescission or counterclaim by the obligor under such Contributed Financing Contract, or any Person claiming under any such right (subject to applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer and other Laws relating to or affecting creditors’ rights generally, to general equitable principles and to the SCRA); (ii) none of the Transferors, the Company or any of its Subsidiaries is in material breach of or material default under any Contributed Financing Contract and, to the Knowledge of the Company, no other event has occurred which has or, with notice and/or lapse of time, would constitute a material default by any party thereunder; (iii) the Company or one of its Subsidiaries is the owner and holder of all right, title and interest in each Contributed Financing Contract; (iv) no obligor under any Contributed Financing Contract (A) has acquired any Portfolio Property, any interest in any Portfolio Property or the use of any Portfolio Property pursuant to such Contributed Financing Contract for personal, family or household use or, except in connection with a LEAF Financing Contract, for agricultural purposes or (B) is a director, executive officer or five percent or greater shareholder of the Company Parties or any of their Subsidiaries, or to the Knowledge of the Company, is a Person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing; (v) the Company or one of its Subsidiaries has in its possession a fully executed original or a true and correct copy of any lease or note (and an executed original or a true and correct copy of all other documents) comprising each Contributed Financing Contract and, in the case of each LEAF Financing Contract only, all other documents required by LFC’s credit or investment approval process with respect to such LEAF Financing Contract; (vi) the Company or one of its Subsidiaries has in its possession documentation sufficient to establish the original cost or value of all Portfolio Property for purposes of determining personal property Tax liability; (vii) all payments pursuant to each Contributed Financing Contract are made for the benefit of the Company or one of its Subsidiaries; (viii) with respect to the LEAF Financial Contracts only, LFC and the LEAF Transferred Subsidiaries approved credit applications and otherwise entered into commitments with respect to the LEAF Financing Contracts in a manner consistent in all material respects with LFC’s credit policies, collateral eligibility standards and credit quality classifications in effect at the time and otherwise complied in all material respects with standards of evaluating, originating, underwriting and funding new businesses which are in all material respects consistent with LFC’s past practices; and (ix) none of the Transferors, the Company or any Subsidiary of the Company is, nor are any of them committed to become, a party to any contract with respect to the Residual as to any Portfolio Property.  Schedule 3.12(c) of the Due Diligence Memorandum sets forth a summary of the delinquency statistics of all of the Contributed Financing Contracts for which payment delinquencies exist.

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(d)           Each LEAF Financing Contract and each LRF 3 Financing Contract has been administered and serviced, and the relevant files are being maintained, in accordance in all material respects with the relevant financing or lease documents and LFC’s underwriting standards and was originated, solicited or acquired, as the case may be, in all material respects in accordance with LFC’s policies, practices and procedures regarding such matters as in effect at the time of such origination, solicitation or acquisition.

(e)           Each Contributed Financing Contract is being maintained in accordance in all material respects with the relevant financing or lease documents and was administered and serviced by LFC until transferred to the Company pursuant to the Contribution Agreement and has been administered and serviced by the Company since such transfer.

(f)           Except as set forth in Schedule 3.12(f) of the Due Diligence Memorandum, to the Knowledge of the Company, each obligor under a Contributing Financing Contract is located in the United States or its territories.

(g)           All amendments, modifications, waivers, extensions, cancellations and releases in respect of any Contributed Financing Contract are in writing and are maintained in hard copy or are stored electronically in the documentation for such Contributed Financing Contract.

(h)           The Contributed Financing Contract files maintained by the Company and its Subsidiaries are in good order and contain all originals or copies of all material documents relating to the origination and enforcement of the Contributed Financing Contracts.

(i)           Each Contributed Financing Contract is evidenced by a written agreement, and there are no material understandings, agreements, undertakings or arrangements between any of the Transferors, the Company or any of its Subsidiaries and the obligors under any Contributed Financing Contract which are not set forth therein or in a written agreement included in the Contributed Financing Contract files relating to such Contributed Financing Contract.

(j)           To the Knowledge of the Company, none of the Transferors, the Company or any of its Subsidiaries has acted, or failed to act, in a manner which would materially alter or materially reduce any of the Company’s or any of its Subsidiaries’ rights or benefits under any manufacturers’ or vendors’ warranties or guarantees relating to property covered by any Contributed Financing Contract.  For the avoidance of doubt, this subsection (j) shall not apply to any action, or failure to act, of or by any of the Transferors, the Company or any of its Subsidiaries, in connection with the acceptance or payment of funds less than an amount due with respect to any of the Company’s or any of its Subsidiaries’ rights or benefits under any manufacturers’ or vendors’ warranties or guaranties relating to any property covered by any Contributed Financing Contract.

(k)           Except as set forth in Schedule 3.12(k) of the Due Diligence Memorandum, the property that is the subject of each Contributed Financing Contract has been delivered to the obligor thereunder, and accepted by such obligor.

(l)           Except as set forth in Schedule 3.12(l) of the Due Diligence Memorandum, or as permitted under LFC’s policies and procedures as of the date of the Contribution Agreement and as described in Schedule 3.12(l) of the Due Diligence Memorandum, the Company or its Subsidiaries, as applicable, has absolute, complete and indefeasible title to the property subject to each Contributed Financing Contract (or a duly perfected first-lien security interest in the property subject to such Contributed Financing Contract) and all sums due thereunder; the supplier or vendor of said property has received payment in full for said property, except in connection with LEAF Financing Contracts only, for the amounts specifically identified as, and included in, Assumed Liabilities.

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(m)           Since May 27, 2010, LRF 3 has conducted its business only in the ordinary and usual course of the normal day-to-day operations of LRF 3, substantially in accordance with past practice.

Section 3.13.                      New Financing Contracts.

(a)           Schedule 3.13(a) of the Due Diligence Memorandum sets forth a true, correct and complete list of all New Financing Contracts and the contract balance remaining on such New Financing Contracts.

(b)           Except as set forth on Schedule 3.13(b) of the Due Diligence Memorandum, each New Financing Contract (and each related guarantee, if any) (i) is a valid, binding and enforceable, non-cancelable obligation of the lessee, obligor or borrower thereunder (and guarantor thereof, if applicable) and is enforceable by the Company or any of its Subsidiaries against the lessee, obligor or borrower thereunder in accordance with its terms, except as may be limited by any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Law affecting creditors’ rights and remedies generally, and (ii) constitutes and arose out of a bona fide business transaction entered into in the ordinary and usual course of business of the Company and its Subsidiaries consistent with LFC’s past practices.  Each of such obligors and guarantors is a bona fide party thereto and, to the Knowledge of the Company has the requisite legal capacity to enter into the respective agreements to which it is a party.

(c)           Except as set forth on Schedule 3.13(c) of the Due Diligence Memorandum, (i) each New Financing Contract is in full force and effect, free and clear of Liens other than Permitted Liens, and not subject to any defense, offset, claim, right of rescission or counterclaim by the obligor under such New Financing Contract, or any Person claiming under any such right (subject to applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer and other Laws relating to or affecting creditors’ rights generally, to general equitable principles and to the Servicemembers Civil Relief Act); (ii) neither the Company nor any of its Subsidiaries is in material breach of or material default under any New Financing Contract and, to the Knowledge of the Company, no other event has occurred which has or, with notice and/or lapse of time, would constitute a material default by any party thereunder; (iii) the Company or one of its Subsidiaries is the owner and holder of all right, title and interest in each New Financing Contract; (vi) no obligor under any New Financing Contract (A) has acquired any Portfolio Property, any interest in any Portfolio Property or the use of any Portfolio Property pursuant to such New Financing Contract for personal, family or household use or (B) is a director, executive officer or five percent or greater shareholder of the Company Parties or any of their Subsidiaries, or to the Knowledge of the Company, is a Person, corporation or enterprise controlling, controlled by or under common control with any of the foregoing; (v) the Company

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or one of its Subsidiaries has in its possession a fully executed original or a true and correct copy of any lease or note (and an executed original or a true and correct copy of all other documents) comprising each New Financing Contract and all other documents required by LFC’s credit or investment approval process with respect to such New Financing Contract; (vi) the Company or one of its Subsidiaries has in its possession documentation sufficient to establish the original cost or value of all Portfolio Property for purposes of determining personal property Tax liability; (vii) all payments pursuant to each New Financing Contract are made for the benefit of the Company or one of its Subsidiaries; (viii) the Company and its Subsidiaries approved credit applications and otherwise entered into commitments with respect to the New Financing Contracts in a manner consistent in all material respects with LFC’s credit policies, collateral eligibility standards and credit quality classifications in effect on the date of the Contribution Agreement and otherwise complied in all material respects with standards of evaluating, originating, underwriting and funding new businesses which are in all material respects consistent with LFC’s past practices; and (ix) neither the Company nor any of its Subsidiaries, nor are either of them committed to become, a party to any contract with respect to the Residual as to any Portfolio Property.  Schedule 3.13(c) of the Due Diligence Memorandum sets forth a summary of the delinquency statistics of all of the New Financing Contracts for which payment delinquencies exist.

(d)           Each New Financing Contract has been administered and serviced, and the relevant files are being maintained, in accordance in all material respects with the relevant financing or lease documents and the Company’s underwriting standards and was originated, solicited or acquired, as the case may be, in all material respects in accordance with the Company’s policies, practices and procedures regarding such matters as in effect on the date of the Contribution Agreement, if originated or acquired after such date, or at the time of such origination, solicitation or acquisition.  The Company’s underwriting standards and its policies, practices and procedures regarding such matters are substantially the same as LFC’s.

(e)           Each New Financing Contract is being maintained in accordance in all material respects with the relevant financing or lease documents and has been administered and serviced by the Company since the later of (i) the date of the Contribution Agreement and (ii) the date it was originated or acquired by the Company or its Subsidiaries.   Prior to the date of the Contribution Agreement, each New Financing Contract then in existence was administered and serviced by LFC.

(f)           Except as set forth in Schedule 3.13(f) of the Due Diligence Memorandum, to the Knowledge of the Company, each obligor under a New Financing Contract is located in the United States or its territories.

(g)           All amendments, modifications, waivers, extensions, cancellations and releases in respect of any New Financing Contract are in writing and are maintained in hard copy or are stored electronically in the documentation for such New Financing Contract.

(h)           The New Financing Contract files maintained by the Company and its Subsidiaries are in good order and contain all originals or copies of all material documents relating to the origination and enforcement of the New Financing Contracts.

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(i)           Each New Financing Contract is evidenced by a written agreement, and there are no material understandings, agreements, undertakings or arrangements between the Company or any of its Subsidiaries and the obligors under any New Financing Contract which are not set forth therein or in a written agreement included in the New Financing Contract files relating to such New Financing Contract.

(j)           To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has acted, or failed to act, in a manner which would materially alter or reduce the Company’s or any of its Subsidiaries’ rights or benefits under any manufacturers’ or vendors’ warranties or guarantees relating to property covered by any New Financing Contract.  For the avoidance of doubt, this subsection (j) shall not apply to any action, or failure to act, of or by any of the Transferors, the Company or any of its Subsidiaries, in connection with the acceptance or payment of funds less than an amount due with respect to any of the Company’s or any of its Subsidiaries’ rights or benefits under any manufacturers’ or vendors’ warranties or guaranties relating to any property covered by any New Financing Contract.

(k)           Except as set forth in Schedule 3.13(k) of the Due Diligence Memorandum, or as permitted by each New Financing Contract, the property that is the subject of each New Financing Contract has been delivered to the obligor thereunder, and accepted by such obligor.

(l)           Except as set forth in Schedule 3.13(l) of the Due Diligence Memorandum, or as permitted under LFC’s policies and procedures as of the date of the Contribution Agreement and as described in Schedule 3.13(l) of the Due Diligence Memorandum, the Company or any of its Subsidiaries has absolute, complete and indefeasible title to the property subject to each New Financing Contract (or a duly perfected first-lien security interest in the property subject to such New Financing Contract) and all sums due thereunder; the supplier or vendor of said property has received payment in full for said property, except for the amounts specifically identified as, and included in, the Assumed Liabilities.

Section 3.14.                      Terms of Contributed Financing Contracts and New Financing Contracts.

With respect to each Contributed Financing Contract and each New Financing Contract:

(a)           if a lease, such lease contains a “hell or high water” clause that unconditionally obligates the obligor to make scheduled payments (including taxes), notwithstanding any casualty, loss or other damage to the equipment;

(b)           it is non-cancelable (in the case of a lease) by the obligor, and it either does not contain any early termination option, or, if it does have such an option, it also contains a make-whole provision;

(c)           it is denominated in U.S. dollars and all scheduled payments thereunder are payable in U.S. dollars; no payment is due from any person that does not have a mailing address in the United States or Puerto Rico;

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(d)           all payments payable under such Contributed Financing Contract or New Financing Contract are absolute, unconditional obligations of the related obligors without (except with respect to a breach of an obligor’s right of quiet enjoyment of the related equipment) right to rescission, offset, defense or counterclaim for any reason;

(e)           it requires the obligor to (i) maintain customary physical damage insurance covering the equipment, (ii) maintain the equipment in working condition, reasonable wear and tear excepted, (iii) bear all the costs of operating the equipment (including the taxes, maintenance and insurance relating thereto) and (iv) assume all risk of loss or malfunction of the equipment;

(f)           it provides that the lessor may accelerate all payments due under the Contributed Financing Contract or New Financing Contract if the related obligor is in default under such Contributed Financing Contract or New Financing Contract;

(g)           except for a residual amount pursuant to the Contributed Financing Contracts and New Financing Contracts, it provides for periodic payments, which are principally due and payable on either a monthly, quarterly or annual basis, and the next payment due date is within one month (for monthly contracts), three months (for quarterly contracts) or one year (for annual contracts) of the date of this Agreement;

(h)           it provides that in the event of a casualty loss, the lessor may require the obligor, at the obligor’s expense, to pay the lessor the sum of all unpaid rents and other payments due under such Contributed Financing Contract or New Financing Contract, all accelerated future payments due under such Contributed Financing Contract or New Financing Contract (discounted to a present value payoff amount) and the Residual of the equipment;

(i)           if it is a lease, it provides that the obligor may not elect to utilize any security deposit thereunder to offset any scheduled payment thereunder;

(j)           it includes only the remaining non-cancelable contractual payments purchased and funded, and no such payment shall be payable later than the maximum remaining term of such Contributed Financing Contract or New Financing Contract, which shall not exceed 120 months;

(k)           it has not been modified, waived, altered or amended in any way by the Transferor, the Company or a Subsidiary of the Company except to the extent otherwise permissible under the Company’s or LFC’s written servicing policies;

(l)           it was originated in compliance with, has been serviced in compliance with and does not contravene in any material respect, any applicable law or regulation;

(m)           it was not originated in, nor is it subject to the laws of, any jurisdiction under which the sale, transfer, and assignment of such Contributed Financing Contract or New Financing Contract is unlawful, void, or voidable;

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(n)           it has not been satisfied, subordinated or rescinded, provided that, in the event it has been satisfied, subordinated or rescinded, it has been properly accounted for in the books and records of the Company;

(o)           it is not subject to any enforceable provision prohibiting its transfer or pledge for the benefit of a secured party;

(p)           it is either (i) not subject to any foreign withholding tax or (ii) provides for a “gross-up” or indemnity of any payments upon the imposition of any such tax;

(q)           if the original purchase price of the equipment or property related to the Contributed Financing Contract or New Financing Contract was in excess of (i) $25,000 in a full payout lease or secured loan or (b) $50,000 in a “true” lease, such Contributed Financing Contract or New Financing Contract is secured by a first priority perfected security interest in the related equipment or property;

(r)           its origination or acquisition was underwritten by LEAF Funding, or LEAF Capital Funding LLC in accordance with LFC’s underwriting guidelines or the Company’s underwriting guidelines, which are substantially similar to the LFC’s underwriting guidelines as of the effective date of the Contribution Agreement;

(s)           it is assignable by its terms; and

(t)           it constitutes “chattel paper” or an “instrument” as defined in the UCC of each State the law of which governs the perfection of the interest granted in it and/or the priority of such perfected interest.

Notwithstanding any other provision in this Agreement to the contrary, neither the Company, its Subsidiaries, Resource America, LFC or any other Person shall be liable for any breach of any of the representations and warranties set forth in this Section 3.14 unless the Loss suffered by the Company or the Purchasers, as the case may be, is directly caused by the failure of a Contributed Financing Contract or a New Financing Contract to include one or more of the provisions listed in subsections (a) through (t) of this Section 3.14.

Section 3.15.                      Insurance Policies.

(a)           Schedule 3.15(a) of the Due Diligence Memorandum contains a complete and correct list of all insurance policies relating to the business or carried by or for the benefit of the Company or any of its Subsidiaries, or any of their Properties, specifying the insurer, policy number, amount of and nature of coverage, the risk insured against, the deductible amount (if any) and the date through which coverage will continue by virtue of premiums already paid.  The Company and its Subsidiaries maintain insurance with insurers for all risks normally insured against, and in amounts normally carried, by Persons of similar size engaged in similar lines of business and such coverage is sufficient.  Schedule 3.15(a) of the Due Diligence Memorandum also sets forth all relevant information as to the nature and approximate amount of all claims for insured losses sustained by the Company or any of its Subsidiaries, including claims relating to errors and omissions, fidelity bond, workers’ compensation, automobile and general liability.  All such insurance policies and bonds are in full force and effect and will be maintained by the Company or one of its Subsidiaries in full force

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and effect as they apply to any matter, action or event relating to the Company or any of its Subsidiaries occurring through the Closing Date and neither the Company nor any of its Subsidiaries has reached or exceeded its policy limits for any insurance policies in effect at any time during the past five (5) years.  There is no claim by the Company or any of its Subsidiaries pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights.  All premiums payable under all such policies and bonds have been timely paid, and the Company and its Subsidiaries have otherwise complied fully with the terms and conditions of all such policies and bonds.  To the Knowledge of the Company, there is no threatened termination of, premium increase with respect to, or material alteration of coverage under, any of such policies or bonds.

(b)           Schedule 3.15(b) of the Due Diligence Memorandum contains a true, correct and complete list of all policies of liability, theft, fidelity, business interruption, life, fire, product liability, workers compensation, health and other material forms of insurance required to be held by the Company or any of its Subsidiaries pursuant to any Contract with a customer, vendor, payor, partner or supplier.

Section 3.16.                      Environmental, Health and Safety Matters.

(a)           The Company and its Subsidiaries possess, and are in compliance in all material respects with, all Permits and have filed all notices that are required under Environmental Laws, and the Company and its Subsidiaries are in compliance in all material respects with all applicable limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in those Laws or contained in any Law, Order, notice, Permit or demand letter issued, entered, promulgated or approved thereunder.

(b)           No notice of violation, notification, demand, request for information, citation, summons or Order has been received, no complaint has been filed, no penalty has been assessed and no investigation, action, claim, suit, Proceeding or review is pending or, to the Knowledge of the Company, threatened by any Governmental Entity or other Person with respect to any matters relating to the Company or any of its Subsidiaries and relating to or arising out of any Environmental Law, including any written notice from any Governmental Entity or from any other Person relating to a release of Hazardous Materials.

(c)           There are no material Environmental Liabilities arising in connection with or in any way relating to the Company and its Subsidiaries and their operations, or the Leased Real Property of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there are no facts, events, conditions, situations or set of circumstances, including notice of actual or threatened Liability under CERCLA or any similar foreign, state or local statute or ordinance from any Governmental Entity or any third party, which could reasonably be expected to result in or be the basis for any such Environmental Liability.

(d)           There has been no release of any Hazardous Materials, in amounts or concentrations requiring investigation of cleanup under Environmental Laws, on any Leased Real Property, the Moberly Property, or, to the Knowledge of the Company, at any other location for which the Company or any of its Subsidiaries would reasonably be expected to be materially liable under Environmental Laws.

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(e)           There are no underground storage tanks on the Moberly Property or Leased Real Property, and to the Knowledge of the Company, no such underground tanks have been removed from any such properties.

(f)           The Company has provided the Purchasers true and complete copies of all environmental reports, audits, studies, data, inspections and investigations related to the Moberly Property, the Leased Real Property, and the operation of the business prepared by any Person and in the possession of LFC or the Company.

Section 3.17.                      Intellectual Property.

(a)           Except as set forth on Schedule 3.17(a) of the Due Diligence Memorandum, the Company or one of its Subsidiaries has good and marketable title to or possesses adequate licenses or other valid rights to use such Intellectual Property, free and clear of all Liens, except for Permitted Liens, and has paid all maintenance fees, renewals or expenses related to such Intellectual Property due and payable.  To the Knowledge of the Company, the activities of the Company or any of its Subsidiaries, if any, relating to development, manufacture, marketing, use, sale, distribution, import, export or other commercial exploitation have not and do not violate, misappropriate, infringe upon or conflict with any Intellectual Property Rights of any third party.  No party has filed a claim or, to the Knowledge of the Company, threatened to file a claim against the Company or any of its Subsidiaries alleging that any of them have violated, misappropriated, infringed on or otherwise improperly used the Intellectual Property Rights of such party.  To the Knowledge of the Company, no right, license, lease, consent or other agreement is required with respect to any Intellectual Property for the conduct of the Company’s or any of its Subsidiaries’ respective businesses as currently conducted.

(b)           To the Knowledge of the Company, none of the Marks, Copyrights or Technology (including registrations or applications to use or register such items) is involved in any cancellation, nullification, interference, conflict, concurrent use or opposition proceeding, and there has been no threat or other indication that any such proceeding will hereafter be commenced.  All maintenance fees, annuity fees, or renewal fee payment, and all renewal affidavits or other applicable documents to establish or maintain, for each jurisdiction in which each Patent, Mark, Copyright, domain name or domain name application included within the Intellectual Property which has issued or is pending have been timely paid or filed with the appropriate authorities.  The Company and its Subsidiaries have used reasonable efforts to maintain their Technology in confidence, and, to the Knowledge of the Company, there has been no misappropriation of any Technology.  To the Knowledge of the Company, none of such employees, consultants or vendors is in violation of such agreements.  Neither the execution, delivery and performance of this Agreement, nor the consummation of the transactions contemplated hereby, will result in or give rise to any right of termination or other right to impair or limit, or otherwise result in a breach of, the Company’s or any of its Subsidiaries’ rights to own or retain a license to any of the Intellectual Property.

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Section 3.18.                      Transactions with Affiliates.

Except as set forth in Schedule 3.18 of the Due Diligence Memorandum, no officer, manager or equity holder of the Company or any of its Subsidiaries, or any person with whom any such officer or manager has any direct or indirect relation by blood, marriage or adoption, or any entity in which any such Person owns any beneficial interest (other than a publicly held corporation whose stock is traded on a national securities exchange or in the over-the-counter market and less than five percent (5%) of the stock of which is beneficially owned by all such Persons in the aggregate) or any Affiliate of any of the foregoing or any Affiliate of the Company or any of its Subsidiaries has any interest in:  (a) any Contract, arrangement or understanding with, or relating to, the Company or any of its Subsidiaries or the businesses or assets of the Company or any of its Subsidiaries; (b) any loan, arrangement, understanding, agreement or Contract for or relating to the Company or any of its Subsidiaries or the businesses or assets of the Company or any of its Subsidiaries; or (c) any property (real, personal or mixed), tangible or intangible, used or currently intended to be used by the Company or any of its Subsidiaries.  Schedule 3.18 of the Due Diligence Memorandum also sets forth a complete list of all accounts receivable, notes receivable and other receivables and accounts payable owed to or due from any Affiliate of the Company to the Company or any of its Subsidiaries.  No stockholder of the Company has any Equity Interest in LFC.  Except as set forth on Schedule 3.18 of the Due Diligence Memorandum or except for scheduled salary payments to the Company’s employees, neither the Company nor any of its Subsidiaries has made any payments to any Person that holds a direct or indirect Equity Interest in the Company.

Section 3.19.                      Intentionally Omitted.

Section 3.20.                      Vendor/Dealer Relations.

Schedule 3.20 of the Due Diligence Memorandum sets forth:

(a)           The names and addresses of the top fifteen (15) vendors and dealers, through which the Company or any of its Subsidiaries has originated any Financing Contracts, by dollar volume (measured by the gross amount invoiced to LFC or its Controlled Affiliates (with respect to the portion of the business contributed by it pursuant to the Contribution Agreement), the Company or any of its Subsidiaries by such vendor or dealer during the applicable period) from which LFC or its Controlled Affiliates, the Company or any of its Subsidiaries ordered equipment which it leased to its customers (“Equipment”) during the nine (9) month period ended September 30, 2011 (the “Top Vendors”), together with a brief description of the Equipment provided and the total amount for which each of the Top Vendors invoiced LFC or its Controlled Affiliates, the Company or any of its Subsidiaries for the nine (9) month period ended September 30, 2011.

(b)           True and correct copies of all Contracts, including, without limitation, any preferred vendor arrangements, currently in effect with the Top Vendors have been provided to the Purchasers.

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(c)           Neither the Company nor any of its Subsidiaries has experienced, and, to the Knowledge of the Company, there do not exist, any material quality control or similar problems with the products currently being supplied or on order from any of the Top Vendors.

(d)           To the Knowledge of the Company, no event has occurred that would materially and adversely affect the Company’s or any of its Subsidiaries’ relations with any such Top Vendors.  Since the effective date of the Contribution Agreement, none of the Top Vendors has canceled, terminated or, to the Knowledge of the Company, made any threat to: (A) cancel or otherwise terminate its Contract or (B) cancel or otherwise terminate its business relationship with the Company or any of its Subsidiaries.  None of the Top Vendors has advised LFC, the Company or any of its Subsidiaries, whether verbally or in writing, that any Top Vendor intends to refuse or otherwise fail to authorize the Company or any of its Subsidiaries to provide leasing of any of its products at any time after the Closing Date in a manner consistent with past practices during the nine (9) month period ended September 30, 2011.

Section 3.21.                      Employee and Labor Matters.

(a)           Pursuant to an e-mail from Miles Herman to Brendan Moore on November 6, 2011, the Company has provided to the Purchasers a true and complete list of all of the employees of the Company and its Subsidiaries as of the date of this Agreement, specifying the annual salary, hourly wages, bonuses, commissions or fees and position for such employee.  Neither the Company nor any of its Subsidiaries has made any written or oral commitment to any employee with respect to compensation, promotion, retention, termination, severance or similar matters in connection with the transactions contemplated by this Agreement.

(b)           Schedule 3.21(b) of the Due Diligence Memorandum sets forth a complete and correct list of all Benefit Plans.  True and complete copies of the following documents, to the extent applicable with respect to each Benefit Plan, have been provided to Purchasers: (i) the documents embodying each such Benefit Plan, including any amendments thereto; (ii) the most current summary plan description, including any amendments thereto; (iii) actual deferral percentage and actual contribution percentage tests results and all Form 5500 annual reports filed; (iv) all current Contracts and agreements with service providers; (v) each trust instrument, insurance contract or other funding arrangement; (vi) the most recent IRS determination or opinion letter regarding the qualified status of any Benefit Plan intended to be qualified under Section 401(a) of the Code; and (vii) each other document pursuant to which a Benefit Plan is maintained, funded or administered.

(c)           All Benefit Plans have been administered, operated and maintained in compliance in all material respects with ERISA, the Code and other applicable Laws and with the terms and provisions thereof.  Each Benefit Plan that is subject to ERISA that is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA intended to be qualified under Section 401(a) of the Code has received or may rely on a favorable determination or opinion letter from the IRS and no facts exist that could reasonably jeopardize such status.  There has no prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code and not otherwise exempt under Section 408 of ERISA, including pursuant to an individual or class exemption) with respect to any Benefit Plan.

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(d)           Except as set forth on Schedule 3.21(d) of the Due Diligence Memorandum, no Benefit Plan is or has been a multiemployer plan, as defined in Section 3(37) of ERISA, or a benefit plan subject to Title IV of ERISA, Section 412 of the Code, or Section 302 of ERISA.

(e)           There is no pending or, to the Knowledge of the Company, threatened litigation or administrative action (other than for routine plan claims and benefits) relating to the Benefit Plans.  Neither the Company nor any of its Subsidiaries provides or has any obligation to provide post-employment medical or other post-employment welfare benefits to any person under any Benefit Plan (other than required by Part 6 of Subtitle I of ERISA or similar state law).

(f)           Neither the execution of this Agreement nor the consummation of the transactions contemplated herein will, either alone or in conjunction with any other event, (i) entitle any employees to severance pay or any increase in severance pay upon any termination of employment after the date hereof or (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the Benefit Plans.

(g)           All contributions, premiums or payments required to be made with respect to any Benefit Plan have been made on or before their due dates.  All required governmental reports, filings, registrations and notices with respect to any Benefit Plan have been properly, accurately and timely filed, distributed or posted.

(h)           No Benefit Plan is maintained for individuals who do not reside in the United States.

(i)           The employees of the Company and its Subsidiaries and the independent contractors providing services to the Company and its Subsidiaries have never been, and currently are not, represented by any labor organization or group whatsoever.  Neither the Company nor any of its Subsidiaries has been, and none is, a signatory to any collective bargaining agreement.  There has not ever been, there is not pending and, to the Knowledge of the Company, there is not threatened, any union organizing campaign or other attempt to organize or establish a labor union, employee organization or labor organization involving or representing employees of the Company or any of its Subsidiaries or any independent contractor providing services to the Company or any of its Subsidiaries.  There has not been, there is not pending and, to the Knowledge of the Company, there is not threatened any labor strike, labor dispute, walkout, work stoppage, slowdown or lockout involving the Company or any of its Subsidiaries.

(j)           No workers’ compensation or retaliation claim, complaint, charge or investigation has been filed or is pending, or, to the Knowledge of the Company, threatened, against the Company or any of its Subsidiaries, and the Company and its Subsidiaries has maintained and currently maintains adequate insurance as required by applicable Law with respect to workers’ compensation claims and unemployment benefits claims.

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(k)           The Company and its Subsidiaries are in compliance in all material respects with all applicable Laws and Contracts concerning or pertaining to employment, including any Laws governing, concerning or pertaining to terms and conditions of employment, discrimination, harassment, retaliation, wages, hours, occupational safety and health, employment practices, affirmative action, labor relations, immigration, temporary workers, independent contractors and plant closings or layoffs (collectively, “Employment Laws”), and neither the Company nor any of its Subsidiaries is engaged in any unfair labor practice.  No employee or independent contractor has been misclassified with respect to application of any Employment Laws or other Laws.  There are no Proceedings pending, or to the Knowledge of the Company, threatened, against the Company or any of its Subsidiaries with respect to any employee, former employee, applicant for employment, independent contractor, consultant or any employee of any of the foregoing arising out of employment, alleged employment, any Employment Laws or any alleged misclassification with respect to application of any other Law.

(l)           To the Knowledge of the Company, no employee of the Company or any of its Subsidiaries performs any services for any other Person whereby such services materially adversely affect such Person’s ability to perform his or her duties for the Company.  To the Knowledge of the Company, no employee of the Company performs services for the Non-Company Parties.

Section 3.22.                      Permits

Except as set forth on Schedule 3.22 of the Due Diligence Memorandum, the Company and its Subsidiaries have all material Permits necessary for their operations in the conduct of their business, such Permits are valid, binding and in full force and effect and no violations are or have been recorded in respect of any thereof, and no Proceeding is pending or threatened to revoke or limit any thereof.  The Company and its Subsidiaries have taken all necessary action to maintain each Permit.  Schedule 3.22 of the Due Diligence Memorandum contains a true, correct and complete list of all such material Permits under which the Company or any of its Subsidiaries is operating or bound, and the Company has furnished to the Purchasers true, correct and complete copies of the Permits required to be set forth on Schedule 3.22 of the Due Diligence Memorandum.  To the Knowledge of the Company, there is no proposed change in any applicable Law which would require the Company or any of its Subsidiaries to obtain any Permits not set forth on Schedule 3.22 of the Due Diligence Memorandum in order to conduct its business as presently conducted.  Except as set forth on Schedule 3.22 of the Due Diligence Memorandum, none of the Permits required to be set forth on Schedule 3.22 of the Due Diligence Memorandum shall be adversely affected as a result of the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.  To the Knowledge of the Company, no loss or expiration of any Permit is threatened, pending or reasonably foreseeable.  None of the Permits or Bonds is held in the name of any Person other than the Company or one of its Subsidiaries.

Section 3.23.                      Accounts Receivable and Accounts Payable.

(a)           Accounts Receivable. Except as set forth in Schedule 3.23(a) of the Due Diligence Memorandum and unless reserved for in the allowance for doubtful

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accounts or any other reserve account in the Financial Statements, to the Knowledge of the Company (for purposes of this Section 3.23(a), the definition of “Knowledge” is limited to actual knowledge of the Company), (i) the debtors to which the Receivables relate are not in or subject to a bankruptcy or insolvency proceeding and (ii) none of the Receivables has been made subject to an assignment for the benefit of creditors.  Except as set forth in Schedule 3.23(a) of the Due Diligence Memorandum and unless reserved for in the allowance for doubtful accounts or any other reserve account in the Financial Statements, all Receivables pursuant to Financing Contracts that are reflected on the Latest Balance Sheet (net of any allowances or reserves shown thereon) (i) are valid, existing and, to the Knowledge of the Company (for purposes of this Section 3.23(a), the definition of “Knowledge” is limited to actual knowledge of the Company) collectible in a manner consistent with the past practice of the Company and its Subsidiaries, (ii) represent monies due for goods sold and delivered or services rendered in the ordinary course of business and (iii) are not subject to any restrictions, security interests or other Liens, except Permitted Liens.  Except as set forth in Schedule 3.23(a) of the Due Diligence Memorandum and unless reserved for in the allowance for doubtful accounts or any other reserve account in the Financial Statements, all Receivables other than those Receivables pursuant to Financing Contracts that are reflected on the Latest Balance Sheet (net of any allowances or reserves shown thereon) (i) are valid, existing and collectible in a manner consistent with the past practice of the Company and its Subsidiaries, (ii) represent monies due for goods sold and delivered or services rendered in the ordinary course of business and (iii) are not subject to any restrictions, security interests or other Liens, except Permitted Liens.  The Company and its Subsidiaries have not factored any of the business’ Receivables.

(a)           Accounts Receivable. Except as set forth in Schedule 3.23(a) of the Due Diligence Memorandum and unless reserved for in the allowance for doubtful accounts or any other reserve account in the Financial Statements, to the Knowledge of the Company (for purposes of this Section 3.23(a), the definition of “Knowledge” is limited to actual knowledge of the Company), (i) the debtors to which the Receivables relate are not in or subject to a bankruptcy or insolvency proceeding and (ii) none of the Receivables has been made subject to an assignment for the benefit of creditors.  Except as set forth in Schedule 3.23(a) of the Due Diligence Memorandum and unless reserved for in the allowance for doubtful accounts or any other reserve account in the Financial Statements, all Receivables pursuant to Financing Contracts that are reflected on the Latest Balance Sheet (net of any allowances or reserves shown thereon) (i) are valid, existing and, to the Knowledge of the Company (for purposes of this Section 3.23(a), the definition of “Knowledge” is limited to actual knowledge of the Company) collectible in a manner consistent with the past practice of the Company and its Subsidiaries, (ii) represent monies due for goods sold and delivered or services rendered in the ordinary course of business and (iii) are not subject to any restrictions, security interests or other Liens, except Permitted Liens.  Except as set forth in Schedule 3.23(a) of the Due Diligence Memorandum and unless reserved for in the allowance for doubtful accounts or any other reserve account in the Financial Statements, all Receivables other than those Receivables pursuant to Financing Contracts that are reflected on the Latest Balance Sheet (net of any allowances or reserves shown thereon) (i) are valid, existing and collectible in a manner consistent with the past practice of the Company and its Subsidiaries, (ii) represent monies due for goods sold and delivered or services rendered in the ordinary course of business and (iii) are not subject to any restrictions, security interests or other Liens, except Permitted Liens.  The Company and its Subsidiaries have not factored any of the business’ Receivables.

(b)           Accounts Payable.  The accounts payable of the Company and its Subsidiaries reflected on the Pro Forma Balance Sheet arose from bona fide transactions in the ordinary course of business, are set forth on Schedule 3.23(b) of the Due Diligence Memorandum and are not more than forty five (45) days past due.

(c)           RCC Accounts Payable.  Set forth on Schedule 3.23(c) of the Due Diligence Memorandum is a schedule of all RCC Past Due Payables and the amount paid in cash to satisfy such RCC Past Due Payables.  Except as set forth on Schedule 3.23(c) of the Due Diligence Memorandum, neither the original terms of the RCC Past Due Payables or any contract or agreement in connection with the satisfaction of the RCC Past Due Payables have been modified or amended and none of the Company Parties has agreed to any conditions, concessions or similar arrangements with respect to the satisfaction of such RCC Past Due Payables.  The RCC Past Due Payables have been satisfied in full.

Section 3.24.                      Taxes.

(a)           The Company and its Subsidiaries have complied in all material respects with all Laws relating to Taxes.  All material Tax Returns required to be filed by, or with respect to, the Company or any of its Subsidiaries have been timely filed.  All such Tax Returns were true, correct and complete.  All Taxes of the Company and its Subsidiaries due and payable with respect to such Tax Returns (and all other Taxes that are in material in amount whether or not shown as due on a Tax Return), or otherwise payable by the Company or any of its Subsidiaries, have been timely paid.

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(b)           There are no Liens for Taxes on any Properties of the Company or any of its Subsidiaries, other than Permitted Liens.

(c)           The Company and its Subsidiaries have timely and properly withheld (i) all required amounts from payments to its employees, agents, contractors, nonresidents and other Persons and (ii) all sales, use and value added Taxes.  The Company and its Subsidiaries timely remitted all withheld Taxes to the proper Governmental Entity in accordance with all Laws.

(d)           Except as set forth on Schedule 3.24(d) of the Due Diligence Memorandum, neither the Company nor any of its Subsidiaries has ever been a member of any affiliated group that files a consolidated, combined, unitary Tax or similar Tax Return.  Neither the Company nor any of its Subsidiaries is liable for Taxes of any other Person as a result of successor liability, transferee liability, joint or several liability (including pursuant to Treasury Regulation Section 1.1502-6 or any similar provision of state, local or non-U.S. Laws), a Contract or otherwise.

(e)           No audits or other Proceedings are in progress, pending or, to the Knowledge of the Company, threatened with regard to any Taxes or Tax Returns of the Company or any of its Subsidiaries.  Neither the Company nor any of its Subsidiaries has executed or filed with any Governmental Entity any agreement or other document extending or having the effect of extending the period for assessment, reassessment or collection of any Taxes.

(f)           No election is pending to change the income Tax treatment of the Company or any of its Subsidiaries.  No Governmental Entity has challenged the income Tax treatment of the Company or any of its Subsidiaries.

(g)           Neither the Company nor any of its Subsidiaries shall be required to include items of income, or exclude an item of deduction, for any period after the Closing Date that individually or collectively are material in amount as a result of: (i) an installment sale transaction by the Company or any of its Subsidiaries occurring on or before the Closing governed by Code Section 453 (or any similar provision of state, local or non-U.S. Laws); (ii) a transaction by the Company or any of its Subsidiaries occurring on or before the Closing reported as an open transaction for U.S. federal income tax purposes (or any similar doctrine under state, local or non-U.S. Laws); (iii) any prepaid amounts received on or prior to the Closing Date by the Company or any of its Subsidiaries; (iv) a change in the Company’s or any of its Subsidiaries’ method of accounting; or (v) an agreement entered into by the Company or any of its Subsidiaries with any Government Entity (including a “closing agreement” under Code Section 7121) on or prior to the Closing Date.  Neither the Company nor any of its Subsidiaries has made an election (including a protective election) pursuant to Code Section 108(i).  Neither the Company nor any of its Subsidiaries currently uses the cash method of accounting for income Tax purposes.  Neither the Company nor any of its Subsidiaries has any “long-term contracts” that are subject to a method of accounting provided for in Code Section 460.

(h)           Each Benefit Plan that is a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been operated in compliance with Section 409A of the Code and the interpretative guidance promulgated by the IRS thereunder, and no such nonqualified deferred compensation plan has or is reasonably expected to result in any participant incurring income acceleration or penalties under Section 409A of the Code.  Neither the Company nor any of its Subsidiaries is required to pay, gross up or otherwise indemnify any employee or independent contractor for any Taxes, including Taxes imposed under Section 409A of the Code or Section 4999 of the Code.

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(i)           Neither the Company nor any of its Subsidiaries is party to any Contract, plan or arrangement with any Person that could result in any payment (or other benefit) being provided that is not deductible under Section 280G of the Code or subject to an excise Tax imposed under Section 4999 of the Code.

Section 3.25.                      Ethical Practices.

Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any representative thereof has offered or given anything of value to: (a) any official of a Governmental Entity, any political party or official thereof, or any candidate for political office; (b) any customer, payor or member of the government; or (c) any other Person, in any such case while knowing or having reason to know that all or a portion of such money or thing of value may be offered, given or promised, directly or indirectly, to any customer, payor, member of the government or candidate for political office for the purpose of the following: (x) influencing any action or decision of such Person, in such Person’s official capacity, including a decision to fail to perform such Person’s official function; (y) inducing such Person to use such Person’s influence with any government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality to assist the Company and its Subsidiaries in obtaining or retaining business for, or with, or directing business to, any Person; or (z) where such payment would constitute a bribe, kickback or illegal or improper payment to assist the Company or any of its Subsidiaries in obtaining or retaining business for, or with, or directing business to, any Person. Neither the Company nor any of its Subsidiaries has accepted or received any unlawful contributions, payments, gifts or expenditures.

Section 3.26.                      Contribution Agreement.

The transactions contemplated by the Contribution Agreement have been properly consummated to allow the business of the Company and its Subsidiaries to operate in substantially the same manner in which the business was operated by or through LFC or the RCC Parties, as applicable, prior to the effective date of the Contribution Agreement.

Section 3.27.                      Sub-Servicing Arrangement.

All consents necessary to appoint the Company the sub-servicer or servicer, as applicable, under the Servicing Agreements have been obtained and furnished to the Purchasers.  LFC and the RCC Parties have taken all necessary actions to appoint the Company as the sub-servicer or servicer, as applicable, under the Servicing Agreements.

Section 3.28.                      Solvency, Etc.

Each of LFC, the Company and each of its Subsidiaries is solvent and, immediately after giving effect to the transactions contemplated by this Agreement, each of them will be solvent.  The Company and its Subsidiaries have assets, and immediately after giving effect to the transactions contemplated hereby, will have assets, (both tangible and intangible)

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with a fair saleable value in excess of the amount required to pay their Liabilities as they come due.  The Company and its Subsidiaries have adequate capital for the conduct of their business and discharge of their debts.  None of LFC, the Company or any of its Subsidiaries is involved in any Proceeding by or against it as a debtor before any Governmental Entity under Title 11 of the United States Bankruptcy Code or any other insolvency or debtors’ relief act, whether state, federal or foreign, or for the appointment of a trustee, receiver, liquidator, assignee, sequestrator or other similar official for any part of the property of the LFC, the Company or any of its Subsidiaries.

Section 3.29.                      Insurance Subsidiary

(a)           The Company has furnished to the Purchasers true and complete copies of all filings made by the Insurance Subsidiary with any Governmental Entity within the twelve (12) month period prior to the date of this Agreement.  The Insurance Subsidiary is in compliance with all applicable Law and has all Permits necessary or advisable for its operations and the conduct of its business, such Permits are in full force and effect, no violations are or have been recorded in respect of any thereof and no Proceeding is pending or, to the Knowledge of the Company, threatened to revoke or limit any thereof.  Except as set forth on Schedule 3.29(a) of the Due Diligence Memorandum, there are no Permits required in order for the Insurance Subsidiary to conduct its business.  None of the Permits set forth on Schedule 3.29(a) of the Due Diligence Memorandum shall be adversely affected as a result of the Company’s execution and delivery of, or the performance of its obligations under, this Agreement, any Related Document or the consummation of the transactions contemplated hereby or thereby.  Except as set forth on Schedule 3.29(a) of the Due Diligence Memorandum, the execution, delivery and performance of this Agreement does not require consent, approval, Order, authorization, registration, declaration or filing with or of any Person or Governmental Entity with respect to the Insurance Subsidiary.

(b)           The Company has furnished to the Purchasers true, complete and correct copies of all examination reports, correspondence, reports of investigations, inquiries and other similar materials relating to the Insurance Subsidiary, from or submitted to any Governmental Entity.  The Insurance Subsidiary’s reserves have been, in all material respects, calculated in accordance with generally accepted actuarial principles, consistently applied.  To the Knowledge of the Company, no facts or circumstances exist as of the date of this Agreement which has had or could reasonably be expected to have a Material Adverse Effect on the Insurance Subsidiary.

(c)           Since September 29, 2009, the Insurance Subsidiary has not entered into any contracts of insurance, reinsurance or retrocession, including slips, binders, cover notes and similar arrangements other than that Reinsurance Contract with American Bankers Insurance Company of Florida (“ABIC”) effective November 1, 2009, pursuant to which ABIC is the ceding company and the Insurance Subsidiary is the reinsurer (the “Reinsurance Contract”).  Prior to the date of this Agreement, the Company has furnished to the Purchasers a true and complete copy of the Reinsurance Contract.  As of the date hereof, the Reinsurance Contract is in full force and effect, constitutes legal, valid and binding obligations of the parties thereto, and is enforceable in accordance with its terms.  Neither the Insurance Subsidiary is in default under the Reinsurance Contract, nor, to the Company’s or the Insurance Subsidiary’s Knowledge, is ABIC in default thereunder, and no event has occurred or circumstance exists that, with the lapse of time or the giving of notice or both, would constitute a default thereunder.  Neither the Company nor the Insurance Subsidiary has received any written claim of any breach, violation or default under the Reinsurance Contract.

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(d)           There are no agreements binding on the Company or on the Insurance Subsidiary or to which the Company or Insurance Subsidiary is a party, on the one hand, and any Governmental Entity is a party or addressee, on the other hand, or Orders, other than those of general application to similar insurers engaged in the same line of business as the Insurance Subsidiary, that (i) impose any specific requirements on the Company or the Insurance Subsidiary in respect of the Insurance Subsidiary’s capital and surplus or (ii) specifically relate to the ability of the Insurance Subsidiary to make distributions.

Section 3.30.                      Protection of Customer Information.

The Company and its Subsidiaries have implemented and maintained commercially reasonable information security measures consistent with industry standards to protect against unauthorized access to, and misuse or loss of, Customer Information or any media containing Customer Information.  Neither the Company nor any of its Subsidiaries has ever experienced any such access, misuse, or loss that could materially compromise (or threatened to materially compromise) the security, confidentiality or integrity of such Customer Information.

Section 3.31.                      Offer and Sale.

Neither the Company nor anyone acting on its behalf has: (a) offered or sold the Purchased Shares, directly or indirectly, by means of any form of general solicitation or general advertisement, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio, or (ii) any seminar or other meeting whose attendees had been invited by general solicitation or general advertising; or (b) in the past sold, offered for sale or solicited, or will sell, offer for sale or solicit, offers to buy any securities of the Company so as to bring the offer, issuance or sale of the Purchased Shares pursuant to this Agreement within the provisions of Section 5 of the Securities Act.  The Company has or will, within the allowable period after the Closing, comply with all applicable state “blue sky” or securities laws in connection with the issuance and sale of the Purchased Shares to be issued pursuant to this Agreement.

Section 3.32.                      Credit Policies and Procedures.

The credit policies, procedures, approval thresholds, and automated approval standards utilized by the Company to underwrite leases, loans or similar financing instruments, or acquire any portfolio of leases, loans or similar financing instruments (the “Credit Policies and Procedures”) are as set forth on Schedule 3.32 of the Due Diligence Memorandum.

Section 3.33.                      Origination Parameters.

The parameters and guidelines that govern the Company’s origination of new leases, loans or similar financing instruments, including (i) types of leases, loans or similar financing instruments, (ii) size parameters, and (iii) any other limitations (whether specific concentration limits related to geography or industry, or otherwise) (the “Origination Parameters”) are included in the Credit Policies and Procedures set forth on Schedule 3.32 of the Due Diligence Memorandum.

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Section 3.34.                      Officers and Directors.

Immediately following the consummation of the transactions contemplated by this Agreement, (i) none of the Management Parties will be officers, directors or managers of Resource America, any RCC Party or any of their respective Affiliates and (ii) none of the Management Parties will be officers, directors or managers of LFC, the LEAF Funds or any of their respective Affiliates, other than as contemplated by Section 8.1(g).

Section 3.35.                      Disclosure.

Prior to the execution of this Agreement, the Company has furnished to the Purchasers true and complete copies of the Material Contracts and any other documents or instruments identified or referred to in this Agreement.  Such furnishing will not alone constitute adequate disclosure of those facts required to be disclosed under this Agreement, and notice of their contents (other than by express reference in the Due Diligence Memorandum) will in no way limit the Company’s other obligations or the Purchasers’ other rights under this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING THE NON-COMPANY

PARTIES

Each of the Non-Company Parties, severally and not jointly, hereby represents and warrants:

Section 4.1.                      Organization.

Such Non-Company Party is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation.

Section 4.2.                      Authorization.

Such Non-Company Party has full entity power and authority to execute and deliver this Agreement and any other certificate, agreement, document or other instrument to be executed and delivered by it in connection with the transactions contemplated by this Agreement (collectively, the “Non-Company Party Ancillary Documents”), to perform its obligations under this Agreement and the Non-Company Party Ancillary Documents and to consummate the transactions contemplated by this Agreement and the Non-Company Party Ancillary Documents.  The execution and delivery of this Agreement and the Non-Company Party Ancillary Documents by such Non-Company Party, the performance by such Non-Company Party of its obligations under this Agreement and the Non-Company Party Ancillary Documents and the consummation of the transactions provided for in this Agreement and the Non-Company Party Ancillary Documents have been duly and validly authorized by all necessary action on the part of such Non-Company Party.  This Agreement has been and, as of the Closing Date, the Non-Company Party Ancillary Documents will be, duly executed and delivered by such Non-Company Party, and do or will, as the case may be, constitute the valid and binding agreements of such Non-Company Party, enforceable against such Non-Company Party in accordance with their respective terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditors’ rights generally, general equitable principles and the discretion of courts in granting equitable remedies.

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Section 4.3.                      Absence of Restrictions and Conflicts.

The execution, delivery and performance of this Agreement and the Non-Company Party Ancillary Documents, the consummation of the transactions contemplated by this Agreement and the Non-Company Party Ancillary Documents and the fulfillment of and compliance with the terms and conditions of this Agreement and the Non-Company Party Ancillary Documents do not or will not, as the case may be, violate or conflict with, constitute a breach of or default under, result in the loss of any benefit under, or permit the acceleration of any obligation under, or otherwise require any action, approval, Order, authorization, registration, declaration or filing with respect to (a) any term or provision of the charter documents of such Non-Company Party, (b) any material Contract to which such Non-Company Party is a party, (c) any Order of any Governmental Entity to which such Non-Company Party is a party or by which such Non-Company Party or any of its properties is bound or (d) any Permit, Law or arbitration award of any court or Governmental Entity or agency applicable to such Non-Company Party, that in any case would not be reasonably likely to prevent or materially delay the performance by such Non-Company Party of any of its obligations under this Agreement or the consummation of any of the transactions contemplated hereby.

Section 4.4.                      Brokers, Finders and Investment Bankers.

Neither such Non-Company Party nor any Affiliate of such Non-Company Party, has employed any broker, finder or investment banker or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees or finders’ fees in connection with the transactions contemplated by this Agreement.

Section 4.5.                      Legal Proceedings.

There are no Proceedings (or any basis therefor) pending, or, to the knowledge of any Non-Company Party, threatened against, any Non-Company Party or any of their respective Subsidiaries or Controlled Affiliates relating to or involving the transactions contemplated by this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES REGARDING THE PURCHASERS

Each Purchaser, severally and not jointly, hereby represents and warrants:

Section 5.1.                      Organization.

Such Purchaser is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation.

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Section 5.2.                      Authorization.

Such Purchaser has full entity power and authority to execute and deliver this Agreement and any other certificate, agreement, document or other instrument to be executed and delivered by it in connection with the transactions contemplated by this Agreement (collectively, the “Purchaser Ancillary Documents”), to perform its obligations under this Agreement and the Purchaser Ancillary Documents and to consummate the transactions contemplated by this Agreement and the Purchaser Ancillary Documents.  The execution and delivery of this Agreement and the Purchaser Ancillary Documents by such Purchaser, the performance by such Purchaser of its obligations under this Agreement and the Purchaser Ancillary Documents, and the consummation of the transactions provided for in this Agreement and the Purchaser Ancillary Documents have been duly and validly authorized by all necessary action on the part of such Purchaser.  This Agreement has been and, as of the Closing Date, the Purchaser Ancillary Documents will be, duly executed and delivered by such Purchaser, and do or will, as the case may be, constitute the valid and binding agreements of such Purchaser, enforceable against such Purchaser in accordance with their respective terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditors’ rights generally, general equitable principles and the discretion of courts in granting equitable remedies.

Section 5.3.                      Absence of Restrictions and Conflicts.

The execution, delivery and performance of this Agreement and the Purchaser Ancillary Documents, the consummation of the transactions contemplated by this Agreement and the Purchaser Ancillary Documents and the fulfillment of and compliance with the terms and conditions of this Agreement and the Purchaser Ancillary Documents do not or will not, as the case may be, violate or conflict with, constitute a breach of or default under, result in the loss of any benefit under, or permit the acceleration of any obligation under, or otherwise require any action, approval, Order, authorization, registration, declaration or filing with respect to (a) any term or provision of the charter documents of such Purchaser, (b) any material Contract to which such Purchaser is a party, (c) any Order of any Governmental Entity to which such Purchaser is a party or by which such Purchaser or any of its properties is bound or (d) any Permit, Law or arbitration award of any court or Governmental Entity or agency applicable to such Purchaser, that in any case would be reasonably likely to prevent or materially delay the performance by such Purchaser of any of its obligations under this Agreement or the consummation of any of the transactions contemplated hereby.

Section 5.4.                      Brokers, Finders and Investment Bankers.

Neither such Purchaser nor any Affiliate of such Purchaser, has employed any broker, finder or investment banker or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees or finders’ fees in connection with the transactions contemplated by this Agreement.

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Section 5.5.                      Investment Representations.

(a)           The Purchased Shares to be issued to such Purchaser pursuant to this Agreement will be acquired by such Purchaser for its own account and not with a view to, or intention of, or for sale in connection with, any distribution thereof.

(b)           Such Purchaser’s financial situation is such that such Purchaser can afford to bear the economic risk of such Purchaser’s investment in the Company for an indefinite period of time, and such Purchaser can afford to suffer the complete loss of such Purchaser’s entire investment in the Company.

(c)           Such Purchaser’s knowledge and experience in financial and business matters are such that such Purchaser is capable of evaluating the merits and risks of the investment in the Company.

(d)           Such Purchaser understands that the purchase of the Purchased Shares pursuant to this Agreement is a speculative investment which involves a high degree of risk of loss of the entire investment therein, that there will be substantial restrictions on the transferability of the Purchased Shares and that for an indefinite period following the Closing Date there will be no public market for such Purchased Shares and that a public market may never exist therefor, and that, accordingly, it may not be possible for such Purchaser to sell the Purchased Shares in case of emergency or otherwise.

(e)           Such Purchaser is an “Accredited Investor” as such term is defined in Regulation D under the Securities Act.

(f)           Such Purchaser understands that no federal or state agency has made any finding or determination regarding the fairness of the offering of Purchased Shares for investment, or any recommendation or endorsement thereof.

(g)           Such Purchaser acknowledges that the Purchased Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available.  Such Purchaser is aware of the provisions of Rule 144 promulgated under the Securities Act that permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions.

(h)           Such Purchaser expressly acknowledges and agrees that the Company is relying upon such Purchaser’s representations contained in this Agreement.

(i)           Such Purchaser acknowledges that no Purchased Shares are being offered or sold to it by means of any form of general solicitation or general advertising.

Section 5.6.                      Legal Proceedings.

There are no Proceedings (or any basis therefor) pending, or, to the knowledge of the Purchasers, threatened against, the Purchasers or any of their Subsidiaries or Affiliates relating to or involving the transactions contemplated by this Agreement.

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Section 5.7.                      Disclaimer.

THE PURCHASERS ACKNOWLEDGE THAT (A) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY SCHEDULE, CERTIFICATE OR RELATED DOCUMENT DELIVERED BY THE COMPANY OR ANY NON-COMPANY PARTY, NONE OF THE COMPANY, ANY NON-COMPANY PARTY OR ANY OTHER PERSON HAS MADE ANY REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AS TO ANY MATTER OR AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION REGARDING ANY MATTER THAT HAS BEEN FURNISHED TO THE PURCHASERS OR THEIR ADVISORS, AND (B) THE PURCHASERS HAVE NOT RELIED ON ANY REPRESENTATION OR WARRANTY FROM ANY PERSON, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY SCHEDULE, CERTIFICATE OR RELATED DOCUMENT, DELIVERED BY THE COMPANY OR ANY NON-COMPANY PARTY PURSUANT TO THIS AGREEMENT.

ARTICLE VI

CERTAIN COVENANTS AND AGREEMENTS

Section 6.1.                      Public Announcements.

No Party shall issue any public report, statement or press release or otherwise make any other public statement with respect to this Agreement and the transactions contemplated hereby (an “Announcement”) without the prior written consent (not to be unreasonably withheld or delayed) of the other Parties, except as may be required by (i) a court of competent jurisdiction, (ii) any Governmental Entity having supervisory authority over the business of any Party, (iii) any administrative body or legislative body (including a committee thereof) with purported or apparent jurisdiction to order any Party to divulge, disclose or make accessible such information, (iv) applicable Law or (v) the rules of any stock exchange; provided that in the event any Party must issue an Announcement in reliance upon any of the foregoing exceptions set forth in clauses (i) to (v) of this Section 6.1, such Party shall use its commercially reasonable efforts to consult with the other Parties regarding the substance of such Announcement prior to making such Announcement.

Section 6.2.                      Confidentiality.

None of LFC, the RCC Parties, nor the Purchasers shall, without the prior written consent of the Company, divulge, disclose or make accessible to any other Person (other than its professional advisors and partners) any Confidential Information pertaining to the business of the Company and its Subsidiaries, except when required to do so by (i) a court of competent jurisdiction, (ii) any Governmental Entity having supervisory authority over the business of any of the Company or any of its Subsidiaries, (iii) any administrative body or legislative body (including a committee thereof) with purported or apparent jurisdiction to order any of LFC, the RCC Parties or the Purchasers to divulge, disclose or make accessible such information, (iv) applicable Law or (v) the rules of any stock exchange.  For purposes of clarification, nothing herein shall preclude Resource America, LFC, the RCC Parties or the Purchasers from (i) disclosing Confidential Information to their respective (A) in the case of Eos, Affiliates (and their respective equityholders, limited partners, advisors, members, prospective investors or other investors and financing sources), so long as such disclosure is not adverse to the Company or its Subsidiaries, and (B) in the case of LFC and the RCC Parties, Controlled Affiliates, so long as such Controlled Affiliate is not engaged in any business that is competitive with the Company or its Subsidiaries and so long as such disclosure is not adverse to the Company or its Subsidiaries, or (ii) distributing announcements in respect of this Agreement and the transactions contemplated hereby, subject to Section 6.1 hereof.

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Section 6.3.                      Use of Proceeds.

The aggregate purchase price to be delivered by the Purchasers pursuant to this Agreement shall be applied at the Closing (a) to capitalize the Company’s balance sheet with equity to enable it to access the debt capital markets and support growth in lease originations, (b) to pay certain fees and expenses in connection with the transactions contemplated by this Agreement, (c) to fund working capital requirements in connection with the Company’s operations and (d) to repay the Resource Obligations.

Section 6.4.                      RCC Past Due Payables.

If, on or following forty five (45) calendar days after the Closing Date (the “Payables Test Date”), it is determined by the Company or the Purchasers that any portion of the RCC Past Due Payables have not been satisfied as of the Payables Test Date (the amount of any such unpaid portion, the “Unpaid RCC Past Due Payables Amount”), the RCC Parties shall make a cash contribution to the Company within thirty (30) calendar days after written notice from the Company of the Unpaid RCC Past Due Payables Amount in an amount equal to the Unpaid RCC Past Due Payables Amount, if applicable.

Section 6.5.                      LRF 3 Leases Backstop.

The Company shall provide to the Purchasers within ninety (90) calendar days after the end of each applicable fiscal year of the Company (subject to extension as agreed to by the Purchasers) a balance sheet of LRF 3 prepared by the Auditor (each such audited balance sheet, a “Test Date Balance Sheet”) as of each of December 31, 2011, December 31, 2012 and December 31, 2013 (each such date, a “Test Date” and December 31, 2013, the “Final Test Date”), along with a statement setting forth the Cash Value of LRF 3 Leases (each such statement, a “Test Date Statement”), which Cash Value of LRF 3 Leases shall be derived from the applicable Test Date Balance Sheet.  If the Cash Value of LRF 3 Leases as set forth on any Test Date Statement is less than $ 18,712,803 as of the applicable Test Date (any such deficit, a “Test Date Deficit”), the RCC Parties and Resource America shall, jointly and severally, be obligated to make a cash contribution to the Company within 30 calendar days of notice of such Test Date Deficit in an amount equal to such Test Date Deficit (any such payment, a “Test Date Payment”); provided, however, that if (i) the RCC Parties and/or Resource America make any Test Date Payments as of any Test Date prior to the Final Test Date and (ii) the Test Date Statement as of the Final Test Date sets forth a Cash Value of LRF3 Leases that is greater than or equal to $ 18,712,803, then the Company shall pay to the RCC Parties and/or Resource America, in the aggregate based on such party’s pro rata portion of such Test Date Payments actually made, an amount equal to the lesser of (i) the sum of any prior Test Date Payments and (ii) the difference between the Cash Value of LRF 3 Leases and $18,712,803.  On each Test Date, the Cash Value of LRF 3 Leases shall be increased by an amount equal to all prior Test Date Payments.

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Section 6.6.                      Sub-Servicing Fees Backstop.

From and after the Closing, in the event the Sub-Servicing Fees (as such term is defined in the Sub-Servicing Agreement) paid to the Company pursuant to the terms of the Sub-Servicing Agreement are less than one percent (1%) of the net present value of all the Contracts (as such term is defined in the Sub-Servicing Agreement) comprising the portfolio of leases held by each of the LEAF Funds respective borrowing bases under such LEAF Fund’s credit facilities or securitizations (the “Servicing Fee Shortfall”), Resource America shall be obligated to make a cash contribution to the Company, within 10 days of notice of such Servicing Fee Shortfall, to satisfy any such Servicing Fee Shortfall; provided, however, that if (i) Resource America provides the Company with written notice that the Company is in material breach of the Sub-Servicing Agreement and the Company has failed to cure such breach (to the extent such breach is curable) within 30 calendar days following receipt of such written notice by the Company, (ii) the Sub-Servicing Agreement is no longer in effect, (iii) the Company is no longer in the business of servicing equipment leases or (iv) the Company is otherwise prohibited by Law from servicing equipment leases or performing its obligations under the Sub-Servicing Agreement, Resource America shall not be required to provide such backstop.

Section 6.7.                      Servicing Rights; Non-Competition and Non-Solicitation.

(a)           Following the Closing, LFC shall, and shall cause each of the LEAF Funds to, use the Company as their sole and exclusive servicer unless (i) the Company is in material breach of its obligations under the Sub-Servicing Agreement and, following the receipt of written notice from LFC detailing the nature of such breach, the Company has failed to cure such breach, if curable, within sixty (60) calendar days following its receipt of such written notice, (ii) the Sub-Servicing Agreement is no longer in effect, (iii) the Company is no longer in the business of servicing equipment leases or (iv) the Company is otherwise prohibited by Law from servicing equipment leases.

(b)           None of LFC, its Controlled Affiliates or the LEAF Funds shall engage in the business of originating or servicing Financing Contracts; provided, however, that LFC, any Controlled Affiliate and any LEAF Fund may purchase Financing Contracts (on an individual or portfolio basis) that have been originated by third parties or the Company so long as (i) the officers, directors or employees of LFC and its Controlled Affiliates that make the purchasing decisions for LFC, its Controlled Affiliates or the LEAF Funds are not also officers, directors or employees of the Company or its Controlled Affiliates and (ii) none of LFC, its Controlled Affiliates or the LEAF Funds may actively solicit Financing Contracts from any of the vendors or dealers, including their respective captive financing affiliates, with which the Company or any of its Controlled Affiliates maintains a written program agreement or is actively pursuing such a program agreement that are set forth on Schedule 6.7(b) of the Due Diligence Memorandum (each, a “Prohibited Vendor”).  The Company shall appropriately modify Schedule 6.7(b) of the Due Diligence Memorandum (i) if the Company or any of its Controlled Affiliates no longer maintains a written program agreement or is no longer actively pursuing such a program agreement with a Prohibited Vendor, or (ii) to, in good faith, add new Prohibited Vendors, in each case by providing written notice to LFC.  Neither Resource America nor LFC or its Controlled Affiliates will raise any new funds or capital to originate or invest in Financing Contracts.  In the event an irreconcilable conflict arises between LFC and the Company which prevents the officers, directors or employees of LFC from acting in their fiduciary capacity to LCC and such failure to act is adverse to LCC, as reasonably determined by the Eos Directors in good faith, all officers, directors and employees of LFC that are also officers, directors or employees of the Company shall immediately resign their positions with LFC.

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(c)           For the period from the date hereof until the date the applicable restricted party no longer holds (directly or indirectly) at least fifteen percent (15%) of the Equity Securities of the Company held by such restricted party as of the date hereof (such period, the “Restricted Period”), none of (i) RCC and its Controlled Affiliates, (ii) Resource America and its Controlled Affiliates (other than LFC and the LEAF Funds) nor (iii) Eos and its Controlled Affiliates shall directly or indirectly, or as a stockholder, partner, member, manager, employee, consultant or other owner or participant in any Person, engage in or assist any other Person to engage in the Subject Business; provided, however, that notwithstanding anything herein to the contrary, during the Restricted Period:

(i)              the restrictions set forth in this Section 6.7(c) shall terminate as to (i) RCC and its Controlled Affiliates and Eos and its Controlled Affiliates upon the consummation of a Change in Control of RCC and (ii) Resource America and its Controlled Affiliates and Eos and its Controlled Affiliates upon the consummation of a Change in Control of Resource America; provided, that such Change of Control is not entered into with the purpose of circumventing the restrictions set forth in this Section 6.7(c);

(ii)              each of (i) RCC and its Controlled Affiliates, (ii) Resource America and its Controlled Affiliates (other than LFC and the LEAF Funds) and (iii) Eos and its Controlled Affiliates shall be permitted to, directly or indirectly, make an investment in any Person, so long as no more than 10% of such Person’s total consolidated revenues in the last fiscal year ending or the trailing twelve months prior to the closing date of such investment are attributable to the Subject Business and so long as no more than 10% of such Person’s total projected consolidated revenues for the following fiscal year beginning on the closing date of such investment are attributable to the Subject Business;

(iii)              each of (i) RCC and its Controlled Affiliates, (ii) Resource America and its Controlled Affiliates (other than LFC and the LEAF Funds) and (iii) Eos and its Controlled Affiliates shall be permitted to, directly or indirectly, make a Permitted Debt Investment;

(iv)              each of (i) RCC and its Controlled Affiliates, (ii) Resource America and its Controlled Affiliates (other than LFC and the LEAF Funds) and (iii) Eos and its Controlled Affiliates shall be permitted to acquire any equity in any Pooled Investment Vehicle managed by an independent investment adviser that may invest in or otherwise allocate capital to the Subject Business, so long as (A) with respect to RCC and its Controlled Affiliates, RCC and its Controlled Affiliates do not direct, influence or have any involvement in the investment decisions of such Pooled Investment Vehicle, (B) with respect to Resource America and its Controlled Affiliates (other than LFC and the LEAF Funds), Resource America and its Controlled Affiliates (including LFC and the LEAF Funds) do not direct, influence or have any involvement in the investment decisions of such Pooled Investment Vehicle and (C) with respect to Eos and its Controlled Affiliates, Eos and its Controlled Affiliates do not direct, influence or have any involvement in the investment decisions of such Pooled Investment Vehicle;

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(v)              subject to the restrictions set forth in Section 6.7(b) hereof, Resource America, LFC, LEAF Funding and LEAF Asset Management, LLC shall be permitted to operate and manage the LEAF Funds;

(vi)              notwithstanding any other provision contained in this Section 6.7(c), each of (i) RCC and its Controlled Affiliates, (ii) Resource America and its Controlled Affiliates (other than LFC and the LEAF Funds) and (iii) Eos and its Controlled Affiliates shall be permitted to be passive owners of not more than five percent (5.0%) of the outstanding stock of any class of a corporation engaged in the Subject Business which is publicly traded, so long as such Party has no active participation in the business of such corporation;

(vii)              each of (i) RCC and its Controlled Affiliates, (ii) Resource America and its Controlled Affiliates (other than LFC and the LEAF Funds) and (iii) Eos and its Controlled Affiliates shall be permitted to engage in the Subject Business solely with respect to leases, loans or notes that are used to finance equipment used directly in the production or processing of oil or natural gas; and

(viii)              notwithstanding the foregoing, the restrictions set forth in this Section 6.7(c) shall automatically terminate and be of no further force or effect upon the closing of an IPO.

(d)           Notwithstanding any other provisions contained herein, it is understood and agreed that the remedy of indemnity payments pursuant to Article X and other remedies at law would be inadequate in the case of any breach of the covenants contained in Section 6.7 hereof.  The applicable Party shall be entitled to equitable relief, including the remedy of specific performance, with respect to any breach or attempted breach of such covenants contained in Section 6.7 hereof.

(e)           During the Restricted Period, each of RCC and its Controlled Affiliates, Resource America and its Controlled Affiliates and Eos and its Controlled Affiliates agrees that it shall not, directly or indirectly through any Affiliate or through or on behalf of any other Person: (i) solicit or encourage any employee of the Company or its Subsidiaries to leave the employ of the Company or such Subsidiary, as applicable, or hire, or participate in the hiring of, any person who was an employee of the Company or its Subsidiaries or (ii) solicit or encourage any vendor, dealer or other business relation of the Company or its Subsidiaries to cease doing business, or reduce any portion of its business, with the Company or such Subsidiary, or in any way interfere with the relationship between any such vendor, dealer or business relation, on the one hand, and the Company or its Subsidiaries, on the other hand.  Notwithstanding the foregoing, the restrictions set forth in clause (i) of the immediately preceding sentence shall not prohibit RCC and its Controlled Affiliates, Resource America and its Controlled Affiliates or Eos and its Controlled Affiliates from placing general advertisements or using general search firm services so long as such general solicitations are not targeted, directly or indirectly, toward any employee of the Company or its Subsidiaries; provided, however, none of the foregoing Parties may hire, participate in the hiring of, or enter into any consulting arrangement with, any employee of the Company or its Subsidiaries under any circumstances.  Notwithstanding the foregoing each of RCC and its Controlled Affiliates and Resource America and its Controlled Affiliates may hire any person who was terminated by the Company or its Subsidiaries so long as  such person was employed in an accounting or legal department.

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Section 6.8.                      Servicing Fees from the 2010-2 Securitization.

(a)           From and after the Closing Date, TRS will remit to the Company, within 10 calendar days of its receipt thereof, all Servicer Fees, Servicing Charges, unreimbursed Collection Costs (as each such term is defined in the 2010-2 Indenture) and any other fees, expenses, reimbursements or payments (the “2010-2 Servicing Payments”) it receives pursuant to the 2010-2 Servicing Agreement, including Section 3.08 thereof, or the 2010-2 Indenture, including Section 13.03(c) thereof.  Notwithstanding the foregoing, reimbursements of Transferor Advances (as defined in the 2010-2 Indenture) shall not be covered by this Section 6.8(a).

(b)           LFC acknowledges and agrees that the Company will receive all amounts described in the preceding paragraph as compensation for sub-servicing the 2010-2 Servicing Agreement, and LFC relinquishes any claims LFC may have on or to the amounts described in Section 6.8(a) hereof as servicer under the 2010-2 Servicing Agreement.  LFC further agrees that if LFC receives any 2010-2 Servicing Payments, it will remit such 2010-2 Servicing Payments within 10 calendar days of its receipt thereof, and if LFC is entitled to any 2010-2 Servicing Payments and does not receive such payments, LFC will execute all such further instruments and agreements which the Company reasonably believes are necessary to assign LFC’s rights to such payment to the Company.

Section 6.9.                      Fiscal Year of the Company. Following the Closing Date, the Company shall take all necessary action to change its fiscal year end to December 31.

Section 6.10.                      Moberly Property.  LFC and the Company agree to take all action necessary to transfer the ownership of the Moberly Property to the Company within thirty (30) calendar days following the Closing Date.

ARTICLE VII

TAX MATTERS

Section 7.1.                      Cooperation.

From and after the Closing, the Purchasers and the Company shall (and shall cause their respective Controlled Affiliates to) (a) assist in the preparation and timely filing of any Tax Return of the Company or any of its Subsidiaries; (b) assist in any audit or other Proceeding with respect to Taxes or Tax Returns of the Company or any of its Subsidiaries; (c) make available any information, records or other documents relating to any Taxes or Tax Returns of any of the Company’s Subsidiaries; (d) provide any information required to allow the Purchasers or the Company to comply with any information reporting or withholding requirements contained in the Code or other Laws; and (e) provide certificates or forms, and timely execute any Tax Return, that are necessary or appropriate to establish an exemption for (or reduction in) any Transfer Tax.

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ARTICLE VIII

CLOSING DELIVERIES

Section 8.1.                      Company’s Closing Deliveries.

At the Closing, the Company shall deliver, or shall cause to be delivered, the following items to the Purchasers, each in form and substance reasonably satisfactory to the Purchasers:

(a)           Related Documents.  Duly executed and delivered counterparts to the Related Documents to which any of the Company Parties, the RCC Directors, the Management Parties or the Management Director are a party.

(b)           Consents and Approvals.  Duly executed copies of the consents and approvals set forth on Schedule 8.1(b) of the Due Diligence Memorandum.

(c)           Revolving Facilities.  Evidence reasonably satisfactory to the Purchasers that the Company has Revolving Facilities of at least $185,000,000.

(d)           Credit Rating.  Evidence reasonably satisfactory to the Purchasers that the Company has obtained a satisfactory credit rating from Moody’s (the determination of whether such rating is satisfactory shall be in the Purchasers’ sole discretion) with respect to the 2011-2 Securitization.

(e)           Affiliate Arrangements.  Evidence reasonably satisfactory to the Purchasers that all receivables and payables between the Company and any of its Affiliates have been satisfied and that all liabilities due to any Person that holds a direct or indirect Equity Interest in the Company have been satisfied.

(f)           Foreign Qualifications.  Evidence reasonably satisfactory to the Purchasers that the Company has filed the necessary forms to qualify to do business in all states where the nature of the business conducted by it makes such qualification necessary.

(g)           Resignations.  Evidence reasonably satisfactory to the Purchasers of the resignation of (1) each of Michael Yecies and Miles Herman as directors of the Company and (2) each Management Party that is an officer and/or director of Resource America, any RCC Party or any of their respective Affiliates (excluding the Company and its Subsidiaries), except that with respect to clause (2):

(i)              neither of Crit DeMent nor Robert Moskovitz will resign as officers from LFC;

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(ii)              neither of Crit DeMent nor Miles Herman will resign as directors from LFC;

(iii)              none of Crit DeMent, Robert Moskovitz or James Grant will resign as officers from LEAF Funding;

(iv)              neither of Crit DeMent nor Miles Herman will resign as directors of LEAF Funding;

(v)              neither of Crit DeMent nor Robert Moskovitz will resign as officers from LEAF Asset Management, LLC; and

(vi)              neither of Crit DeMent nor Miles Herman will resign as directors from LEAF Asset Management, LLC.

(h)           Restated Certificate.  Evidence reasonably satisfactory to the Purchasers that the Restated Certificate has been filed with the Secretary of State of the State of Delaware and is in full force and effect.

(i)           Secretary’s Certificate.  A certificate, dated as of the Closing Date, signed by the Secretary of the Company, certifying as to (i) the certificate or articles of incorporation, organization or formation of the Company and each of its Subsidiaries and the bylaws, limited liability company agreement or similar operating agreement of the Company and each of its Subsidiaries, (ii) resolutions of the board of directors of the Company authorizing the execution, delivery and performance by the Company of this Agreement and the Company Ancillary Documents and (iii) the incumbency of the Company’s officers executing this Agreement and the Company Ancillary Documents;

(j)           Other Officer’s Certificates.

(i)              A certificate, dated as of the Closing Date, signed by the Secretary of LFC, certifying as to (i) the certificate or articles of incorporation of LFC and the bylaws or similar governing documents of LFC, (ii) resolutions of the board of directors of LFC authorizing the execution, delivery and performance by LFC of this Agreement and each Non-Company Parties Ancillary Document to which it is a party and (iii) the incumbency of LFC’s officers executing this Agreement and the Related Documents, as applicable;

(ii)              A certificate, dated as of the Closing Date, signed by the Secretary of each of the RCC Parties, certifying as to (i) the certificate or articles of incorporation of each of the RCC Parties and the bylaws or similar governing documents of each of the RCC Parties, (ii) resolutions of the board of directors of each RCC Party authorizing the execution, delivery and performance by each RCC Party of this Agreement and each Non-Company Parties Ancillary Document to which each is a party and (iii) the incumbency of the RCC Parties’ officers executing this Agreement and the Related Documents, as applicable;

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(iii)              A certificate, dated as of the Closing Date, signed by the Secretary of Resource America, certifying as to (i) the certificate or articles of incorporation of Resource America and the bylaws or similar governing documents of Resource America, (ii) resolutions of the board of directors of Resource America authorizing the execution, delivery and performance by Resource America of this Agreement and each Non-Company Parties Ancillary Document to which it is a party and (iii) the incumbency of Resource America’s officers executing this Agreement and the Related Documents, as applicable;

(k)           Good Standing Certificates.  A certificate of the Secretary of State (or other applicable office) in which each Company Party, the Company and each of the Company’s Subsidiaries is organized, dated as of a date not more than five (5) Business Days prior to the Closing Date, certifying as to the good standing and non-delinquent Tax status of each such entity;

(l)           Governmental Filings.  Copies of all filings and/or notices made by the Company and its Subsidiaries with Governmental Entities in connection with the consummation of the transactions contemplated by this Agreement and the Related Documents;

(m)           U.S. Real Property Interests.  A properly completed and duly executed certificate of the Company dated as of the Closing Date certifying that less than 50% of the Company’s assets represent “United States real property interests” within the meaning of Section 897(c) of the Code; and

(n)           Other Documents.  All other documents required to be entered into by the Company pursuant to this Agreement or reasonably requested by the Purchasers necessary to consummate the transactions contemplated by this Agreement.

Section 8.2.                      Purchasers’ Closing Deliveries.

At the Closing, the Purchasers shall deliver, or cause to be delivered, the following items to the Company, as applicable, each in a form and substance reasonably satisfactory to the Company:

(a)           Purchase Price.  Each Purchaser shall deliver to the Company the aggregate purchase price for such Purchaser’s Purchased Shares, paid in accordance with Section 2.2; and

(b)           Related Documents.  Duly executed and delivered copies of the Related Documents to which any Purchaser or any of its Affiliates is a party.

(c)           Other Documents.  All other documents required to be entered into by the Purchasers pursuant to this Agreement or reasonably requested by the Company necessary to consummate the transactions contemplated by this Agreement.

ARTICLE IX

CLOSING

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The consummation of the transactions contemplated by this Agreement are referred to in this Agreement as the “Closing.”  The “Closing Date” will occur on the date hereof, or on such other date as the Parties may agree.  The Closing will take place at the offices of Winston & Strawn LLP, 200 Park Avenue, New York, New York 10166, or at such other place as the parties may agree.

ARTICLE X

MISCELLANEOUS PROVISIONS

Section 10.1.                      Survival.

The respective representations and warranties of the Company and the Purchasers contained in or made pursuant to this Agreement shall survive until the earlier of (i) ninety (90) calendar days following the delivery of the Company’s audited financial statements by the Company’s independent auditors for the fiscal year ended December 31, 2012 and (ii) two (2) years following the Closing.  The representations and warranties of the Company, the Non-Company Parties and the Purchasers contained in or made pursuant to this Agreement shall in no way be affected by (a) any investigation of the subject matter thereof made (or capable of being made) by or on behalf of any party to this Agreement or (b) the knowledge of any breach of any Party.  Notwithstanding anything to the contrary contained herein, (x) the Company Fundamental Representations, the Non-Company Party Representations and the Purchaser Fundamental Representations shall survive the Closing indefinitely, (y) the Statutory Representations shall survive the Closing until 60 days after the expiration of the applicable statute of limitations and (z) the covenants contained in or made pursuant to this Agreement shall survive the Closing until fully performed pursuant to their terms.

Section 10.2.                      Indemnification.

(a)           Indemnification by the Company.

(i)              Subject to the limitations set forth in Section 10.2(f) hereof, effective at and after the Closing, the Company shall indemnify the Purchaser Group against, and agree to hold each of them harmless from, any and all Losses incurred or suffered by any such Person arising out of or in connection with (i) any misrepresentation or breach of the Company General Representations (it being understood and agreed that for purposes of determining whether any such inaccuracy or breach has occurred, all such representations and warranties of the Company that are qualified as to materiality or Material Adverse Effect shall be deemed to be not so qualified) or (ii) any breach of any covenant or agreement made or to be performed by the Company pursuant to this Agreement.

(ii)              The Company’s indemnification obligations set forth in Section 10.2(a)(i) hereof shall be satisfied at the option of the Purchasers, in their sole discretion, (a) by the payment in cash to the Purchasers of an amount equal to the indemnifiable Losses or (b) by the issuance of shares of Series C Preferred Stock to the Purchasers in a face amount equal to the amount of the indemnifiable Losses.  In connection with the foregoing, and upon written notice to the Company by the Purchaser Group, the Company agrees to take all actions necessary to issue such shares of Series C Preferred Stock, including authorizing the Certificate of Designations and filing such Certificate of Designations with the Delaware Secretary of State.

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(b)           Indemnification by Resource America and LFC.  Effective at and after the Closing, Resource America and LFC shall, jointly and severally, indemnify the Company against, and agree to hold it harmless from, any and all Losses incurred or suffered by the Company arising out of or in connection with (i) any misrepresentation or breach of any Company Fundamental Representation, (ii) any misrepresentation or breach of any Non-Company Party Representation made by Resource America or LFC, (iii) subject to the limitations set forth in Section 10.2(f) hereof, any misrepresentation or breach of Section 3.12 or Section 3.14 (but solely with respect to the LEAF Financing Contracts) (it being understood and agreed that in the case of clauses (i), (ii) and (iii), for purposes of determining whether any such inaccuracy or breach has occurred, all such representations and warranties that are qualified as to materiality shall be deemed to be not so qualified) or (iv) any breach of any covenant or agreement made or to be performed by Resource America or LFC pursuant to this Agreement.  The indemnification obligations of Resource America and LFC set forth in this Section 10.2(b) shall be satisfied by the payment in cash to the Company of an amount equal to the indemnifiable Losses.

(c)           Indemnification by the RCC Parties.  Effective at and after the Closing, the RCC Parties shall, jointly and severally, indemnify the Company against, and agree to hold it harmless from, any and all Losses incurred or suffered by the Company arising out of or in connection with (i) any misrepresentation or breach of any Non-Company Party Representation made by any RCC Party (it being understood and agreed that in the case of this clause (i), for purposes of determining whether any such inaccuracy or breach has occurred, all such representations and warranties that are qualified as to materiality shall be deemed to be not so qualified) or (ii) any breach of any covenant or agreement made or to be performed by any RCC Party pursuant to this Agreement.  The indemnification obligations of the RCC Parties set forth in this Section 10.2(c) shall be satisfied by the payment in cash to the Company of an amount equal to the indemnifiable Losses.

(d)           Indemnification by the Purchasers.  Subject to the limitations set forth in Section 10.2(f) hereof, effective at and after the Closing, the Purchasers shall, jointly and severally, indemnify the Company against, and agree to hold each of them harmless from, any and all Losses incurred or suffered by the Company Parties arising out of or in connection with (i) any misrepresentation or breach of the Purchaser Representations (it being understood and agreed that for purposes of determining whether any such inaccuracy or breach has occurred, all such representations and warranties of the Purchasers that are qualified as to materiality shall be deemed to be not so qualified) or (ii) any breach of any covenant or agreement made or to be performed by the Purchasers pursuant to this Agreement.  The indemnification obligations of the Purchaser Group set forth in this Section 10.2(d) shall be satisfied by the payment in cash to the Company of an amount equal to the indemnifiable Losses.

(e)           Procedures.

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(i)              Third Party Claims.  In order for a Person (the “Indemnified Party”) to be entitled to any indemnification provided for under this Section 10.2 in respect of, arising out of or involving a claim made by any Person against the indemnified party (a “Third Party Claim”), such Indemnified Party must notify the Person providing indemnification under this Section 10.2 (the “Indemnifying Party”) in writing (and in reasonable detail) of such Third Party Claim promptly following receipt by such Indemnified Party of notice of such Third Party Claim; provided, however, that the failure to give such notification shall not affect the indemnification provided hereunder, except to the extent that (and only to the extent that) the Indemnifying Party shall have been actually and materially prejudiced as a result of such failure.  Thereafter, the Indemnified Party shall deliver to the Indemnifying Party, promptly following the Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnified Party relating to such Third Party Claim.

(ii)              Assumption.  If a Third Party Claim is made against an Indemnified Party, the Indemnifying Party shall be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof with counsel selected by the Indemnifying Party, so long as such counsel is not reasonably objected to by the Indemnified Party.  Should the Indemnifying Party so elect to assume the defense of a Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof.  If the Indemnifying Party assumes such defense, the Indemnified Party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party shall control such defense.  The Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has not assumed the defense thereof (other than during any period in which the Indemnified Party shall have failed to give notice of the Third Party Claim as provided above).  Notwithstanding any provision herein to the contrary, the Indemnifying Party will not be entitled to assume control of the defense of such Third Party Claim, and will pay the reasonable fees and expenses of counsel employed by the Indemnified Party, if (i) the Indemnified Party reasonably believes that there exists or could arise a conflict of interest which, under applicable principles of legal ethics, could prohibit a single legal counsel from representing both the Indemnified Party and the Indemnifying Party in connection with such Third Party Claim and (ii) the Indemnifying Party fails to provide reasonable assurance to the Indemnified Party, after being requested in writing by the Indemnified Party, of the Indemnifying Party’s financial capacity and/or intent to defend such Third Party Claim and provide indemnification with respect to such Third Party Claim, if required to do so by the terms of this Agreement.  If the Indemnifying Party chooses to defend or prosecute a Third Party Claim, all of the Indemnified Parties shall reasonably cooperate in the defense or prosecution thereof.  Such cooperation shall include the retention, and (upon the Indemnifying Party’s request) the provision to the Indemnifying Party, of records and information that are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, the cost of which shall constitute Losses.  Whether or not the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying Party’s prior written consent (which consent shall not be unreasonably withheld) except where such settlement, compromise or discharge (a) involves only the payment of money damages, (b) does not impose an injunction or other equitable relief upon the Indemnifying Party, (c) does not contain any term that in any manner affects, restrains or interferes with the business of the Indemnifying Party, (d) does not contain any admission or statement suggesting any wrongdoing or liability on behalf of the Indemnifying Party and (e) includes a complete release of the Indemnifying Party from all liability in connection with  such Third Party Claim.  If the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall agree to any settlement, compromise or discharge of such Third Party Claim that the Indemnifying Party recommends and that by its terms obligates the Indemnifying Party to pay the full amount of the liability in connection with such Third Party Claim and which releases the Indemnified Party completely in connection with such Third Party Claim.

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(iii)              Direct Claims.  In the event any Indemnified Party should have a claim against any Indemnifying Party under this Section 10.2 that does not involve a Third Party Claim being asserted or sought to be collected from such Indemnified Party (a “Direct Claim”), the Indemnified Party shall promptly deliver notice of such Direct Claim to the Indemnifying Party, specifying in reasonable detail the nature of such Direct Claim and the amount asserted (or an estimate thereof).  Subject to Sections 10.1 and 10.2(g) hereof, the failure by any Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnified Party from any liability that it may have to such Indemnified Party under this Section 10.2, except to the extent (and only to the extent that) that the Indemnifying Party demonstrates that it has been actually and materially prejudiced by such failure.  If the Indemnifying Party does not notify the Indemnified Party within 20 Business Days following its receipt of such notice that the Indemnifying Party disputes its liability to the Indemnified Party under this Section 10.2, such Direct Claim specified by the Indemnified Party in such notice shall be conclusively deemed a liability of the Indemnifying Party under this Section 10.2 and the Indemnifying Party shall pay the amount of such liability to the Indemnified Party on demand or, in the case of any notice in which the amount of the Direct Claim (or any portion thereof) is estimated, on such later date when the amount of such Direct Claim (or such portion thereof) becomes finally determined.

(f)           Limitations on Indemnification.

(i)              Notwithstanding anything to the contrary in this Agreement, the Company shall not be liable for any Losses indemnifiable pursuant to Section 10.2(a)(i) hereof (i) unless the aggregate amount of all such Losses indemnifiable pursuant to Section 10.2(a)(i) hereof for which indemnification is sought exceeds on a cumulative basis $500,000 (the “Company Deductible”), and then only to the extent of such excess, (ii) unless the Losses for any individual item for which indemnification is sought exceed $25,000 (any such item not exceeding $25,000 shall not be aggregated for purposes of clause (i) above, but any such items exceeding $25,000 shall be aggregated for purposes of clause (i) above) and (iii) in the aggregate in excess of $4,500,000 above the Company Deductible.

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(ii)              Notwithstanding anything to the contrary in this Agreement, Resource America and LFC shall not collectively be liable for any Losses indemnifiable pursuant to Section 10.2(b)(iii) hereof (i) unless the aggregate amount of all such Losses indemnifiable pursuant to Section 10.2(b)(iii) hereof for which indemnification is sought exceeds on a cumulative basis $250,000 (the “REXI/LFC Deductible”), and then only to the extent of such excess, (ii) unless the Losses for any individual item for which indemnification is sought exceed $25,000 (any such item not exceeding $25,000 shall not be aggregated for purposes of clause (i) above, but any such items exceeding $25,000 shall be aggregated for purposes of clause (i) above) and (iii) in the aggregate in excess of $1,000,000 above the REXI/LFC Deductible.

(iii)              Notwithstanding anything to the contrary in this Agreement, the Purchasers (collectively) shall not be liable for any Losses indemnifiable pursuant to Section 10.2(d)(i) hereof (i) unless the aggregate amount of all such Losses indemnifiable pursuant to Section 10.2(d)(i) hereof for which indemnification is sought exceeds on a cumulative basis $750,000 (the “Purchaser Deductible”), and then only to the extent of such excess, (ii) unless the Losses for any individual item for which indemnification is sought exceed $25,000 (any such item not exceeding $25,000 shall not be aggregated for purposes of clause (i) above, but any such items exceeding $25,000 shall be aggregated for purposes of clause (i) above) and (iii) in the aggregate in excess of $5,500,000 above the Purchaser Deductible.  Notwithstanding anything to the contrary in this Agreement, none of the limitations set forth in this Section 10.2(f)(iii) shall apply to any misrepresentation or breach of the Purchaser Fundamental Representations (it being understood and agreed that for purposes of determining whether any such inaccuracy or breach has occurred, all such representations and warranties of the Purchasers that are qualified as to materiality shall be deemed to be not so qualified).

(g)           Termination of Indemnification.  The obligations to indemnify and hold harmless any Party pursuant to this Section 10.2 shall terminate when the applicable representation or warranty or applicable agreement or covenant terminates pursuant to Section 10.1 hereof.  Notwithstanding the foregoing, if, prior to the close of business on the date of expiration of the Claims Period, an Indemnifying Party shall have been properly notified of a claim for indemnity hereunder and such claim shall not have been finally resolved or disposed of at such date, such claim shall continue to survive and shall remain a basis for indemnity hereunder until such claim is finally resolved or disposed of in accordance with the terms hereof.

(h)           Exclusive Remedy.

(i)              Except with respect to (a) matters covered by Article VI hereof, pursuant to which specific performance shall be available, (b) matters related to the Related Documents and (c) fraud, gross negligence or willful misconduct, the Purchasers right to indemnification under this Agreement constitutes the Purchasers’ sole and exclusive remedy with respect to all claims relating to this Agreement, including (x) any inaccuracy in, or any breach of, any representation or warranty or any covenant or agreement of the Company or any Non-Company Party, as applicable, in this Agreement or in any certificate delivered by the Company or any Non-Company Party, as applicable, and (y) any failure by the Company or any Non-Company Party, as applicable, to perform any covenant, agreement, obligation or undertaking in this Agreement.

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(ii)              The Company Parties’ right to indemnification under this Agreement constitutes the Company Parties’ sole and exclusive remedy with respect to all claims relating to this Agreement, including (i) any inaccuracy in, or any breach of, any representation or warranty or any covenant or agreement of the Purchasers in this Agreement or in any certificate delivered by the Purchasers and (ii) any failure by the Purchasers to perform any covenant, agreement, obligation or undertaking in this Agreement.

(i)           Any indemnification payment made hereunder shall be treated as an adjustment to the aggregate purchase price paid in respect of the Purchased Shares.

Section 10.3.                      Notices.

All notices, communications and deliveries under this Agreement will be made in writing signed by or on behalf of the party making the same, will specify the Section under this Agreement pursuant to which it is given or being made, and will be delivered personally or by facsimile or other electronic transmission or sent by registered or certified mail (return receipt requested) or by next day courier (with evidence of delivery and postage and other fees prepaid) as follows:

To the Company: LEAF Commercial Capital, Inc.

One Commerce Square

2005 Market Street, 14th Floor

Philadelphia, Pennsylvania 19103

Email: cdement@LEAFnow.com

Facsimile: (215) 640-6330

Attn: Crit DeMent

with a copy (which shall not constitute notice) to:

Ballard Spahr LLP

1735 Market Street, 51st Floor

Philadelphia, Pennsylvania 19103

Email: guarcini@ballardspahr.com

Fax:  (215) 864-8999

Attn: Gerald J. Guarcini

To LFC:                                  c/o LEAF Commercial Capital, Inc.

One Commerce Square

2005 Market Street, 15th Floor

Philadelphia, Pennsylvania 19103

Email: cdement@LEAFnow.com

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Facsimile: (215) 640-6330

Attn: Crit DeMent

with a copy (which shall not constitute notice) to:

Ballard Spahr LLP

1735 Market Street, 51st Floor

Philadelphia, Pennsylvania 19103

Email: guarcini@ballardspahr.com

Fax:  (215) 864-8999

Attn: Gerald J. Guarcini

To the RCC Parties:                 c/o Resource Capital Corp.

712 Fifth Avenue, 12th Floor

New York, NY  10019

Attn:  David Bryant

with a copy (which shall not constitute notice) to:

Covington & Burling LLP

620 Eighth Avenue

The New York Times Building

New York, New York 10018

Email: sinfante@cov.com

Fax: (646) 441-9039

Attn: Stephen A. Infante

To Resource America:             Resource America, Inc.

One Crescent Drive, Suite 203

Navy Yard Corporate Center

Philadelphia, PA  19112

Attn:  Thomas Elliott

To any Purchaser:                    c/o Eos Partners, L.P.

320 Park Avenue

New York, New York  10022

Email: bmoore@eospartners.com

Facsimile: (212) 832-5815

Attn:  Brendan Moore

with a copy (which shall not constitute notice) to:

Winston & Strawn LLP

200 Park Avenue

New York, New York 10166

Email: bvaiana@winston.com

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Fax: (212) 294-4700

Attn: Bradley C. Vaiana

or to such other representative or at such other address of a Party as such Party may furnish to the other Parties in writing.  Any notice which is delivered personally or by facsimile or other electronic transmission in the manner provided herein shall be deemed to have been duly given to the party to whom it is directed upon actual receipt by such party or its agent.  Any notice which is addressed and mailed in the manner herein provided shall be conclusively presumed to have been duly given to the party to which it is addressed at the close of business, local time of the recipient, on the fourth Business Day after the day it is so placed in the mail (or on the first Business Day after placed in the mail if sent by overnight courier) or, if earlier, the time of actual receipt.

Section 10.4.                      Assignment; Successors in Interest.

No assignment or transfer by any party of such party’s rights and obligations under this Agreement will be made except with the prior written consent of the other Parties to this Agreement; provided, however, that any Purchaser may assign any or all of its rights, obligations and interests hereunder without any such written consent to any Affiliate of such Purchaser.  This Agreement will be binding upon and will inure to the benefit of the Parties and their successors and permitted assigns, and any reference to a party will also be a reference to a successor or permitted assign.

Section 10.5.                      Number; Gender.

Whenever the context so requires, the singular number will include the plural and the plural will include the singular, and the gender of any pronoun will include the other genders.

Section 10.6.                      Captions.

The titles, captions and table of contents contained in this Agreement are inserted in this Agreement only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision of this Agreement.  Unless otherwise specified to the contrary, all references to Articles and Sections are references to Articles and Sections of this Agreement and all references to schedules are references to schedules to this Agreement.

Section 10.7.                      Controlling Law.

This Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of New York without reference to its choice of law rules (other than Section 5-1401 of the New York General Obligations Law).

Section 10.8.                      Consent to Jurisdiction, Etc.

Except as otherwise expressly provided in this Agreement, the Parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated herebyshall be brought only to the exclusive jurisdiction of the courts of the State of New York or the federal courts located in the State of New York, and each of the Parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  The Parties agree that, after a legal dispute is before a court as specified in this Section 10.9, and during the pendency of such dispute before such court, all actions, suits, or proceedings with respect to such dispute or any other dispute, including without limitation, any counterclaim, cross-claim or interpleader, shall be subject to the exclusive jurisdiction of such court.  Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court.  Each party hereto agrees that a final judgment in any action, suit or proceeding described in this Section 10.9 after the expiration of any period permitted for appeal and subject to any stay during appeal shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Laws.

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Section 10.9.                      WAIVER OF JURY TRIAL.

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 10.10.                   Expenses.

The Company shall bear the cost of all investment banking, legal and accounting fees, including a $1,500,000 investment banking fee payable to FBR Capital Markets, incurred on behalf of the Company and its shareholders in connection with, or related to, the transactions contemplated by this Agreement, in an aggregate amount not to exceed $2,000,000.  In addition, the Company shall reimburse the Purchasers at Closing for all fees and expenses incurred by the Purchasers in connection with the transactions contemplated by this Agreement, including due diligence, legal fees, accounting fees, travel expenses and other out-of-pocket expenses.

Section 10.11.                    Severability.

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by Law, the Parties waive any provision of Law which renders any such provision prohibited or unenforceable in any respect.

Section 10.12.                    Counterparts; Facsimile Signatures.

This Agreement may be executed and delivered by facsimile or portable document format (.pdf) in two (2) or more counterparts, each of which will be deemed an original, and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one (1) of such counterparts.

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Section 10.13.                    Enforcement of Certain Rights.

Nothing expressed or implied in this Agreement is intended, or will be construed, to confer upon or give any Person other than the Parties, and their successors or permitted assigns, any rights, remedies or Liabilities under or by reason of this Agreement, or result in such Person being deemed a third party beneficiary of this Agreement.

Section 10.14.                    Amendments; Waivers.

Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Parties hereto; provided, however, (i) any Purchaser may execute an amendment or waiver on behalf of all of the Purchasers, (ii) either Resource America or LFC may execute an amendment or waiver on behalf of such other party and (iii) either RCC Party may execute an amendment or waiver on behalf of such other RCC Party.  A waiver by any party of the performance of any act will not constitute a waiver of the performance of any other act or an identical act required to be performed at a later time.

Section 10.15.                    Integration.

This Agreement and the documents executed pursuant to this Agreement supersede all negotiations, agreements and understandings (both written and oral) among the Parties with respect to the subject matter of this Agreement.

Section 10.16.                    Cooperation Following the Closing.

Following the Closing, each of the Parties shall deliver to the others such further information and documents and shall execute and deliver to the others such further instruments and agreements as the other party shall reasonably request to consummate or confirm the transactions provided for in this Agreement, to accomplish the purpose of this Agreement or to assure to the other party the benefits of this Agreement.

Section 10.17.                    Interpretation; Construction.

(a)           The term “Agreement” means this agreement together with all schedules and exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof.  Unless the context otherwise requires, words importing the singular shall include the plural, and vice versa.  The use in this Agreement of the term “including” means “including, without limitation.” The words “herein”, “hereof’, “hereunder”, “hereby”, “hereto”, “hereinafter”, and other words of similar import refer to this Agreement as a whole, including the schedules and exhibits, as the same may from time to time be amended, modified, supplemented or restated, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in this Agreement.  All references to articles, sections, subsections, clauses, paragraphs, schedules and exhibits mean such provisions of this Agreement and the schedules and exhibits attached to this Agreement, except where otherwise stated.  The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require.

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(b)           The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any party.  Any fact or item disclosed on any schedule or in the Due Diligence Memorandum to this Agreement shall be deemed disclosed on all other schedules, as applicable to such Party, to this Agreement to which such fact or item may reasonably apply so long as such disclosure is in sufficient detail to enable a party hereto to identify the facts or items to which it applies.  Any fact or item disclosed on any schedule or in the Due Diligence Memorandum hereto shall not by reason only of such inclusion be deemed to be material and shall not be employed as a point of reference in determining any standard of materiality under this Agreement.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed, as of the date first above written.

COMPANY

LEAF COMMERCIAL CAPITAL, INC.

By:   /s/ Crit DeMent

 Name:  Crit DeMent

 Title:     CEO

LFC

LEAF FINANCIAL CORPORATION

By:   /s/ Crit DeMent

 Name:  Crit DeMent

 Title:     CEO

[Signature Page to Stock Purchase Agreement]

RCC PARTIES

RESOURCE TRS, INC.

By:   /s/ Jeffrey D. Blomstrom

 Name:  Jeffrey D. Blomstrom

 Title:    Seinor Vice President

RESOURCE CAPITAL CORP.

By:   /s/ Jeffrey D. Blomstrom

 Name:  Jeffrey D. Blomstrom

 Title:    Seinor Vice President

RESOURCE AMERICA

RESOURCE AMERICA, INC.

By:   /s/ Michael S. Yecies

 Name:  Michael S. Yecies

 Title:    Seinor Vice President, Chief Legal Officer and Secretary

[Signature Page to Stock Purchase Agreement]

PURCHASERS
EOS PARTNERS, L.P.,
a Delaware limited partnership
By:	EOS GENERAL, L.L.C.,
	a Delaware limited liability company,
	its general partner
	By:	/s/ Steven M. Friedman
		Name:  Steven M. Friedman
		Title:     Manager
EOS CAPITAL PARTNERS III, L.P.,
a Delaware limited partnership
By:	ECP GENERAL III, L.P.,
	a Delaware limited partnership,
	its general partner
	By:	ECP III, LLC,
		a Delaware limited liability company,
		its general partner
		By:	/s/ Steven M. Friedman
			Name:  Steven M. Friedman
			Title:     President
EOS CAPITAL PARTNERS IV, L.P.,
a Delaware limited partnership
By:	ECP GENERAL IV, L.P.,
	a Delaware limited partnership,
	its general partner
	By:	ECP IV, LLC,
		a Delaware limited liability company,
		its general partner
		By:	/s/ Steven M. Friedman
			Name:  Steven M. Friedman
			Title:     President

[Signature Page to Stock Purchase Agreement]

Schedule A

Purchasers	Purchased Shares	Purchase Price
Eos Capital Partners III, L.P. c/o Eos Partners, L.P. 320 Park Avenue New York, New York  10022 Telephone:                    (212) 832-5800 Facsimile:                      (212) 832-5815 Attn:  Brendan Moore	12,950	$12,950,000
Eos Capital Partners IV, L.P. c/o Eos Partners, L.P. 320 Park Avenue New York, New York  10022 Telephone:                    (212) 832-5800 Facsimile:                      (212) 832-5815 Attn:  Brendan Moore	28,050	$28,050,000
Eos Partners, L.P. c/o Eos Partners, L.P. 320 Park Avenue New York, New York  10022 Telephone:                    (212) 832-5800 Facsimile:                      (212) 832-5815 Attn: Brendan Moore	9,000	$ 9,000,000

Schedule B

Knowledge

Crit DeMent

Miles Herman

Robert Moskovitz

Brian Kestenbaum

Exhibit A

CERTIFICATE OF DESIGNATIONS

OF

SERIES C REDEEMABLE PREFERRED STOCK

OF

LEAF COMMERCIAL CAPITAL, INC.

PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW

OF THE STATE OF DELAWARE

The undersigned officer of LEAF Commercial Capital, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies that the resolutions set forth below were duly adopted by the written consent of the Board of Directors of the Corporation in lieu of a meeting pursuant to authority conferred upon the Board of Directors by the provisions of the Amended and Restated Certificate of Incorporation and the Bylaws of the Corporation.

The Board of Directors adopted the resolutions set forth below authorizing the designation of [_____] shares of a new class of stock designated Series C Redeemable Preferred Stock, and fixing the relative powers, preferences, rights, qualifications, limitations and restrictions of the Series C Redeemable Preferred Stock.

The resolutions adopted by the Board of Directors are as follows:

RESOLVED, that the designation of [_____] shares of the Corporation’s [______] authorized shares of preferred stock, par value $0.001 per share, as Series C Redeemable Preferred Stock (the “Series C Preferred Stock”) is hereby authorized and approved; and

RESOLVED, that notwithstanding anything set forth in the Corporation’s Amended and Restated Certificate of Incorporation (the “Certificate”) to the contrary, the number, powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions of the Series C Preferred Stock are to be fixed as follows:

1.           Definitions.  Capitalized terms used and not otherwise defined herein have the meanings set forth in the Certificate or in Section 7 hereof.

2.           Designation and Rank.  [_____] shares of preferred stock, par value $0.001 per share, of the Corporation are hereby constituted as a series of preferred stock of the Corporation designated as “Series C Redeemable Preferred Stock.”

3.           Dividends.

(a)           From and after the date hereof, the Series C Holders, in preference to holders of (a) the Corporation’s Series A Participating Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), (b) the Corporation’s Series B Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), (c) the Corporation’s Series D Redeemable Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock”), (d) the Corporation’s common stock, par value $0.001 per share (the “Common Stock”) and (e) any other class or series of the Corporation’s Equity Securities hereafter created ranking junior to the Series C Preferred Stock (collectively, “Junior Stock”), shall be entitled to receive cumulative dividends (accruing from and after the date of issuance of such share of Series C Preferred Stock) at the Series C Dividend Rate on the Series C Preference Amount, from time to time on such share, which shall compound annually on each outstanding share of Series C Preferred Stock, whether or not such dividends are earned or declared and whether or not sufficient funds are legally available therefor (as adjusted for any stock dividends, combinations, splits, recapitalizations and related transactions with respect to such share).

(b)           So long as any share of Series C Preferred Stock shall be outstanding, no dividend, whether in cash or property, shall be paid or declared, nor shall any other distribution be made, on any Junior Stock, nor shall any shares of any Junior Stock of the Corporation be purchased, redeemed or otherwise acquired for value by the Corporation or any Subsidiary thereof (except for acquisitions of Equity Securities by the Corporation pursuant to agreements which permit the Corporation to repurchase such shares upon termination of services to the Corporation at a price per share determined in accordance with such agreements) until payment in full of the Series C Preference Amount.  In the event a dividend or other distribution is paid or declared on the Series C Preferred Stock, and such dividend or distribution is insufficient to pay the Series C Holders the full Series C Preference Amount to which such holder shall be entitled, the Series C Holders shall share pro rata in any such dividend or distribution in accordance with their respective Series C Preference Amounts.

4.           Liquidation.

(a)           Upon a Liquidation, after payment or provision for payment of the debts and other liabilities of the Corporation, the Series C Holders shall be entitled to receive, out of the remaining assets of the Corporation available for distribution to its stockholders, with respect to each share of Series C Preferred Stock, an amount equal to the Series C Preference Amount before any distribution shall be made to the holders of Series A Preferred Stock, Series B Preferred Stock, Series D Preferred Stock, Common Stock or any other class or series of Junior Stock.  If upon any Liquidation the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the Series C Holders the full Series C Preference Amount to which such holder shall be entitled, the Series C Holders shall share pro rata in any distribution of assets in accordance with their respective Series C Preference Amounts.

(b)           In the event of a Liquidation involving the sale of shares by stockholders of the Corporation or merger, consolidation or similar stock transaction, the “remaining assets of the Corporation available for distribution” shall be deemed to be the aggregate consideration to be paid to all stockholders participating in such Liquidation.  In connection with such a Liquidation, the Corporation shall, concurrently with the consummation of such Liquidation, cause the redemption of all outstanding shares of Series C Preferred Stock for an amount in cash equal to the applicable amount payable with respect to such shares of Series C Preferred Stock under this Section 4 (subject to the priorities and limitations set forth herein).

(c)           If any or all of the proceeds payable to the stockholders of the Corporation in connection with a Liquidation are in a form other than cash or marketable securities, the fair market value of such consideration shall be determined in good faith by the Board of Directors of the Corporation (the “Board”) or, upon the request of any member of the Board, based upon the value as determined by an independent appraiser that is acceptable to the Board.

5.           Optional Redemption.

(a)           Any and all outstanding shares of Series C Preferred Stock shall be subject to optional redemption (“Series C Optional Redemption”) by the Corporation (subject to the restrictions imposed herein and by the DGCL) at any time after the issuance of the Series C Preferred Stock (any such date the Corporation exercises such redemption right being referred to henceforth as an “Series C Optional Redemption Date”) at a purchase price per share equal to the Series C Preference Amount as of any such Series C Optional Redemption Date (such amount being referred to henceforth as the “Series C Redemption Price”).

(b)           The Series C Optional Redemption shall be accomplished using the procedures set forth below:

(i)           The Corporation shall give notice to the holder of the shares of Series C Preferred Stock to be redeemed (the “Series C Optional Redemption Shares”) as required by the DGCL.  Any notice provided by the Corporation shall contain the information required by the DGCL.  If the Corporation exercises its right to effect a Series C Optional Redemption in accordance with this Section 5, the Corporation may redeem all or any portion of the shares of Series C Preferred Stock then outstanding.  The Series C Optional Redemption Shares shall be redeemed upon payment by the Corporation to the holder of such Series C Optional Redemption Shares of the Series C Redemption Price applicable to such Series C Optional Redemption Shares as set forth in Section 5(a).  Any Series C Optional Redemption hereunder shall be subject to restrictions imposed by the DGCL regarding the circumstances under which such Series C Optional Redemption may be effected.

(ii)           If the Corporation redeems less than all of the outstanding shares of Series C Preferred Stock pursuant to this Section 5, the Corporation shall redeem shares of Series A Preferred Stock pro rata in accordance with the number of shares of Series C Preferred Stock then held by the Series C Holders.

(iii)           To facilitate the optional redemption of any shares of Series C Preferred Stock as provided in Section 5(a), the Board shall be authorized to cause the transfer books of the Corporation to be closed not more than sixty (60) days prior to the Series C Optional Redemption Date.  From and after the Series C Optional Redemption Date, all rights of the holder thereof as a stockholder of the Corporation with respect to the Series C Optional Redemption Shares redeemed, except the right to receive the Series C Redemption Price, shall cease and terminate.

(iv)           The holder shall be entitled to receive the Series C Redemption Price upon actual delivery to the Corporation or to such other entity as may be designated by the notice referred to in subsection (i) of this Section 5 of certificates for the number of shares to be redeemed, duly endorsed in blank or accompanied by proper instruments of assignment and transfer duly endorsed in blank.  The Series C Preferred Stock redeemed pursuant to the provisions of this Section may, in the sole discretion of the Board, be held in the treasury of the Corporation or retired and canceled and given the status of authorized and unissued Series C Preferred Stock.

(v)           No sinking fund will be created for the redemption or purchase of the shares of Series C Preferred Stock.

6.           Voting Rights.  Except as set forth herein or as otherwise required by applicable law, each outstanding share of Series C Preferred Stock shall not be entitled to vote on any matter on which the stockholders of the Corporation shall be entitled to vote, and shares of Series C Preferred Stock shall not be included in determining the number of shares voting or entitled to vote on any such matters; provided, however, that the holders of Series C Preferred Stock shall have the right to vote as a separate class on any amendment of this Section 6 and on any amendment, repeal or modification of any provision of this Certificate of Designations or the Certificate that adversely affects the powers, preferences or special rights of the Series C Holders.  Any action to be taken by a vote of the Series C Preferred Stock shall be authorized by the affirmative vote of the holders of a majority of the shares of Series C Preferred Stock.

7.           Certain Definitions.

(a)           “Series C Dividend Rate” means a cumulative per annum rate equal to eight percent (8%).

(b)           “Series C Holder” means a holder of shares of Series C Preferred Stock.

(c)           “Series C Original Stated Amount” means $1,000 per share of Series C Preferred Stock.

(d)           “Series C Preference Amount” means, as to each share of Series C Preferred Stock that is issued and outstanding, an amount equal to the sum of (i) the Series C Original Stated Amount and (ii) all accrued and unpaid dividends added to the Series C Original Stated Amount which shall accrue from the date of issuance thereof in accordance with Section 3 (as adjusted for any stock dividends, combinations, splits, recapitalizations and related transactions with respect to such shares).

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be been signed by [___________], its [___________], and attested by [___________], its [___________], whereby said [___________]affirms, under penalties of perjury, that this Certificate of Designations is the act and deed of the Corporation and that the facts stated herein are true, this [___] day of [___________], 20[__].

LEAF COMMERCIAL CAPITAL, INC.

By:       

Name:

Title:

Attest:

By:       __________________________

Name:

            Title:

EX-99.2

EXHIBIT 99.2

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

LEAF COMMERCIAL CAPITAL, INC.

The undersigned natural person of at least 18 years of age, Crit DeMent, being the Chief Executive Officer of LEAF Commercial Capital, Inc., a corporation organized and existing under the laws of the State of Delaware, on behalf of said corporation, hereby certifies as follows:

FIRST:  The name of the corporation (hereinafter the “Corporation”) is LEAF Commercial Capital, Inc., which is the name under which the corporation was originally incorporated. The date of filing the original certificate of incorporation with the Secretary of State of the State of Delaware is December 13, 2011.

SECOND:  The Certificate of Incorporation of the Corporation as in effect on the date hereof is hereby amended and restated in its entirety as set forth on Exhibit A hereto (the “Restated Certificate”).

THIRD:  Said Restated Certificate was duly adopted by the Board of Directors of the Corporation by unanimous written consent in lieu of a meeting thereof in accordance with the provisions of Sections 141(f), 242 and 245 of Title 8 of the General Corporation Law of the State of Delaware (the “DGCL”), and by the stockholders of the Corporation by written consent in lieu of a meeting thereof in accordance with Sections 228(a), 242 and 245 of the DGCL.

IN WITNESS WHEREOF, I have executed this Certificate this 16th day of November, 2011.

/s/ Crit DeMent

       Crit DeMent, Chief Executive Officer

Signature Page to LEAF Commercial Capital, Inc.

Amended and Restated Certificate of Incorporation

EXHIBIT A

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

LEAF COMMERCIAL CAPITAL, INC.

ARTICLE I

NAME

The name of the Corporation (herein called the “Corporation”) is LEAF Commercial Capital, Inc.

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the registered office of the Corporation in the State of Delaware is located at 1679 S. Dupont Hwy., Suite 100, Dover, Kent County, Delaware 19901. The name of the registered agent of the Corporation at such address is Registered Agent Solutions, Inc.

ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

ARTICLE IV

CAPITAL STOCK

1.           Authorized Shares. The Corporation shall be authorized to issue 338,577 shares of all classes of capital stock, consisting of (i) 200,000 shares of Common Stock, $0.001 par value (the “Common Stock”), and (ii) 138,577 shares of preferred stock, $0.001 par value per share (the “Preferred Stock”), (w) 81,341 shares of which shall be designated Series A Participating Preferred Stock (the “Series A Preferred Stock”), (x) 4,872 shares of which shall be designated Series B Redeemable Preferred Stock (the “Series B Preferred Stock”), (y) 2,364 shares of which shall be designated Series D Redeemable Preferred Stock (the “Series D Preferred Stock”) and (z) 50,000 shares of which shall be available for designation in one or more classes or series pursuant to Section 3(b) below (the “Undesignated Preferred Stock”).

2.           Stock Split.  Simultaneously with the effective date (the “Effective Time”) of the filing of this Amended and Restated Certificate of Incorporation, as amended, restated, modified or otherwise supplemented from time to time (this “Certificate”), each share of Common Stock issued and outstanding immediately prior to the Effective Time shall automatically and without any action on the part of the holder thereof, be split and divided into 4.977 shares of Common Stock which the Corporation shall be authorized to issue immediately subsequent to the Effective Time.

3.           Capital Stock.

(a)           Common Stock. Each share of Common Stock shall be identical in all respects and for all purposes and entitled to (i) one vote in all proceedings in which action may or is required to be taken by stockholders of the Corporation, (ii) participate equally in all dividends payable with respect to the Common Stock, as, if and when declared by the Board of Directors of the Corporation (the “Board”) subject to any rights and preferences in favor of any class or series of Preferred Stock and (iii) share ratably in all distributions of assets of the Corporation in the event of any voluntary or involuntary liquidation, or winding up of the affairs of the Corporation, subject to any rights and preferences in favor of any class or series of Preferred Stock.

(b)           Preferred Stock.

(i)           With respect to the shares of Undesignated Preferred Stock as of the date hereof, the Board shall have authority to the fullest extent permitted under the DGCL, but subject to all contractual restrictions to which it is bound, to adopt by resolution from time to time one or more certificates of designation providing for the designation of one or more series of Preferred Stock, and such designations, limitations, voting rights (if any) and restrictions thereof, and to fix or alter the number of shares comprising any such series, subject to any requirements of the DGCL, all contractual restrictions by which the Corporation is bound and this Certificate.

(ii)           The authority of the Board with respect to each series of Preferred Stock shall include, without limitation of the foregoing, the right to determine and fix the following preferences and powers, which may vary as between different series of Preferred Stock:

(A)           the distinctive designation of such series and the number of shares to constitute such series;

(B)           the rate at which any dividends on the shares of such series shall be declared and paid, or set aside for payment, whether dividends at the rate so determined shall be cumulative or accruing, and whether the shares of such series shall be entitled to any participating or other dividends in addition to dividends at the rate so determined, and if so, on what terms;

(C)           the right or obligation, if any, of the Corporation to redeem shares of the particular series of Preferred Stock and, if redeemable, the price, terms and manner of such redemption;

(D)           the special and relative rights and preferences, if any, and the amount or amounts per share, which the shares of such series of Preferred Stock shall be entitled to receive upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation;

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(E)           the terms and conditions, if any, upon which shares of such series shall be convertible into, or exchangeable for, shares of capital stock of any other series, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any;

(F)           the obligation, if any, of the Corporation to retire, redeem or purchase shares of such series pursuant to a sinking fund or fund of a similar nature or otherwise, and the terms and conditions of such obligation;

(G)           voting rights, if any, including special voting rights with respect to the election of directors and matters adversely affecting any series of Preferred Stock;

(H)           limitations, if any, on the issuance of additional shares of such series or any shares of any other series of Preferred Stock; and

(I)           such other preferences, powers, qualifications, special or relative rights and privileges thereof as the Board, by the vote of the members of the Board then in office acting in accordance with this Certificate, or any Preferred Stock, may deem advisable and are not inconsistent with law, the provisions of this Certificate or the provisions of any certificate of designations.

4.           Dividends.

(a)           Series A Preferred Stock.

(i)           From and after the date hereof, the Series A Holders in preference to the holders of any other class or series of the Corporation’s Equity Securities (“Junior Stock”), shall be entitled to receive cumulative dividends (accruing from and after the date of issuance of such share of Series A Preferred Stock) at the Series A Dividend Rate on the Series A Preference Amount, from time to time on such share, which shall compound annually on each outstanding share of Series A Preferred Stock, whether or not such dividends are earned or declared and whether or not sufficient funds are legally available therefor.

(ii)           So long as any share of Series A Preferred Stock shall be outstanding, no dividend, whether in cash or property, shall be paid or declared, nor shall any other distribution be made, on any series or class of the Corporation’s Junior Stock, nor shall any shares of any Junior Stock of the Corporation be purchased, redeemed, or otherwise acquired for value by the Corporation or any Subsidiary thereof (except for acquisitions of Equity Securities by the Corporation pursuant to agreements which permit the Corporation to repurchase such shares upon termination of services to the Corporation at a price per share determined in accordance with such agreements) until payment in full of the Series A Preference Amount to the Series A Holders.  In the event a dividend or other distribution is paid or declared on the Series A Preferred Stock, and such dividend or distribution is insufficient to pay the Series A Holders the full Series A Preference Amount to which such holder shall be entitled, the Series A Holders shall share pro rata in any such dividend or distribution in accordance with their respective Series A Preference Amounts.

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(b)           Series B Preferred Stock.

(i)           Subject to the rights, powers and preferences applicable to the Series A Preferred Stock, from and after the date hereof, the Series B Holders, in preference to the holders of any other Junior Stock of the Corporation, shall be entitled to receive cumulative dividends (accruing from and after the date of issuance of such share of Series B Preferred Stock) at the Series B Dividend Rate on the Series B Preference Amount, from time to time on such share, which shall compound annually on each outstanding share of Series B Preferred Stock, whether or not such dividends are earned or declared and whether or not sufficient funds are legally available therefor.

(ii)           Subject to the rights, powers and preferences applicable to the Series A Preferred Stock, so long as any share of Series B Preferred Stock shall be outstanding, no dividend, whether in cash or property, shall be paid or declared, nor shall any other distribution be made, on any other series or class of the Corporation’s Junior Stock, nor shall any shares of any other Junior Stock of the Corporation be purchased, redeemed, or otherwise acquired for value by the Corporation or any Subsidiary thereof (except for acquisitions of Equity Securities by the Corporation pursuant to agreements which permit the Corporation to repurchase such shares upon termination of services to the Corporation at a price per share determined in accordance with such agreements) until payment in full of the Series B Preference Amount to the Series B Holders.  In the event a dividend or other distribution is paid or declared on the Series B Preferred Stock, and such dividend or distribution is insufficient to pay the Series B Holders the full Series B Preference Amount to which such holder shall be entitled, the Series B Holders shall share pro rata in any such dividend or distribution in accordance with their respective Series B Preference Amounts.

(c)           Common Stock.  Subject to the rights, powers and preferences applicable to any series of Preferred Stock outstanding at any time, the holders of Common Stock shall be entitled to receive dividends when, as and if declared by the Board out of funds legally available therefor at such times and in such amounts as the Board may determine in its sole discretion.  In the event that any dividend or distribution of any asset is declared or paid on the Common Stock, the holders of Series A Preferred Stock shall be entitled to participate in such dividend or distribution pro rata in accordance with the number of shares of Common Stock into which such shares of Series A Preferred Stock are then convertible pursuant to Section 7 hereof.

(d)           Notwithstanding anything to the contrary contained herein, no dividend on Preferred Stock or Common Stock shall be declared by the Board or paid or set aside for payment by the Corporation at such time if such declaration or payment shall be restricted or prohibited by law.

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5.           Liquidation.

(a)           Upon a Liquidation, after payment or provision for payment of the debts and other liabilities of the Corporation, the Series A Holders and the Series D Holders shall be entitled to receive, pari passu out of the remaining assets of the Corporation available for distribution to its stockholders, with respect to, as applicable, each share of Series A Preferred Stock or Series D Preferred Stock, an amount equal to, as applicable, the Series A Preference Amount and the Series D Preference Amount, before any distribution shall be made to the holders of the Series B Preferred Stock, the Common Stock, or any other class or series of Junior Stock. If upon any Liquidation the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the Series A Holders and the Series D Holders the full Series A Preference Amount and Series D Preference Amount, as applicable, to which each such holder shall be entitled, the Series A Holders and the Series D Holders shall share pro rata in any distribution of assets in accordance with their respective Series A Preference Amounts and Series D Preference Amounts, as applicable.

(b)           Upon a Liquidation, after payment or provision for payment of the debts and other liabilities of the Corporation and after payment in full of the Series A Preference Amount and the Series D Preference Amount, the Series B Holders shall be entitled to receive, out of the remaining assets of the Corporation available for distribution to its stockholders, with respect to each share of Series B Preferred Stock, an amount equal to the Series B Preference Amount, before any distribution shall be made to the holders of the Common Stock or any other class or series of Junior Stock. If upon any Liquidation the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the Series B Holders the full Series B Preference Amount to which such holder shall be entitled, the Series B Holders shall share pro rata in any distribution of assets in accordance with their respective Series B Preference Amounts.

(c)           Upon a Liquidation, after payment in full of the Series A Preference Amount, the Series D Preference Amount and the Series B Preference Amount, the Series A Holders (on the basis of the number of shares of Common Stock into which the Series A Preferred Stock are then convertible pursuant to Section 7 hereof immediately prior to such Liquidation) and the holders of Common Stock shall be entitled to receive, prorata, the remaining assets of the Corporation available for distribution to its stockholders.

(d)           In the event of a Liquidation involving the sale of shares by stockholders of the Corporation or merger, consolidation or similar stock transaction, the “remaining assets of the Corporation available for distribution” shall be deemed to be the aggregate consideration to be paid to all stockholders participating in such Liquidation.

(e)           If any or all of the proceeds payable to the stockholders of the Corporation in connection with a Liquidation are in a form other than cash or marketable securities, the fair market value of such consideration shall be determined in good faith by the Board or, upon the request of any member of the Board, based upon the value as determined by an independent appraiser that is acceptable to the Board.

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6.           Voting Rights.

(a)           In addition to the rights provided by law, the Series A Preferred Holders shall be entitled to vote on all matters as to which holders of Common Stock shall be entitled to vote, in the same manner and with the same effect as such holders of Common Stock, voting together with the holders of Common Stock as one class (including, without limitation, for purposes of Section 242(b)(2) of the DGCL). Each share of Series A Preferred Stock shall entitle the holder thereof to such number of votes as shall equal the number of shares of Common Stock into which such share of Series A Preferred Stock is then convertible pursuant to Section 7 hereof. The affirmative vote of the holders of a majority of the shares of Series A Preferred Stock and Common Stock, voting together as one class, shall be sufficient to increase or decrease the number of authorized shares of Common Stock (but not below the number of shares at the time outstanding).

(b)           Except as otherwise required by the DGCL, each outstanding share of Series B Preferred Stock and each outstanding share of Series D Preferred Stock shall not be entitled to vote on any matter on which the stockholders of the Corporation shall be entitled to vote (including, without limitation, for purposes of Section 242(b)(2) of the DGCL), and shares of Series B Preferred Stock and Series D Preferred Stock shall not be included in determining the number of shares voting or entitled to vote on any such matters.

7.           Optional Conversion.

(a)           Upon the terms set forth in this Section 7, each Series A Preferred Holder shall have the right, at such holder’s option, at any time and from time to time, to convert each share of Series A Preferred Stock held by such holder into the number of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing (i) the Series A Initial Purchase Price, by (ii) the Conversion Price, as last adjusted and then in effect, by surrender of the certificates representing the shares of Series A Preferred Stock to be converted.

(b)           Any holder of shares of Series A Preferred Stock may exercise the conversion right pursuant to subsection (a) above by delivering to the Corporation the certificate or certificates for the shares to be converted, duly endorsed or assigned in blank or to the Corporation (if required by it), accompanied by written notice stating that the holder elects to convert such shares and stating the name or names (with address) in which the certificate or certificates for the shares of Common Stock are to be issued.  Conversion shall be deemed to have been effected on the date when such delivery is made (the “Conversion Date”).  As promptly as practicable thereafter, the Corporation shall issue and deliver to, or upon the written order of such holder, to the place designated by such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled, and a cash amount in respect of any fractional interest in a share of Common Stock as provided in subsection (c) below. The person in whose name the certificate or certificates for Common Stock are to be issued shall be deemed to have become a stockholder of record on the applicable Conversion Date unless the transfer books of the Corporation are closed on that date, in which event such person shall be deemed to have become a stockholder of record on the next succeeding date on which the transfer books are open, but the Conversion Price shall be that in effect on the Conversion Date. Upon conversion of only a portion of the number of shares covered by a certificate representing shares of the Series A Preferred Stock surrendered for conversion, the Corporation shall issue and deliver to or upon the written order of the holder of the certificate so surrendered for conversion, at the expense of the Corporation, a new certificate covering the number of shares of such Series A Preferred Stock representing the unconverted portion of the certificate so surrendered.

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(c)           Upon conversion, the Corporation (unless otherwise requested by the holder of the shares of Series A Preferred Stock that are the subject of the conversion) will not issue fractional shares of its Common Stock, and shall distribute cash in lieu of such fractional shares. In lieu of any fractional shares of Common Stock that would otherwise be issuable upon the conversion of the shares of the Series A Preferred Stock, the Corporation shall pay to the holder of the Series A Preferred Stock being so converted a cash adjustment in respect of such fractional interest in an amount equal to the then fair market value, as determined in good faith by the Board, of a share of Common Stock multiplied by such fractional interest.

(d)           The Conversion Price shall be subject to adjustment from time to time as follows:

(i)           if, at any time after the date of this Certificate, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, subdivision or split-up, the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of the Series A Preferred Stock shall be increased in proportion to such increase in outstanding shares. The provisions of this clause shall similarly apply to successive combinations or reverse-splits.

(ii)           if, at any time after the date of this Certificate, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock, then, following the record date for such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of the Series A Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. The provisions of this clause shall similarly apply to successive combinations or reverse-splits.

(iii)           All calculations under this Section 7 shall be made to the nearest onehundredth (1/100) of a cent or the nearest one tenth (1/10) of a share, as the case may be.

(iv)           Except in connection with a Liquidation, in the event of any capital reorganization of the Corporation, any reclassification of the stock of the Corporation (other than a change in par value or from no par value to par value or from par value to no par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or any consolidation or merger of the Corporation, each share of Series A Preferred Stock shall, after such reorganization, reclassification, consolidation, or merger, be convertible into the kind and number of shares of

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stock or other securities or property of the Corporation or of the corporation resulting from such consolidation or surviving such merger to which the holder of the number of shares of Common Stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation or merger) upon conversion of such share of the Series A Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation or merger. The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, consolidations or mergers.

(v)           In any case in which the provisions of this subsection (d) shall require that an adjustment shall become effective immediately after a record date of an event, the Corporation may defer such adjustment until the occurrence of such event (i) issuing to the holder of any share of Series A Preferred Stock converted after such record date and before the occurrence of such event the shares of capital stock issuable upon such conversion by reason of the adjustment required by such event in addition to the shares of capital stock issuable upon such conversion before giving effect to such adjustments, and (ii) paying to such holder any amount in cash in lieu of a fractional share of capital stock pursuant to subsection (c) above; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder’s right to receive such additional shares and such cash.

(e)           Whenever. the Conversion Price shall be adjusted as provided in subsection (d), the Corporation shall make available for inspection during regular business hours, at its principal executive offices or at such other place as may be designated by the Corporation, a statement, signed by its chief executive officer, showing in detail the facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment. The Corporation shall also cause a copy of such statement to be sent by nationally recognized overnight carrier or by first class certified mail, return receipt requested and postage prepaid, to each holder of Series A Preferred Stock at such holder’s address appearing on the Corporation’s records. Where appropriate, such copy may be given in advance and may be included as part of any notice required to be mailed under the provisions of subsection (f) below.

(f)           If the Corporation shall propose to take any action of the types described in subsection (d) above, the Corporation shall give notice to each holder of Series A Preferred Stock, in the manner set forth in subsection (e) above, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place.  Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Conversion Price and the number, kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon conversion of the Series A Preferred Stock.  In the case of any action which would require the fixing of a record date, such notice shall be given at least twenty (20) days prior to the date so fixed, and in case of all other action, such notice shall be given at least thirty (30) days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action.

(g)           The Corporation shall reserve, and at all times from and after the date of this Certificate keep reserved, free from preemptive or similar rights, out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series A Preferred Stock, sufficient shares of Common Stock to provide for the conversion of all outstanding shares of Series A Preferred Stock.

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8.           Mandatory Conversion.

(a)           Upon the consummation of an IPO that is not a Cash Out IPO, each share of Series A Preferred Stock then outstanding shall, by virtue of and simultaneously with such occurrence, be deemed automatically converted into that minimum number of fully paid and nonassessable shares of Common Stock necessary to result in each share of Series A Preferred Stock converting into its Post Conversion Percentage of all Common Stock Equivalents issued and outstanding (excluding “out-of-the-money” stock options) after giving effect to the mandatory conversion set forth in this Section 8(a) immediately prior to the IPO; provided, however, that the total Post Conversion Percentage for all Series A Preferred Stock then outstanding shall in no event exceed 99.9999% of such Common Stock Equivalents.

(b)           Upon the consummation of a Cash Out IPO, the proceeds of which shall be used, in part, to pay in full the Aggregate Series A Preference Amount to the Series A Holders and the Aggregate Series D Preference Amount to the Series D Holders, each share of Series A Preferred Stock then outstanding shall, by virtue of and simultaneously with such occurrence and such payment, be deemed automatically converted into that number of fully paid and nonassessable shares of Common Stock which would be issuable in respect thereof pursuant to Section 7.

(c)           As promptly as practicable after the satisfaction of the condition set forth in Section 8(a) and the delivery to the Corporation of the certificate or certificates for the shares of Series A Preferred Stock which have been converted, duly endorsed or assigned in blank to the Corporation (if required by it), the Corporation shall issue and deliver to or upon the written order of each holder of Series A Preferred Stock, to the place designated by such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled pursuant to Section 8(a) or 8(b) above, and a cash amount in respect of any fractional interest in a share of Common Stock as provided in Section 7(c) above.  The person in whose name the certificate or certificates for Common Stock are to be issued shall be deemed to have become a stockholder of record on the date of such occurrence and on such date the shares of Series A Preferred Stock shall cease to be outstanding, whether or not the certificates representing such shares have been received by the Corporation.

9.           Optional or Mandatory Redemption.

(a)           Series B Preferred Stock.

(i)           Any and all outstanding shares of Series B Preferred Stock shall be subject to optional redemption (“Series B Optional Redemption”) by the Corporation (subject to the restrictions imposed herein and by the DGCL) at any time after the issuance of the Series B Preferred Stock (any such date the Corporation exercises such redemption right being referred to henceforth as a “Series B Optional Redemption Date”) at a purchase price per share equal to the Series B Preference Amount as of any such Series B Optional Redemption Date (such amount being referred to henceforth as the “Series B Redemption Price”).

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(ii)           The Series B Optional Redemption shall be accomplished using the procedures set forth below:

(A)           The Corporation shall give notice to the holder of the shares of Series B Preferred Stock to be redeemed (the “Series B Optional Redemption Shares”) as required by the DGCL.  Any notice provided by the Corporation shall contain the information required by the DGCL.  If the Corporation exercises its right to effect a Series B Optional Redemption in accordance with this Section 9, the Corporation must redeem all, but not less than all, of the outstanding Series B Preferred Stock.  The Series B Optional Redemption Shares shall be redeemed upon payment by the Corporation to the holder of such Series B Optional Redemption Shares of the Series B Redemption Price applicable to such Series B Optional Redemption Shares as set forth in Section 9(a)(i).  Any Series B Optional Redemption hereunder shall be subject to restrictions imposed by the DGCL regarding the circumstances under which such Series B Optional Redemption may be effected.

(B)           To facilitate the optional redemption of any shares of Series B Preferred Stock as provided in Section 9(a)(i), the Board shall be authorized to cause the transfer books of the Corporation to be closed not more than sixty (60) days prior to the Series B Optional Redemption Date.  From and after the Series B Optional Redemption Date, all rights of the holder thereof as a stockholder of the Corporation with respect to the Series B Optional Redemption Shares redeemed, except the right to receive the Series B Redemption Price, shall cease and terminate.

(C)           The holder shall be entitled to receive the Series B Redemption Price upon actual delivery to the Corporation or to such other entity as may be designated by the notice referred to in subsection (A) of this Section of certificates for the number of shares to be redeemed, duly endorsed in blank or accompanied by proper instruments of assignment and transfer duly endorsed in blank.  The Series B Preferred Stock redeemed pursuant to the provisions of this Section may, in the sole discretion of the Board, be held in the treasury of the Corporation or retired and canceled and given the status of authorized and unissued Series B Preferred Stock.

(D)           No sinking fund will be created for the redemption or purchase of the shares of Series B Preferred Stock.

(b)           Series D Preferred Stock.

(i)           Any and all outstanding shares of Series D Preferred Stock shall be subject to optional redemption (“Series D Optional Redemption”) by the Corporation (subject to the restrictions imposed herein and by the DGCL) at any time after the issuance of the Series D Preferred Stock (any such date the Corporation exercises such redemption right being referred to henceforth as a “Series D Optional Redemption Date”) at a purchase price per share equal to the Series D Preference Amount as of any such Series D Optional Redemption Date (such amount being referred to henceforth as the “Series D Optional Redemption Price”).

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(ii)           Any and all outstanding shares of Series D Preferred Stock shall be subject to mandatory redemption (“Series D Mandatory Redemption”) by the Corporation (subject to the restrictions imposed herein and by the DGCL) upon the consummation of an IPO (any such date of the consummation of an IPO being referred to henceforth as a “Series D Mandatory Redemption Date”) at a purchase price per share equal to the Series D Preference Amount as of any such Series D Mandatory Redemption Date (such amount being referred to henceforth as the “Series D Mandatory Redemption Price”).

(iii)           Any Series D Optional Redemption and any Series D Mandatory Redemption, as applicable, shall be accomplished using the procedures set forth below:

(A)           The Corporation shall give notice to the holder of the shares of Series D Preferred Stock to be redeemed (the “Series D Redemption Shares”) as required by the DGCL.  Any notice provided by the Corporation shall contain the information required by the DGCL.  If the Corporation exercises its right to effect a Series D Optional Redemption or in connection with a Series D Mandatory Redemption, as applicable, in accordance with this Section 9, the Corporation must redeem all, but not less than all, of the outstanding Series D Preferred Stock.  The Series D Redemption Shares shall be redeemed upon payment by the Corporation to the holder of such Series D Redemption Shares of the Series D Optional Redemption Price or the Series D Mandatory Redemption Price applicable to such Series D Redemption Shares as set forth in Section 9(b)(i) or Section 9(b)(ii), as applicable.  Any Series D Optional Redemption and any Series D Mandatory Redemption, as applicable, hereunder shall be subject to restrictions imposed by the DGCL regarding the circumstances under which such Series D Optional Redemption and such Series D Mandatory Redemption, as applicable, may be effected.

(B)           To facilitate the redemption of any shares of Series D Preferred Stock as provided in Section 9(b)(i) or Section 9(b)(ii), as applicable, the Board shall be authorized to cause the transfer books of the Corporation to be closed not more than sixty (60) days prior to the Series D Optional Redemption Date or the Series D Mandatory Redemption Date, as applicable.  From and after the Series D Optional Redemption Date or the Series D Mandatory Redemption Date, as applicable, all rights of the holder thereof as a stockholder of the Corporation with respect to the Series D Redemption Shares redeemed, except the right to receive the Series D Optional Redemption Price or the Series D Mandatory Redemption Price, as applicable, shall cease and terminate.

(C)           The holder shall be entitled to receive the Series D Optional Redemption Price or the Series D Mandatory Redemption Price, as applicable,

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upon actual delivery to the Corporation or to such other entity as may be designated by the notice referred to in subsection (A) of this Section of certificates for the number of shares to be redeemed, duly endorsed in blank or accompanied by proper instruments of assignment and transfer duly endorsed in blank.  The Series D Preferred Stock redeemed pursuant to the provisions of this Section may, in the sole discretion of the Board, be held in the treasury of the Corporation or retired and canceled and given the status of authorized and unissued Series D Preferred Stock.

(iv)           No sinking fund will be created for the redemption or purchase of the shares of Series D Preferred Stock.

10.           Certain Definitions.

(a)           “Affiliate” means, with respect to any Person: (a) a director, manager, officer, partner, member, beneficiary or equity holder (whether direct or indirect) of such Person; (b) a spouse, parent, sibling or child of such Person (or spouse, parent, sibling or child of any director, manager or executive officer of such Person); and (c) any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with such first Person.

(b)           “Aggregate Series A Face Amount” means the aggregate amount of the Series A Face Amounts payable to all of the Series A Holders.

(c)            “Aggregate Series A Preference Amount” means the aggregate amount of the Series A Preference Amounts payable to all of the Series A Holders.

(d)           “Aggregate Series B Preference Amount” means the aggregate amount of the Series B Preference Amounts payable to all of the Series B Holders.

(e)           “Aggregate Series D Preference Amount” means the aggregate amount of the Series D Preference Amounts payable to all of the Series D Holders.

(f)           “Bylaws” shall mean the bylaws of the Corporation (as the same may be amended, modified or supplemented from time-to-time after the date hereof).

(g)           “Cash Out IPO” shall mean an IPO resulting in aggregate proceeds (net of underwriting discounts and commissions) of not less than the Aggregate Series A Preference Amount and the Aggregate Series D Preference Amount which proceeds are used to retire in full the Aggregate Series A Preference Amount and the Aggregate Series D Preference Amount, as applicable.

(h)           “Common Stock Equivalent” means, at any time, one share of Common Stock or the right to acquire, whether or not such right is immediately exercisable, a share of Common Stock, whether evidenced  by an option, warrant, convertible security or other instrument or agreement.

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(i)           “Control” means (including, with correlative meanings, “controlled by” and “under common control with”), with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

(j)           “Conversion Price” means, initially the Series A Initial Purchase Price, as such Series A Initial Purchase Price may be adjusted from time to time pursuant to Section 7(d) hereof.

(k)           “Equity Securities” means all shares of capital stock of the Corporation, including the Shares, all securities convertible into or exchangeable for shares of capital stock of the Corporation, and all options, warrants, and other rights to purchase or otherwise acquire from the Corporation shares of such capital stock, including any stock appreciation or similar rights, contractual or otherwise.

(l)           “Excess Proceeds” means, to the extent greater than zero, the Pre-IPO Valuation minus (i) the Aggregate Series A Face Amount, (ii) any accrued and unpaid dividends with respect to the then outstanding shares of Series A Preferred Stock, (iii) the Aggregate Series B Preference Amount and (iv) the Aggregate Series D Preference Amount.

(m)           “Governmental Entity” means any national, federal, state, local or foreign court, tribunal, arbitral body, arbitrator, administrative agency or commission or other governmental or regulatory authority or instrumentality.

(n)           “IPO” shall mean (x) the first firm commitment underwritten public offering pursuant to an effective registration statement filed on Form S-1 (or its successor form) under the Securities Act of 1933, as amended, or (y) admission to trading on any global securities exchange, including the London Stock Exchange’s Alternative Investment Market division.

(o)           “Liquidation” means (i) any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, other than any dissolution, liquidation or winding up in connection with any reincorporation of the Corporation in another jurisdiction, or (ii) any Sale of the Corporation.

(p)           “Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

(q)           “Post Conversion Percentage” means the quotient obtained by dividing (i) the Series A Face Amount plus the Series A Excess Proceeds Amount by (ii) the Pre-IPO Valuation less the sum of (a) the aggregate value of all accrued and unpaid dividends with respect to the then outstanding shares of Series A Preferred Stock, (b) the Aggregate Series B Preference Amount and (c) the Aggregate Series D Preference Amount.

(r)           “Pre-IPO Valuation” means the equity value (including the face value and all accrued and unpaid dividends with respect to the then outstanding shares of Preferred Stock) of the Corporation immediately prior to the IPO.

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(s)           “Pro Rata Ratio” means, as to each share of Series A Preferred Stock that is issued and outstanding, the quotient obtained by dividing (A) that number of shares of Common Stock into which each share of Series A Preferred Stock is then convertible pursuant to Section 7 hereof immediately prior to the conversion pursuant to Section 8(a) of Article IV by (B) all Common Stock Equivalents issued and outstanding (excluding “out-of-the-money” stock options) immediately prior to the IPO.

(t)            “Sale of the Corporation” means (i) the sale of all or substantially all of the Corporation’s assets, (ii) the sale or transfer of the outstanding shares of capital stock of the Corporation, or (iii) the merger or consolidation of the Corporation with another person or entity, in each case in clauses (ii) and (iii) above under circumstances in which the holder’s (together with any Affiliates of such holders) of the voting power of outstanding capital stock of the Corporation, immediately prior to such transaction, own less than 50% in voting power of the outstanding capital stock of the Corporation or the surviving or resulting corporation or acquirer, as the case may be, immediately following such transaction.  A sale (or multiple related sales) of one or more Subsidiaries of the Corporation (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or securities) which constitutes all or substantially all of the consolidated assets of the Corporation shall also be deemed a Sale of the Corporation.

(u)           “Series A Dividend Rate” means a cumulative per annum rate equal to twelve percent (12%).

(v)           “Series A Excess Proceeds Amount” means, as to each share of Series A Preferred Stock, an amount equal to the product of (A) the Pro Rata Ratio and (B) the Excess Proceeds.

(w)           “Series A Holder” means a holder of shares of Series A Preferred Stock.

(x)           “Series A Initial Purchase Price” means $1,000 per share of Series A Preferred Stock.

(y)           “Series A Face Amount” means, as to each share of Series A Preferred Stock that is issued and outstanding, an amount equal to (i) the Series A Initial Purchase Price less (ii) the aggregate amount of all distributions made with respect to such share of Series A Preferred Stock, excluding any dividends.

(z)           “Series A Preference Amount” means, as to each share of Series A Preferred Stock that is issued and outstanding, an amount equal to the sum of (i) the Series A Initial Purchase Price and (ii) the accrued and unpaid dividends added to the Series A Initial Purchase Price, which shall accrue from the date of issuance thereof in accordance with Section 4 of Article IV (as adjusted for any stock dividends, combinations, splits, recapitalizations and related transactions with respect to such shares).

(aa)           “Series B Dividend Rate” means a cumulative per annum rate equal to eight percent (8%).

(bb)           “Series B Holder” means a holder of shares of Series B Preferred Stock.

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(cc)           “Series B Initial Purchase Price” means $1,000 per share of Series B Preferred Stock.

(dd)           “Series B Preference Amount” means, as to each share of Series B Preferred Stock that is issued and outstanding, an amount equal to the sum of (i) the Series B Initial Purchase Price and (ii) the accrued and unpaid dividends added to the Series B Initial Purchase Price which shall accrue from the date of issuance thereof in accordance with Section 4 of Article IV (as adjusted for any stock dividends, combinations, splits, recapitalizations and related transactions with respect to such shares).

(ee)           “Series D Holder” means a holder of shares of Series D Preferred Stock.

(ff)           “Series D Preference Amount” means, as to each share of Series D Preferred Stock that is issued and outstanding, an amount equal to $1,000 per such share of Series D Preferred Stock (as adjusted for any stock dividends, combinations, splits, recapitalizations and related transactions with respect to such shares).

(gg)           “Shares” shall have the meaning set forth in the Stockholders’ Agreement

(hh)           “Stockholders’ Agreement” means that certain Stockholders’ Agreement dated on or about the date of this Certificate, by and among the Corporation and the stockholders party thereto, as the same may be modified, supplemented or amended from time to time.

(ii)           “Stock Purchase Agreement” means that certain Stock Purchase Agreement, dated as of November 16, 2011, by and among the Corporation, Leaf Financial Corporation, Resource TRS, Inc., Resource Capital Corp., Resource America, Inc. and the Purchasers identified therein, as the same may be amended from time to time after the date hereof.

(jj)           “Subsidiary” means, with respect to any Person, any other Person the majority of whose equity securities or voting securities are directly or indirectly owned or controlled by such Person.

ARTICLE V

DIRECTORS

The number of directors of the Corporation shall be such as from time to time shall be fixed in the manner provided in the Stockholders’ Agreement and the Bylaws of the Corporation. The election of directors of the Corporation need not be by ballot unless the Bylaws so require.

ARTICLE VI

INDEMNIFICATION

To the fullest extent permitted by the DGCL, as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages or breach of fiduciary duty as a director.  The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative, or investigative (a “Proceeding”), by reason of the fact that he or she or his or her testator or intestate is or was a director of the Corporation or any Subsidiary of the Corporation or any predecessor of the Corporation or any Subsidiary of the Corporation, or serves or served at any other enterprise as director at the request of the Corporation or any predecessor to the Corporation, or acted at the direction of any such director against all expense, liability and loss actually and reasonably incurred or suffered by such person in connection therewith.

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Any indemnification under this Article VI (unless ordered by a court) shall be made by the Corporation upon a determination that indemnification of the director is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, as the same exists or hereafter may be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment).

Expenses (including attorneys’ fees) incurred by a director of the Corporation in defending a Proceeding shall be paid by the Corporation in advance of the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of the director to repay all amounts so advanced in the event that it shall ultimately be determined that such director is not entitled to be indemnified by the Corporation as authorized in this Article VI.

The indemnification and advancement of expenses provided by this Article VI shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation. All rights to indemnification under this Article VI shall be deemed to be a contract between the Corporation and each director of the Corporation or any of its subsidiaries who serves or served in such capacity at any time while this Article VI is in effect.

The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director of the Corporation or any of its subsidiaries, or is or was serving at the request of the Corporation as a director of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her or on his or her behalf in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article VI.

If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify or advance expenses to each person entitled to indemnification or advancement of expenses, as the case may be, as to all expense, liability and loss actually and reasonably incurred or suffered by such person and for which indemnification or advancement of expenses, as the case may be, is available to such person pursuant to this Article VI to the full extent permitted by any applicable portion of this Article VI that shall not have been invalidated and to the full extent permitted by applicable law.

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Neither any amendment nor repeal of this Article VI, nor the adoption of any provision of this Certificate inconsistent with this Article VI, shall eliminate or reduce the effect of this Article VI in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article VI would accrue or arise, prior to such amendment, repeal of adoption of an inconsistent provision.

ARTICLE VII

MANAGEMENT OF THE CORPORATION

For the management of the business and for the conduct of the affairs of the Corporation, and in any other definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders, it is further provided that, in furtherance and not in limitation of the powers concurred by the DGCL, the Board is expressly authorized and empowered:

(a)           to make, alter, amend or repeal the Bylaws in any manner not inconsistent with the DGCL or this Certificate;

(b)           to determine whether any, and if any, which part, of the net profits of the Corporation or of its surplus shall be declared as dividends and paid to the stockholders, and to direct and determine the use and disposition of any such net profits or such surplus; and

(c)           to fix from time to time the amount of net profits of the Corporation or of its surplus to be reserved as working capital or for any other lawful purpose.

In addition to the powers and authorities herein or by statute expressly conferred upon it, the Board may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Certificate and of the Bylaws of the Corporation.

ARTICLE VIII

CREDITORS MEETINGS

Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of the DGCL or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of the DGCL, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree on any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders of the Corporation as the case may be and also on the Corporation. The Corporation shall not enter into any agreement or become subject to any agreement which could restrict in any manner its ability to comply with this Certificate or any agreement which benefits or grants rights to the holders of the Preferred Stock.

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The Corporation hereby elects not to be governed by Section 203 of the DGCL.

ARTICLE IX

BUSINESS OPPORTUNITIES

(a)           In anticipation that (i) Eos Management, L.P. and/or its Affiliates (collectively, “Eos”) and (ii) Resource Capital Corp. and/or its Affiliates (collectively, “RCC”) will be, indirectly or directly, substantial stockholders of the Corporation, and in recognition of (A) the benefits to be derived by the Corporation through its continued contractual, corporate and business relations with Eos and RCC, as applicable (including service of officers, directors, partners, managers, employees or Affiliates of Eos (collectively, “Eos Persons”) and RCC (collectively, “RCC Persons”), as applicable, as directors of the Corporation) and (B) the difficulties attendant to any director, who desires and endeavors fully to satisfy such director’s fiduciary duties, in determining the full scope of such duties in any particular situation, the provisions of this Article IX are set forth to regulate, define and guide the conduct of certain affairs of the Corporation as they may involve Eos, RCC, any Eos Persons and any RCC Persons, as applicable, and the powers, rights, duties and liabilities of the Corporation and its officers, directors and stockholders in connection therewith.

(b)           Except as Eos or RCC, as applicable, may otherwise agree in writing, Eos and RCC, as applicable (subject to Section 6.7 of the Stock Purchase Agreement), shall have the right to (i) engage, directly or indirectly, in the same or similar business activities or lines of business as the Corporation and (ii) do business with any client, competitor or customer of the Corporation, with the result that the Corporation shall have no right in or to such activities or any proceeds or benefits therefrom, and none of Eos, RCC, any Eos Person or any RCC Person, as applicable (except as provided in subsection (c) of this Article IX), shall be liable to the Corporation or its stockholders for breach of any fiduciary duty by reason of any such activities of Eos or RCC, as applicable, or of such Eos Person’s or RCC Person’s, as applicable, participation therein. In the event that Eos, RCC, any Eos Person or any RCC Person, as applicable, acquires knowledge of a potential transaction or matter that may be a corporate opportunity for, on the one hand, Eos or RCC, as applicable, and the Corporation, on the other hand, Eos and such Eos Person or RCC and such RCC Person, as applicable, shall have no duty to communicate or present such corporate opportunity to the Corporation, and the Corporation hereby renounces any interest or expectancy it may have in such corporate opportunity, with the result that Eos or such Eos Person or RCC and such RCC Person, as applicable, shall not be liable to the Corporation or its stockholders for breach of any fiduciary duty, including for breach of any fiduciary duty as a stockholder of the Corporation by reason of the fact that Eos or RCC, as applicable, pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to the Corporation.

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(c)           In the event that a director or officer of the Corporation who is an Eos Person or RCC Person, as applicable, acquires knowledge of a potential transaction or matter that may be a corporate opportunity for the Corporation, on the one hand, and, on the other hand, Eos or RCC, as applicable, such corporate opportunity shall belong to Eos or RCC, as applicable, and the Corporation hereby renounces any interest or expectancy it may have in such corporate opportunity, unless such corporate opportunity is expressly offered to such director or officer in writing solely in his capacity as a director or officer of the Corporation, in which case such corporate opportunity shall belong to the Corporation.

(d)           For the purposes of this Article IX, “corporate opportunities” shall not include any business opportunities that the Corporation is not financially or contractually able to undertake, or that are, from their nature, not in the line of the Corporation’s business or are of no practical advantage to it or that are ones in which the Corporation has no interest or reasonable expectancy.

(e)           Any person or entity purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article IX.

(f)           For purposes of this Article IX only, the “Corporation” shall mean the Corporation and all corporations, partnerships, joint ventures, associations and other entities in which the Corporation beneficially owns (directly or indirectly) fifty percent (50%) or more of the outstanding voting stock, voting power or similar voting interests.

(g)           Notwithstanding anything in this Article IX to the contrary, any restriction on the ability of either Eos or RCC to compete with the business of the Corporation shall supersede this Article IX.

(h)           Notwithstanding anything in this Certificate to the contrary and in addition to any vote of the Board required by this Certificate, the affirmative vote of the holders of more than eighty percent (80%) of the Series A Preferred Stock (voting on an as-converted basis) shall be required to alter, amend or repeal in a manner adverse to the interests of Eos, RCC, any Eos Person or any RCC Person, or adopt any provision adverse to the interests of Eos, RCC, any Eos Person or any RCC Person and inconsistent with, any provision of this Article IX.

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EX-99.3

Exhibit 99.3

EXECUTION VERSION

LEAF COMMERCIAL CAPITAL, INC.

STOCKHOLDERS' AGREEMENT

NOVEMBER 16, 2011

TABLE OF CONTENTS

		Page
ARTICLE I                      DEFINITIONS; RULES OF CONSTRUCTION		1
ARTICLE II                     BOARD REPRESENTATION		10
2.1.	Board Representation.	10
2.2.	Voting Agreement.	12
2.3.	Vacancies; Removal; Interim Director.	12
2.4.	Committees; Subsidiaries	13
2.5.	Non-Voting Observers.	13
2.6.	Board Expansion Option.	14
2.7.	Meetings; Expenses; Compensation.	14
ARTICLE III                    ISSUANCE AND TRANSFER OF SHARES		15
3.1.	Future Stockholders.	15
3.2.	Limitations on Transfers.	15
3.3.	Co-Sale Rights.	17
3.4.	Preemptive Rights.	17
3.5.	Approved Sale; Sale of the Corporation.	19
3.6.	Realization Event.	20
ARTICLE IV                   PROTECTIVE PROVISIONS		21
4.1.	Eos Director Protective Covenants.	21
4.2.	Investor Stockholder Protective Covenants.	23
4.3.	RCC Protective Covenants.	24
4.4.	Subsidiaries and Committees.	25
ARTICLE V                    ADDITIONAL AGREEMENTS		25
5.1.	Information Rights.	25

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5.2.	Conversion of Series A Preferred Stock.	26
5.3.	Conversion of Series B Preferred Stock.	26
5.4.	Resignations.	27
ARTICLE VI                   MISCELLANEOUS		27
6.1.	Termination.	27
6.2.	Legend on Stock Certificates.	27
6.3.	Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial.	27
6.4.	Remedies.	28
6.5.	Severability.	28
6.6.	Assignments; Successors and Assigns.	28
6.7.	Amendments; Waivers.	29
6.8.	Notices.	29
6.9.	Captions.	30
6.10.	Number; Gender.	30
6.11.	Entire Agreement.	30
6.12.	Counterparts; Facsimile Signatures.	30
6.13.	Conflicting Agreements.	31
6.14.	Third Party Reliance.	31
6.15.	Consultation with Counsel, etc.	31
6.16.	Prevailing Party.	31
6.17.	Interpretation.	31
6.18.	Construction.	32

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STOCKHOLDERS’ AGREEMENT (this “Agreement”) dated as of November 16, 2011, by and among LEAF COMMERCIAL CAPITAL, INC., a Delaware corporation (the “Corporation”), the Investors (as defined herein) and the Existing Stockholders (as defined herein).

WHEREAS, the Stockholders (as defined herein) believe it to be in the best interest of the Corporation and the Stockholders to provide for the continued stability of the business and policies of the Corporation and its subsidiaries, as the same may exist from time to time.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION

The following terms have the following meanings:

“Accredited Investor” shall have the meaning set forth in Rule 501 of the Securities Act.

“Affiliate” means, with respect to any Person: (a) a director, manager, officer, partner, member, beneficiary or equity holder (whether direct or indirect) of such Person; (b) a spouse, parent, sibling or child of such Person (or spouse, parent, sibling or child of any director, manager or executive officer of such Person); and (c) any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with such first Person.

“Agreement” shall have the meaning set forth in the preamble.

“Approved Sale” shall have the meaning set forth in Section 3.5(a) hereof.

“Board” means the Board of Directors of the Corporation.

“Board Decrease” shall have the meaning set forth in Section 2.6 hereof.

“Board Expansion Option” shall have the meaning set forth in Section 2.6 hereof.

“Business Day” shall mean any date that is not a Saturday, Sunday or a day on which banking institutions in New York, New York are not required to be open.

“Bylaws” means the bylaws of the Corporation, as the same may be amended, modified or supplemented from time to time after the date hereof.

“Cause” means (i) indictment for, conviction of, or entering into a plea of nolo contendre to, any crime (whether or not a felony) involving dishonesty, fraud, embezzlement, breach of trust or other crime of moral turpitude or (ii) conviction of, or entering a plea of nolo contendre to, a felony (other than a traffic violation).

“Charter” means the Amended and Restated Certificate of Incorporation of the Corporation, in effect at the time in question, as the same may be amended, modified or supplemented from time to time after the date hereof.

“Common Stock” means the Corporation’s common stock, par value $0.001 per share.

“Common Stock Equivalent” means, at any time, one share of Common Stock or the right to acquire, whether or not such right is immediately exercisable, a share of Common Stock, whether evidenced  by an option, warrant, convertible security or other instrument or agreement.

“Control” means (including, with correlative meanings, “controlled by” and “under common control with”), with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.

“Controlled Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, through one or more intermediaries, is Controlled by such first Person.  For the avoidance of doubt, none of the LEAF Funds are Controlled Affiliates of LFC.

“Corporation” shall have the meaning set forth in the preamble.

“Corporation Governing Body” shall have the meaning set forth in Section 2.5(d) hereof.

“Co-Sale Pro Rata Amount” means, with respect to any Stockholder, the quotient obtained by dividing (i) the number of Co-Sale Securities held by such Stockholder by (ii) the aggregate number of Co-Sale Securities held by all Stockholders or class of Stockholders (as applicable), assuming in each case the conversion or exchange of all securities by their terms convertible into or exchangeable for Common Stock and the exercise of all vested and “in the money” options to purchase or rights to subscribe for Common Stock (including warrants) or such convertible or exchangeable securities.

“Co-Sale Notice” shall have the meaning set forth in Section 3.3(a)(i) hereof.

“Co-Sale Securities” shall have the meaning set forth in Section 3.3(a)(i) hereof.

“Co-Sale Transferee” shall have the meaning set forth in Section 3.3(a) hereof.

“Co-Sale Transferor” shall have the meaning set forth in Section 3.3(a) hereof.

“Credit Policies and Procedures” shall have the meaning set forth in the Stock Purchase Agreement.

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“Directors” shall have the meaning set forth in Section 2.1(b)(vii) hereof.

“Eos” means, collectively, Eos Partners, Eos III and Eos IV.

“Eos III” means Eos Capital Partners III, L.P.

“Eos III Director” shall have the meaning set forth in Section 2.1(b)(i) hereof.

“Eos IV” means Eos Capital Partners IV, L.P.

“Eos IV Director” shall have the meaning set forth in Section 2.1(b)(ii) hereof.

“Eos Directors” shall have the meaning set forth in Section 2.1(b)(iii) hereof.

“Eos Group Director” shall have the meaning set forth in Section 2.1(b)(iii) hereof.

“Eos Nominee” shall have the meaning set forth in Section 2.2(c) hereof.

“Eos Observers” shall have the meaning set forth in Section 2.5(a) hereof.

“Eos Partners” means Eos Partners, L.P.

“Equity Investment” means an investment in Equity Securities so long as (1) RCC has the ability to exercise a preemptive right to participate on a pro rata basis in such equity investment in accordance with Section 3.4 hereof and on terms no less favorable to RCC than the terms applicable to Eos’s participation and (2) RCC’s existing governance and other rights relating to the shares of Series A Preferred Stock held by it are not disproportionately disadvantaged by such equity investment relative to Eos’s governance and other rights relating to the shares of Series A Preferred Stock held by it (including hereunder), other than an equity investment in which Eos elects to participate and RCC does not elect to participate.

“Equity Securities” means all shares of capital stock of the Corporation, including the Shares, all securities convertible into or exchangeable for shares of capital stock of the Corporation, and all options, warrants, and other rights to purchase or otherwise acquire from the Corporation shares of such capital stock, including any stock appreciation or similar rights, contractual or otherwise.

“Exchange Act” means the Securities and Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations promulgated thereunder.

“Excluded Securities” means (i) shares of Common Stock at any time issuable pursuant to the Restricted Stock Plan, (ii) stock, warrants or other securities issued to a bank or other financial institution (in any case which bank or other financial institution is not an Affiliate of Eos) in connection with a financing or in connection with any acquisition by the Corporation (whether directly or indirectly) approved by the Board, (iii) shares of Common Stock issuable upon conversion of the Series A Preferred Stock, (iv) shares of Common Stock issuable upon the exercise of the Guggenheim Warrant or the Eos Warrants, (v) shares of Common Stock issued by the Corporation in an IPO, (vi) Equity Securities of the Corporation issued after the date hereof to give effect to any stock dividend or distribution, stock split, reverse stock split or combination or other similar pro rata recapitalization event affecting any class or series of Common Stock, (vii) securities of the Corporation that are redeemable by the Corporation upon a date certain by the Corporation but are not Common Stock Equivalents, (viii) Equity Securities of the Corporation issued in connection with any stock appreciation or similar rights, contractual or otherwise and (ix) Equity Securities of the Corporation issued in connection with the Corporation’s indemnification obligations set forth in Article X of the Stock Purchase Agreement.

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“Existing Stockholder” means any Person set forth on Annex II hereto and any Person who becomes a party to this Agreement as an Existing Stockholder pursuant to Sections 3.1 or 3.2 hereof.  For the avoidance of doubt, Existing Stockholder does not include any of the Investors.

“Existing Stockholder Shares” means all Equity Securities held at any time during the term of this Agreement by any Existing Stockholder.

“Future Stockholder” shall have the meaning set forth in Section 3.1 hereof.

“GAAP” means generally accepted accounting principles employed in the United States.

“Governmental Entity” means any national, federal, state, local or foreign court, tribunal, arbitral body, arbitrator, administrative agency or commission or other governmental or regulatory authority or instrumentality.

“Group” means:

(a)           in the case of any Stockholder who is an individual, (i) such Stockholder, (ii) the spouse, parent, sibling or lineal descendants of such Stockholder, (iii) all trusts for the benefit of such Stockholder or any of the foregoing, (iv) all Persons principally owned by and/or organized or operating for the benefit of any of the foregoing and (v) all Affiliates of such Stockholder;

(b)           in the case of any Stockholder that is a partnership, (i) such Stockholder, (ii) its limited, special and general partners, (iii) any Person to which such Stockholder shall Transfer all or substantially all of its assets or with which it shall be merged and (iv) all Affiliates and employees of and consultants to, such Stockholder; and

(c)           in the case of any Stockholder which is a corporation or a limited liability company, (i) such Stockholder, (ii) its stockholders or members as the case may be, (iii) any Person to which such Stockholder shall Transfer all or substantially all of its assets and (iv) all Affiliates of such Stockholder.

“Guggenheim Indenture” means the Indenture, dated as of December 5, 2010, by and among LEAF Capital Funding SPE A, LLC, U.S. Bank National Association and Guggenheim Securities, LLC.

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“Guggenheim Warrant” means the Warrant to purchase Common Stock issued by the Corporation to Guggenheim Securities, LLC, as the same may be amended, modified or supplemented from time to time after the date hereof.

“Independent Directors” shall have the meaning set forth in Section 2.1(b)(vi) hereof.

“Initial Subscribing Investor” shall have the meaning set forth in Section 3.4(f) hereof.

“Investment Bank” shall have the meaning set forth in Section 3.6(a) hereof.

“Investors” means the Persons set forth on Annex I hereto and any Person who becomes a party to this Agreement as an Investor pursuant to Sections 3.1 or 3.2 hereof.

“Investor Shares” means all Equity Securities of the Corporation held at any time during the term of this Agreement by the Investors.

“IPO” shall have the meaning set forth in the Charter.

“Joinder Agreement” shall have the meaning set forth in Section 3.1 hereof.

“LFC” means LEAF Financial Corporation, a Delaware corporation.

“Liquidation” shall have the meaning set forth in the Charter.

“Management Agreement” means that certain Management Consulting Agreement, dated as of the date hereof, between the Corporation and Eos Management, L.P., as the same may be amended, restated, supplemented or otherwise modified from time to time after the date hereof.

“Management Director” shall have the meaning set forth in Section 2.1(b)(v) hereof.

“Management Observers” shall have the meaning set forth in Section 2.5(b) hereof.

“Management Stockholders” means those individuals set forth on Annex III hereto and any Person who becomes a party to this Agreement as a Management Stockholder pursuant to Sections 3.1 or 3.2 hereof.

“Management Stockholder Shares” means all Equity Securities held at any time during the term of this Agreement by any Management Stockholder.

“Material Adverse Effect” means (A) any state of facts, change, event, effect or occurrence (including a decrease in the Moody’s or Standard & Poor’s rating with respect to any material indenture, warehouse line of credit or other securitization to which the Corporation or any of its Subsidiaries is a party (any such decrease, a “Ratings Decrease”)) (whether or not constituting a breach of a representation, warranty or covenant set forth in this Agreement) that, individually or in the aggregate, is or would reasonably be expected to have a material adverse effect on the

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business, financial condition, or results of operations of the Corporation and its Subsidiaries taken as a whole, (B) the occurrence and continuation of any of the following defaults or events of default under any material indenture, warehouse line of credit or other securitization to which the Corporation or any of its Subsidiaries is a party: (v) a default based on a Ratings Decrease (such a default, a “Ratings Default”), (w) a payment default, (x) a financial covenant default, (y) a default pursuant to which the applicable lender, trustee, agent or other similarly situated party under such material indenture, warehouse line of credit or other securitization exercises its remedies in respect of such event of default (it being understood and agreed by the Parties that the grant of any waiver by the lender, trustee, agent or other similarly situated party with respect to such event of default shall not constitute the exercise of remedies for purposes of this definition) or (z) a bankruptcy or insolvency related default; provided, however, that with respect to a financial covenant default or a Ratings Default, such default will only be deemed a Material Adverse Effect to the extent it is not cured or waived by the applicable lender or counterparty within ninety (90) calendar days of occurring, (C) the inability of the Corporation or its Subsidiaries to perform under any custodial agreement, servicing agreement or sub-servicing agreement and such inability to perform would reasonably be expected to have a material adverse effect on the business, financial condition, or results of operations of the Corporation and its Subsidiaries taken as a whole, or (D) the failure to comply with the financial covenants set forth in Exhibit C hereof; provided, however, that with respect to clause (A) only, any change in Laws (other than changes in regulatory conditions affecting the industry in which the Corporation operates) or GAAP or the interpretations thereof by a Governmental Entity shall not be deemed to constitute a Material Adverse Effect.  Notwithstanding anything to the contrary herein, the Investors shall have no rights or remedies in respect of a Material Adverse Effect under this Agreement, unless and until (i) the Investors provide to the Corporation notice of a Material Adverse Effect and (ii) with respect to clause (A) only, the Corporation fails to cure such Material Adverse Effect, solely to the extent such Material Adverse Effect is curable, within 45 calendar days after notice of the same is given to the Corporation.

“NASDAQ” means the National Association of Securities Dealers Automated Quotations.

“New Securities” means all Equity Securities other than Excluded Securities.

“Observers” shall have the meaning set forth in Section 2.5(c) hereof.

“Origination Parameters” shall have the meaning set forth in the Stock Purchase Agreement.

“Other Accredited Stockholders” shall have the meaning set forth in Section 3.4(f) hereof.

“Other Stockholders” shall have the meaning set forth in Section 3.3(a)(i) hereof.

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“Permitted Family Transferee” means, with respect to any Management Stockholder (and each Permitted Transferee of such Management Stockholder), (i) the spouse or any lineal descendant (including adopted children) of such Person, (ii) any trust solely for the benefit of such Person and/or the spouse or lineal descendants (including adopted children) of such Person, (iii) a charitable foundation under the Control of such Person, (iv) a family trust, partnership or limited liability company under the Control of such Person or established solely for the benefit of such Person and/or such Person's spouse or lineal descendants (including adopted children) or for estate planning purposes provided such family trust, partnership or limited liability company remains under the Control of such Person, or (v) the estate of such Person.

“Permitted Transfer” means (a) with respect to an Existing Stockholder, any Transfer by such Existing Stockholder to (i) a Permitted Family Transferee of such Existing Stockholder and (ii) any Transferee approved in writing by the Investors holding a majority of the Investor Shares outstanding at such time and (iii) a Controlled Affiliate of such Existing Stockholder (so long as (i) such Controlled Affiliate is not engaged in any business that is competitive with the Company or its Subsidiaries and (ii) such Transfer is not adverse to the Company or its Subsidiaries) and (b) with respect to a Stockholder who is an Investor, any Transfer by such Investor to a member of such Investor’s Group (so long as such Transfer is not adverse to the Company or its Subsidiaries).

“Permitted Transferee” means any Person to whom a Permitted Transfer is made.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“Preemptive Offer” shall have the meaning set forth in Section 3.4(a) hereof.

“Preemptive Offer Notice” shall have the meaning set forth in Section 3.4(a) hereof.

“Preemptive Offer Number” shall have the meaning set forth in Section 3.4(b) hereof.

“Preemptive Offer Period” shall have the meaning set forth in Section 3.4(a) hereof.

“Preferred Stock” shall have the meaning set forth in the Charter.

“Prevailing Party” means, with respect to any party, in an action seeking (i) monetary damages, if such party secures as a final judgment, a dollar amount (excluding interest) that is equal to or greater than fifty percent (50%) of the amount claimed as damages in the complaint or as a counterclaim in the answer, and, if such party fails to secure an amount equal to or greater than fifty percent (50%) of the amount claimed, then the other party shall be deemed to be the prevailing party for purposes of this Agreement; (ii) a declaratory ruling or a permanent injunction, if such party successfully secures the relief sought, and, if such party is unsuccessful in securing such relief, then the other party shall be deemed to be the prevailing party; and (iii) monetary damages and a demand for a declaratory ruling or permanent injunction, only if such party satisfies the criteria in both clauses (i) and (ii), and, if such party does not satisfy such criteria, then the other party shall be deemed to be the prevailing party; provided, however, that if one party would be a Prevailing Party under one of the clauses in this definition and the other party would be a Prevailing Party under another clause, then neither party shall be deemed a Prevailing Party for purposes of this Agreement.

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“Pro Rata Amount” means, with respect to any Stockholder, the quotient obtained by dividing (i) the number of Common Stock Equivalents held by such Stockholder by (ii) the aggregate number of Common Stock Equivalents held by all Stockholders or class of Stockholders (as applicable), assuming in each case the conversion or exchange of all securities by their terms convertible into or exchangeable for Common Stock and the exercise of all vested and “in the money” options to purchase or rights to subscribe for Common Stock (including warrants) or such convertible or exchangeable securities.

“Purchase Notice” shall have the meaning set forth in Section 3.4(b) hereof.

“RCC” means Resource TRS, Inc., a Delaware corporation and wholly owned Subsidiary of Resource Capital Corp., a Maryland real estate investment trust.

“RCC Directors” shall have the meaning set forth in Section 2.1(b)(iv) hereof.

“RCC Observers” shall have the meaning set forth in Section 2.5(c) hereof.

“Realization Event” shall have the meaning set forth in Section 3.6(a) hereof.

“Realization Event Notice” shall have the meaning set forth in Section 3.6(a) hereof.

“Realization Event Trigger” shall mean the earlier to occur of (i) the failure by the Corporation to consummate a Sale of the Corporation or an IPO on or before the third anniversary of the date of this Agreement for any reason and (ii) the occurrence of a Material Adverse Effect.

“Related Person” shall have the meaning set forth in Section 4.1(n) hereof.

“Requesting Stockholders” shall have the meaning set forth in Section 3.6(a) hereof

“Restricted Stock Plan” means the Corporation’s 2011 Restricted Stock Plan, as the same may be amended, restated or otherwise modified from time to time after the date hereof.

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations promulgated thereunder.

“Sale of the Corporation” shall have the meaning set forth in the Charter.

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“Series A Preferred Stock” means the Corporation’s Series A Participating Preferred Stock, $0.001 par value per share.

“Series A Directors” shall have the meaning set forth in Section 2.1(b)(vii) hereof.

“Series A Majority” means the holders of a majority of all then outstanding shares of Series A Preferred Stock.

“Series B Preference Amount” shall have the meaning set forth in the Charter.

“Series B Preferred Stock” means the Corporation’s Series B Redeemable Preferred Stock, $0.001 par value per share.

 “Series D Preferred Stock” means the Corporation’s Series D Redeemable Preferred Stock, $0.001 par value per share.

“Shares” means all Investor Shares and all Existing Stockholder Shares.

“Stockholder Realization Notice” shall have the meaning set forth in Section 3.6(a) hereof.

“Stockholders” means the Investors, the Existing Stockholders and any Future Stockholders.

“Stock Purchase Agreement” means that certain Stock Purchase Agreement, dated as of November 16, 2011, by and among the Corporation, LFC, RCC, Resource Capital Corp., Resource America, Inc. and the Purchasers identified therein, as the same may be amended, restated or otherwise modified from time to time after the date hereof.

“Subscribing Stockholders” shall have the meaning set forth in Section 3.4(a) hereof.

“Subsequent Meeting” shall have the meaning set forth in Section 2.1(d) hereof.

“Subsidiary” means, with respect to any Person, any other Person the majority of whose equity securities or voting securities are directly or indirectly owned or controlled by such Person.

“Subsidiary Governing Body” shall have the meaning set forth in Section 2.5(d) hereof.

“Tag-Along Notice” shall have the meaning set forth in Section 3.3(c) hereof.

“Tag-Along Seller” shall have the meaning set forth in Section 3.3(d) hereof.

“Termination Date” means the earlier to occur of: (i) the closing of an IPO and (ii) the consummation of a Liquidation.

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“Third Party” means, with respect to any Stockholder, any Person that is not (i) the Corporation or (ii) a member of the Group of such Stockholder.

“Transfer” means to sell, transfer, assign, pledge or otherwise dispose of Equity Securities, either voluntarily or involuntarily and with or without consideration, excluding by Management Stockholders to the Corporation upon a termination of employment.

“Transferee” means any Person to whom a Stockholder shall Transfer Shares.

ARTICLE II

BOARD REPRESENTATION

2.1.   Board Representation.

(a)Subject to Section 2.6 hereof, the Corporation and the Stockholders shall take such corporate actions as may be required to ensure that (i) the number of directors constituting the Board is at all times no greater than eight (8) and (ii) the presence of at least four (4) directors is required to constitute a quorum of the Board.  The Board shall initially be set at seven (7) members

(b)The Board shall be comprised as follows:

(i)Eos III shall be entitled: (A) to nominate one (1) individual to the Board to serve as director (the “Eos III Director”) until his or her respective successor is elected and qualified, (B) to nominate each successor to the Eos III Director and (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B); the Eos III Director shall initially be Steven M. Friedman;

(ii)Eos IV shall be entitled: (A) to nominate one (1) individual to the Board to serve as director (the, “Eos IV Director”) until his or her respective successor is elected and qualified, (B) to nominate each successor to the Eos IV Director and (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B); the Eos IV Director shall initially be Brendan M. Moore;

(iii)Eos shall be entitled: (A) to nominate one (1) individual to the Board to serve as director (the, “Eos Group Director”, and, together with the Eos III Director and the Eos IV Director, the “Eos Directors”) until his or her respective successor is elected and qualified, (B) to nominate each successor to the Eos Group Director and (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B); the Eos Group Director shall initially be Aakash Patel;

(iv)RCC shall be entitled: (A) to nominate two (2) individuals to the Board to serve as directors (the “RCC Directors”) until their respective successors are elected and qualified, (B) to nominate each successor to the RCC Directors and (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B); the RCC Directors shall initially be Steven J. Kessler and Jeffrey F. Brotman;

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(v)the Management Stockholders holding a majority of the Management Stockholder Shares shall be entitled: (A) to nominate one (1) individual to the Board to serve as director (the “Management Director”) until his or her respective successor is elected and qualified, (B) to nominate each successor to the Management Director and (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B); provided, however, such Management Director must be acceptable to the Series A Majority; the Management Director shall initially be Crit DeMent;

(vi)the Eos Directors and the RCC Directors shall be entitled (acting unanimously): (A) to nominate up to two (2) individuals to the Board to serve as directors (the “Independent Directors”) until their respective successors are elected and qualified, (B) to nominate each successor to the Independent Directors, (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B); provided, however, that such nominee and any successor may not be an officer or employee of the Corporation, any Management Stockholder or any officer of employee of RCC or Eos; the Eos Directors and RCC Directors shall (acting unanimously) determine, in good faith, the Independent Director(s) as promptly as practicable after the date of the Agreement; and

(vii)upon the exercise of the Board Expansion Option in accordance with Section 2.6 hereof, the Series A Majority shall be entitled: (A) to nominate such number of individuals to the Board to serve as directors as would result in the Eos Directors, together with such individuals, constituting a majority of the members of the Board (such individuals, the “Series A Directors” and, together with the Eos Directors, the RCC Directors, the Management Director and the Independent Directors, the “Directors”) until their respective successors are elected and qualified, (B) to nominate each successor to the Series A Directors and (C) to direct the removal from the Board of any Series A Director nominated under the foregoing clauses (A) or (B).

(c)Each nomination or any proposal to remove from the Board any director shall be made by delivering to the Corporation a notice signed by the Person(s), or the holders of capital stock, entitled to make such nomination or proposal.  As promptly as practicable, but in any event within ten (10) calendar days, after delivery of such notice, the Corporation shall take or cause to be taken such corporate actions as may be required to cause the election or removal proposed in such notice.  Such corporate actions may include calling a meeting or soliciting a written consent of the Board, or calling a meeting or soliciting a written consent of the Stockholders.

(d)Notwithstanding anything set forth in Section 2.1(a) hereof, the presence of at least one (1) Eos Director is required to constitute a quorum of the Board; provided, however, that if all of the Eos Directors are absent from two (2) consecutive properly noticed meetings of the Board, such second meeting shall be adjourned until such time as determined by the directors so present at such second meeting, which time shall be set forth in the notice of the subsequent meeting of the Board (“Subsequent Meeting”) required to be delivered in accordance with the Bylaws; provided, further, however, that notwithstanding the foregoing, if an Eos Director is not present at such Subsequent Meeting, the presence of any four (4) directors shall constitute a quorum of the Board.

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2.2.   Voting Agreement.

(a)Each Stockholder covenants and agrees to vote all Equity Securities held by such Stockholder for (i) the election to the Board of all individuals nominated in accordance with Section 2.1 hereof and for the removal from the Board of all directors proposed to be removed in accordance with Section 2.1 hereof, and (ii) the election to each committee of the Board of an Eos Director nominated in accordance with Section 2.4 hereof, and in each case shall take all actions required on its behalf to give effect to the agreements set forth in this Article II.  Each Stockholder shall use its respective commercially reasonable efforts to cause each director originally nominated by such Stockholder to vote for the election to the Board of all individuals nominated in accordance with Section 2.1(vi) hereof.

(b)Pursuant to this Section 2.2, each Stockholder hereby approves and votes all of his, her or its Equity Securities in favor of the election to the Board of each of the initial Board designees named pursuant to Section 2.1(b) above.

(c)Each Existing Stockholder and the Corporation hereby grants to Eos an irrevocable proxy, coupled with an interest, and power of attorney authorizing Eos or any nominee of Eos (the “Eos Nominee”) to act as proxy of such Existing Stockholder and the Corporation, with full powers of substitution and resubstitution, and hereby authorizes the Eos Nominee to vote, give consents and in all other ways act in such Existing Stockholder’s or the Corporation’s place with respect to (including executing and delivering all documents deemed necessary and appropriate by the Eos Nominee) effectuating the consummation of any Equity Investment in connection with an MAE.  The Stockholders hereby agree to indemnify, defend and hold the Eos Nominee harmless against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from its exercise of the proxy and power of attorney granted hereby.

2.3.   Vacancies; Removal; Interim Director.

(a)In the event a vacancy is created on the Board by reason of the death, disability, removal (with or without Cause) or resignation of any director, (i) the Corporation shall notify each Stockholder of the occurrence of such vacancy,  (ii) such vacancy shall be filled in accordance with the procedures set forth in Section 2.1 hereof and (iii) no Stockholder shall have the ability to fill any vacancy to the extent that the ability to appoint such Stockholder is specifically granted to other Stockholders pursuant to Section 2.1 hereof.  No Stockholder shall have the ability to remove a director to the extent that such director was not nominated by such Stockholder (other than in the case of the Management Director); provided, however, that any director may be removed for Cause by a vote of the holders of a majority of all of the then-outstanding Common Stock Equivalents.

(b)If the Stockholders entitled to nominate a successor to fill such vacancy fail to do so within fifteen (15) calendar days after delivery of such notice, such vacancy may be filled in accordance with the Bylaws (subject in all cases to Section 2.3(a) above) until a successor has been nominated and elected to the Board in accordance with Sections 2.1 and 2.2 of this Agreement.

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(c)No Person may serve as a director of the Corporation if such Person was an employee of the Corporation and has been terminated by the Corporation.

2.4.   Committees; Subsidiaries.

(a)Each Stockholder shall use its respective commercially reasonable efforts to cause each director of the Corporation originally nominated by such Stockholder to take such corporate actions as may be required to ensure that at least one (1) Eos Director is appointed to each committee of the Board.  An Eos Director shall be the chair of the audit committee.

(b)Subject to applicable law and regulation, Eos shall have the right (but not the obligation), upon written notice to the Corporation, to cause the Corporation and each Stockholder to take, and each Stockholder shall use its respective commercially reasonable efforts to cause each director of the Corporation originally nominated by such Stockholder to take, such corporate actions as may be required to ensure that the composition of the board of directors (or similar governing body) of all direct and indirect Subsidiaries of the Corporation is identical to the composition of the Board.

(c)The Corporation and each Stockholder shall take such corporate actions as may be required to ensure that the Indemnification Committee Charter, attached hereto as Exhibit B, is adopted (and not rescinded) and made effective as of the date hereof.

2.5.   Non-Voting Observers.

(a)In addition to its other rights under this Agreement, Eos shall be entitled to have up to two (2) non-voting observers at any Board meeting (collectively, the “Eos Observers”) who shall be designated in advance of such Board meeting by Eos, by notice to the Corporation prior to such Board meeting (and who shall also be subject to removal for no reason or any reason whatsoever by Eos by notice to the Corporation).

(b)In addition to its other rights under this Agreement, the Management Stockholders shall be entitled to have up to two (2) non-voting observers at any Board meeting (collectively, the “Management Observers”) who shall be designated in advance of such Board meeting by the Management Stockholders, by notice to the Corporation prior to such Board meeting (and who shall also be subject to removal for no reason or any reason whatsoever by the Management Stockholders by notice to the Corporation).

(c)In addition to its other rights under this Agreement, RCC shall be entitled to have up to two (2) non-voting observers at any Board meeting (collectively, the “RCC Observers” and, together with the Eos Observers and the Management Observers, the “Observers”) who shall be designated in advance of such Board meeting by RCC, by notice to the Corporation prior to such Board meeting (and who shall also be subject to removal for no reason or any reason whatsoever by RCC by notice to the Corporation).

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(d)Each Observer shall be entitled to be present at all meetings of the Board (and each committee thereof) (each, a “Corporation Governing Body”), as well as at all meetings of the board of directors (or similar governing body) of all direct and indirect Subsidiaries of the Corporation (and each committee thereof) (each, a “Subsidiary Governing Body”). The Corporation shall notify each Observer of each meeting of each Corporation Governing Body and each meeting of each Subsidiary Governing Body, including the time and place of such meeting, in the same manner and at the same times as the members of such Corporation Governing Body or Subsidiary Governing Body, as the case may be, are notified.

(e)Each Observer shall (i) have the same access to information concerning the business and operations of the Corporation and its Subsidiaries, including notes, minutes and consents, at the same times as the members of each Corporation Governing Body or Subsidiary Governing Body may receive access to such information, (ii) be entitled to participate in discussions of the affairs, finances and accounts of, and consult with, and make proposals and furnish advice to, the Corporation Governing Bodies and the Subsidiary Governing Bodies and (iii) be provided with copies of all notices, minutes, consents, and forms of consents in lieu of meetings of the Corporation Governing Bodies and the Subsidiary Governing Bodies and all other material that the Corporation or any of its Subsidiaries provides to members of any Corporation Governing Body or Subsidiary Governing Body as such, in each case at the same time or times as such notices, minutes, consents or forms are issued or circulated by or to, or such other material is provided to, such members.

2.6.   Board Expansion Option.

Upon and at any time after the occurrence of a Realization Event Trigger, the holders of a majority of the Investor Shares may, at their sole option (such option, the “Board Expansion Option”), elect, by providing written notice to the Corporation, to cause the Corporation to increase the number of directors constituting the Board to such number as is necessary to ensure that all Series A Directors are elected to the Board.  The Corporation and the Stockholders shall, upon receipt of such notice, promptly take such actions as may be required to increase the number of directors constituting the Board to such number as is necessary to ensure that all Series A Directors are elected to the Board.  Notwithstanding the foregoing, in the event the holders of a majority of the Investor Shares have exercised the Board Expansion Option in connection with the occurrence of a Material Adverse Effect and, prior to the third anniversary of the date of this Agreement, (i) there ceases to be a Material Adverse Effect and (ii) the Requesting Stockholders have not delivered a Realization Event Notice in accordance with Section 3.6 hereof, then the size of the Board shall revert to its size immediately prior to the exercise of such Board Expansion Option (a “Board Decrease”), and the Corporation and the Stockholders shall promptly take such actions as may be required to effect such reversion.  For the avoidance of doubt, a Board Decrease shall not preclude the Investors from exercising the Board Expansion Option in connection with any other Realization Event Trigger.

2.7.   Meetings; Expenses; Compensation.

(a)The Corporation shall convene meetings of the Board at least once every calendar quarter.  Upon any failure by the Corporation to convene any meeting required by this paragraph, an Eos Director or RCC Director may convene such meeting.

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(b)The Corporation shall reimburse each Director for his or her reasonable out-of-pocket expenses (including travel) incurred in connection with (i) the attendance of meetings of a Corporation Governing Body or Subsidiary Governing Body and (ii) conducting any other business of the Corporation (or of any Subsidiary thereof).

ARTICLE III

ISSUANCE AND TRANSFER OF SHARES

3.1.   Future Stockholders.

The Corporation shall require each Person that acquires Equity Securities (excluding options to acquire Common Stock) after the date hereof (a “Future Stockholder”), as a condition to the effectiveness of such acquisition, to execute a joinder to this Agreement, substantially in the form attached hereto as Exhibit A (the “Joinder Agreement”), agreeing to be treated as (i) an Investor, if such Person acquires such Equity Securities from an Investor, (ii) an Existing Stockholder, if such Person acquires such Equity Securities from an Existing Stockholder, and/or (iii) a Management Stockholder, if such Person is not otherwise an Investor or an Existing Stockholder and acquires Equity Securities from a Management Stockholder or the Corporation, whereupon, in each case, such Person shall be bound by, and entitled to the benefits of, the provisions of this Agreement relating to Investors, Existing Stockholders and/or Management Stockholders, as the case may be.

3.2.   Limitations on Transfers.

(a)No Transfer of any Equity Securities by any Stockholder shall become effective unless and until (i) the transferee (unless already subject to this Agreement) executes and delivers to the Corporation a Joinder Agreement, agreeing to be treated in the same manner as the transferring Stockholder (i.e., as either an Investor, an Existing Stockholder and/or a Management Stockholder) and (ii) such Transfer is either (x) a Permitted Transfer or (y) otherwise made in compliance with this Article III.  Upon such Transfer and such execution and delivery, the Transferee shall be bound by, and entitled to the benefits of, this Agreement with respect to the transferred Equity Securities in the same manner as the transferring Stockholder.  The provisions regarding Transfers of Equity Securities contained in this Article III shall apply to all Equity Securities now owned or hereafter acquired by a Stockholder.  Any Transfer of Equity Securities by a Stockholder not made in accordance with this Article III shall be void ab initio.

(b)In the event of a Liquidation, each Stockholder shall use his, her or its best efforts to ensure that the holders of Preferred Stock receive (out of the proceeds of such Liquidation or Sale of the Corporation distributable to the Corporation’s stockholders) the amounts that they would be entitled to receive pursuant to the Charter in connection with a Liquidation.

(c)Notwithstanding anything to the contrary contained herein, (A) neither the Management Stockholders nor LFC shall be permitted to Transfer all or any portion of its Equity Securities and (B) RCC shall not be permitted to Transfer, prior to the date that is five (5) years from the date hereof, all or any portion of its Series B Preferred Stock or Series D Preferred Stock to any Person, other than (in the case of clauses (A) and (B)) (i) to Permitted Transferees, (ii) pursuant to Sections 3.5 or 3.6 or (iii) with the written consent of Eos.

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(d)Notwithstanding anything to the contrary contained herein, neither RCC nor any Investor shall be permitted to Transfer all or any portion of its Series A Preferred Stock to any Person prior to the date that is five (5) years from the date hereof, other than (i) to Permitted Transferees, (ii) pursuant to Sections 3.3, 3.5 or 3.6 or (iii) with the written consent of Eos (with respect to Transfers by RCC) or RCC (with respect to Transfers by an Investor).

(e)Notwithstanding anything to the contrary contained herein, no Stockholder may Transfer any Equity Securities to any Person (or to any Affiliate thereof), other than in connection with an Approved Sale, who directly or indirectly competes with the Corporation or any of the Corporation’s Subsidiaries, as determined by the Board (including, without limitation, the approval of a majority of the directors (including at least one (1) Eos Director, unless Eos is the transferring Stockholder) that have not been nominated by the transferring Stockholder, in their sole discretion).

(f)Each Stockholder shall, after complying with the provisions of this Agreement, but prior to any Transfer of Equity Securities, give written notice to the Corporation of such proposed Transfer.  Each such notice shall describe the manner and circumstances of the proposed Transfer.  Upon request by the Corporation, each Stockholder seeking to Transfer Equity Securities shall deliver a written opinion of counsel for such Stockholder, addressed to the Corporation, stating that, in the opinion of such counsel (which opinion and counsel shall be reasonably satisfactory to the Corporation), such proposed Transfer does not involve a transaction requiring registration or qualification of such Equity Securities under the Securities Act or the securities laws of any State of the United States; provided, however, that no such opinion shall be required for a Transfer which is a Permitted Transfer or a Transfer effected pursuant to Sections 3.3 (with respect to a Tag-Along Seller) and 3.5 hereof.  Subject to compliance with the other provisions of this Agreement, if the Corporation does not request such an opinion within ten (10) Business Days of receipt of the notice, the Transferring Stockholder shall be entitled to Transfer such Equity Securities, on the terms set forth in the notice, within sixty (60) calendar days of delivery of the notice.

(g)Each Existing Stockholder that is an entity that was formed for the sole purpose of directly or indirectly acquiring Equity Securities or that has no substantial assets other than Equity Securities or direct or indirect interests in Equity Securities agrees that (i) certificates for shares of its common stock or other instruments reflecting equity interests in such entity (and the certificates for shares of common stock or other equity interests in any similar entities controlling such entity) will note the restrictions contained in this Agreement on the restrictions on transfer of shares as if such common stock or other equity interests were Equity Securities, (ii) no shares of such common stock or other equity interests may be transferred to any person other than in accordance with the terms and provisions of this Agreement as if such common stock or other equity interests were Equity Securities and (iii) any transfer of such common stock or other equity interests shall be deemed to be a transfer of a pro rata number of Equity Securities hereunder.

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3.3.   Co-Sale Rights.

(a)Subject to compliance with the other applicable provisions of this Agreement, if at any time a Stockholder (the “Co-Sale Transferor”) proposes to Transfer any Shares (other than pursuant to a Permitted Transfer) to any Third Party (the “Co-Sale Transferee”), the Co-Sale Transferor shall, at least thirty (30) calendar days prior to the closing of such Transfer:

(i)Deliver a notice (the “Co-Sale Notice”) to all other Stockholders (the “Other Stockholders”) that hold Equity Securities of the same class, series or type (or convertible into the same class, series or type) (such Equity Securities, the “Co-Sale Securities”)  detailing the terms and conditions of the proposed Transfer; provided, that such Co-Sale Notice shall indicate that the Co-Sale Transferee has been informed of the co-sale rights provided for in this Section 3.3 and has agreed to purchase the Co-Sale Securities in accordance with the terms hereof.

(ii)The Co-Sale Transferor shall not be permitted to Transfer any Co-Sale Securities to the Co-Sale Transferee unless all Other Stockholders are permitted to Transfer their respective Co-Sale Pro Rata Amount of the aggregate number of Co-Sale Securities to which the Co-Sale Offer relates.

(b)The Co-Sale Transferor shall, in addition to complying with the provisions of this Section 3.3, comply with the other provisions of this Article III.

(c)Within thirty (30) calendar days after delivery of the Co-Sale Notice, each Other Stockholder may elect to participate in the proposed Transfer by delivering to such Co-Sale Transferor a notice (the “Tag-Along Notice”) specifying the number of Co-Sale Securities (up to his, her or its Co-Sale Pro Rata Amount with respect to which such Other Stockholder shall exercise his, her or its rights under this Section 3.3).  Each Tag-Along Notice shall include only Equity Securities of the same, class, series or type (or convertible into the same class, series or type) being Transferred by the Co-Sale Transferor.  For purposes of this Section 3.3, each Other Stockholder may aggregate his, her or its Co-Sale Pro Rata Amount among Other Stockholders in his, her or its Group to the extent that such Other Stockholders in his, her or its Group do not elect to sell their respective Co-Sale Pro Rata Amounts.

(d)Any Co-Sale Securities requested to be included by an Other Stockholder (a “Tag-Along Seller”) in any Co-Sale Notice shall be Transferred on terms and conditions that are no less favorable than the terms and conditions set forth in the Co-Sale Notice, provided, however, that adjustment shall be made to account for the relative value of the Co-Sale Securities.

3.4.   Preemptive Rights.

(a)If the Corporation proposes to issue any New Securities to any Person, the Corporation shall, before such issuance, deliver to the Stockholders (other than those Stockholders that are not Accredited Investors (collectively, the “Subscribing Stockholders”)) a written notice offering to issue to the Subscribing Stockholders such New Securities upon the terms set forth in this Section 3.4 (the “Preemptive Offer Notice”).  The Preemptive Offer Notice shall state that the Corporation proposes to issue New Securities and shall set forth the number and the terms and conditions (including the purchase price) of such New Securities.  The offer (the “Preemptive Offer”) shall remain open and irrevocable for a period of ten (10) calendar days (the “Preemptive Offer Period”) from the date of its delivery.

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(b)Each Subscribing Stockholder may accept the Preemptive Offer by delivering to the Corporation a notice (the “Purchase Notice”) at any time during the Preemptive Offer Period.  The Purchase Notice shall state the number (the “Preemptive Offer Number”) of New Securities such Subscribing Stockholder desires to purchase.  If the sum of all Preemptive Offer Numbers exceeds the number of New Securities, then the New Securities shall be allocated among the Subscribing Stockholders that delivered a Purchase Notice in accordance with their respective Pro Rata Amount (based on the aggregate number of Common Stock Equivalents outstanding at the time of the Preemptive Offer and held by all Subscribing Stockholders).

(c)The issuance of New Securities to the Subscribing Stockholders who delivered a Purchase Notice shall be made on a Business Day, as designated by the Corporation, not less than ten (10) and not more than sixty (60) calendar days after expiration of the Preemptive Offer Period on those terms and conditions of the Preemptive Offer not inconsistent with this Section 3.4.

(d)If the number of New Securities exceeds the sum of all Preemptive Offer Numbers, the Corporation may issue such excess or any portion thereof on the terms and conditions set forth in the Preemptive Offer to any Person within ninety (90) calendar days after expiration of the Preemptive Offer Period.  If such issuance is not made within such 90-day period, the restrictions provided for in this Section 3.4 shall again become effective.

(e)For purposes of this Section 3.4, each Subscribing Stockholder may aggregate his, her or its Pro Rata Amount among other Subscribing Stockholders in his, her or its Group to the extent that other Subscribing Stockholders in his, her or its Group do not elect to purchase their respective Pro Rata Amounts.

(f)Notwithstanding anything to the contrary contained herein, the Corporation may, in order to expedite the issuance of the New Securities under this Section 3.4, issue all or a portion of the New Securities to one or more Persons (each, an “Initial Subscribing Investor”), without complying with the provisions of this Section 3.4; provided, that prior to such issuance, either (i) each Initial Subscribing Investor agrees to offer to sell to each Stockholder who is an Accredited Investor and who is not an Initial Subscribing Investor (each such Stockholder, an “Other Accredited Stockholder”) his or its respective Pro Rata Amount of such New Securities on the same terms and conditions as issued to the Initial Subscribing Investors or (ii) if the Initial Subscribing Investor was a Stockholder prior to the issuance of New Securities in accordance with this Section 3.4, the Corporation shall offer to sell an additional amount of New Securities to each Other Accredited Stockholder only in an amount and manner which provides such Other Accredited Stockholders with rights substantially similar to the rights outlined in Sections 3.4(b), 3.4(c) and 3.4(e) hereof.  The Initial Subscribing Investors or the Corporation, as applicable, shall offer to sell such New Securities to each Other Accredited Stockholder within sixty (60) calendar days after the closing of the purchase of the New Securities by the Initial Subscribing Investors.

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3.5.   Approved Sale; Sale of the Corporation.

(a)At any time that Eos and RCC shall approve a Sale of the Corporation to one or more Persons (an “Approved Sale”), each Stockholder and the Corporation shall consent to and raise no objections against the Approved Sale, and if the Approved Sale is structured as (A) a merger or consolidation of the Corporation, each Stockholder shall, and hereby does, waive any dissenter’s rights, appraisal rights or similar rights in connection with such merger or consolidation and hereby instructs the Board to vote in favor of such Approved Sale, or (B) a sale of shares of capital stock, each Stockholder shall, and hereby does, agree to sell their Equity Securities on the terms and subject to the conditions approved by Eos and RCC.  All Stockholders and the Corporation shall take all necessary and desirable actions in connection with the consummation of the Approved Sale, including the execution of such agreements and such instruments and other actions reasonably necessary to (1) provide the representations, warranties, indemnities, covenants, conditions, escrow agreements and other provisions and agreements relating to such Approved Sale and (2) to effectuate the allocation and distribution of the aggregate consideration upon the Approved Sale as set forth below.  The Stockholders shall not be required to comply with, and shall have no rights under, Sections 3.1 through 3.4 hereof in connection with any Approved Sale.

(b)The Corporation shall provide the Stockholders with written notice of any Approved Sale at least ten (10) calendar days prior to the consummation thereof setting forth in reasonable detail the terms (including price, time and form of payment) of any Approved Sale.  The obligations of the Stockholders to participate in any Approved Sale are subject to the satisfaction of the following conditions:

(i)each Stockholder shall receive the same portion of the aggregate consideration from such Approved Sale that such Stockholder would have received if such aggregate consideration (in the case of an asset sale, after payment or provision for all liabilities) had been distributed by the Corporation in a Liquidation;

(ii)if any Stockholders of a class, series or type of Equity Securities are given an option as to the form and amount of consideration to be received with respect to Equity Securities in a class, series or type, all holders of Equity Securities of such class, series or type will be given the same option; provided, however, that those Stockholders that are not Accredited Investors shall not be entitled to receive securities in connection with such Approved Sale and instead, shall receive cash proceeds equivalent in value to the securities being offered in such Approved Sale (as determined in good faith by the Board);

(iii)no Stockholder shall be obligated to pay more than his or its pro rata amount of reasonable expenses incurred (based on the proportion of the aggregate transaction consideration received) in connection with a consummated Approved Sale to the extent such expenses are incurred for the benefit of all Stockholders and are not otherwise paid by the Corporation or the acquiring party (expenses incurred by or on behalf of a Stockholder for its or his sole benefit not being considered expenses incurred for the benefit of all Stockholders);

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(iv)notwithstanding any other provision in this Agreement, the reasonable expenses incurred by the Management Stockholders in connection with an Approved Sale shall be paid by the Corporation or the acquiring party; and

(v)(A) No Stockholder shall be required to make any representations or warranties in connection with any Approved Sale pursuant to this Section 3.5, other than with respect to his, her or its title to, and ownership of, the Equity Securities being conveyed, tax status, authority to enter into any such transaction, the enforceability of relevant agreements against such Stockholder and other customary representations with respect to such Stockholder’s ownership of the Equity Securities, as applicable; (B) each Stockholder's indemnification obligations in connection with any such Approved Sale shall be on a pro rata but several (and not joint) basis with all other Stockholders (other than any such obligations that relate specifically to a Stockholder, such as indemnification with respect to representations and warranties given by a Stockholder regarding such Stockholder’s title to and ownership of its Shares, tax status, authority to enter into any such transaction and enforceability of relevant agreements against such Stockholder, as applicable, which obligations shall be the obligations of solely such Stockholder and not the pro rata or joint obligations of any other Stockholder); and (C) the aggregate liability of each such Stockholder with respect to any indemnification obligations, together with its pro rata share of allocated expenses in connection with such Approved Sale contemplated by this Section 3.5, shall not exceed the proceeds received by such Stockholder in connection with such Approved Sale.

(c)Each Stockholder and the Corporation hereby grants an irrevocable proxy and power of attorney to any Eos Nominee to take all necessary actions and execute and deliver all documents deemed necessary and appropriate by such Person to effectuate the consummation of any Approved Sale.  The Stockholders hereby agree to indemnify, defend and hold the Eos Nominee harmless (severally in accordance with their pro rata share of the consideration received in any such Approved Sale (and not jointly and severally)) against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from its exercise of the proxy and power of attorney granted hereby.

3.6.   Realization Event.

(a)Upon and anytime following a Realization Event Trigger, the holders of a majority of all then outstanding Investor Shares (the “Requesting Stockholders”), may deliver a written notice to (i) the Corporation (a “Realization Event Notice”), directing the Corporation to pursue strategic alternatives including a Sale of the Corporation, IPO, recapitalization, refinancing or other similar liquidity event (in each case, a “Realization Event”) and identifying an independent nationally recognized investment bank (the “Investment Bank”) to advise on such strategic alternatives, in accordance with this Section 3.6 or (ii) each of the other Stockholders (a “Stockholder Realization Notice”) indicating that the Requesting Stockholders are electing to pursue a Realization Event that does not require any action by the Corporation (e.g., a Sale of the Corporation via a stock sale) and identifying the Investment Bank. Upon receipt of a Realization Event Notice, the Corporation shall use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable to affect the Realization Event in accordance with this Section 3.6.  Upon receipt of a Stockholder Realization Notice, each Stockholder shall reasonably cooperate (at the Corporation’s expense) in taking, or causing to be taken, all actions and doing, or causing to be done, all things necessary or desirable to effect the Realization Event in accordance with this Section 3.6.

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(b)The Corporation or the Stockholders, as the case may be, shall require the Investment Bank to submit a report to the Requesting Stockholders and the Corporation outlining alternatives for a Realization Event that will achieve the highest value reasonably available. The Corporation and the Stockholders shall reasonably cooperate with the Investment Bank in accordance with any procedures set forth in such report with respect to the proposed Realization Event, shall use their commercially reasonable efforts to reach agreement on the terms and conditions for such Realization Event and will retain independent legal counsel selected by the Requesting Stockholders to advise the Corporation and the Stockholders on such Realization Event.

(c)For purposes of the foregoing, in the event of a disagreement on the terms and conditions for the Realization Event among the Stockholders, the final determination of such terms and conditions shall be made by the Requesting Stockholders, and thereafter the Requesting Stockholders shall have the right to cause the Corporation, or the Stockholders, as the case may be, to expeditiously consummate such Realization Event on the terms so determined. In connection with any Realization Event pursuant to this Section 3.6, the provisions set forth in Sections 3.5(a), (b) and (c) hereof shall apply, mutatis mutandis, with respect to such Realization Event as if it were an Approved Sale; provided, however, that Section 3.5(c) hereof shall only apply, mutatis mutandis, with respect to such Realization Event as if it were an Approved Sale if the Realization Event Trigger occurs because of the occurrence of a Material Adverse Effect; provided, further, that a Realization Event Trigger that occurs because of the failure by the Corporation to consummate a Sale of the Corporation or an IPO on or before the third anniversary of the date of this Agreement for any reason shall not give rise to the application of Section 3.5(c) hereof, mutatis mutandis, with respect to such Realization Event as if it were an Approved Sale. The Corporation agrees to pay all fees and expenses of the Investment Bank and such legal counsel in connection with such Realization Event.

ARTICLE IV

PROTECTIVE PROVISIONS

4.1.   Eos Director Protective Covenants.

The Corporation shall not take any of the following actions without the prior written approval of at least one (1) Eos Director:

(a)create a bonus plan or program or issue any bonuses or agree to issue bonuses, in which the payment under such bonus plan is contingent upon the occurrence of a Liquidation;

(b)pledge any assets (other than in connection with capital leases or other financings or securitizations that have been previously approved by the Board);

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(c)make any material changes in accounting or tax methods or policies (other than as required by GAAP or applicable law), or any change in the Corporation’s auditors;

(d)acquisition or disposition by the Corporation of any business (whether by way of merger, purchase of stock, assets, license or otherwise);

(e)adopt an annual budget, operating budget or business plan, or materially deviate from any of the foregoing;

(f)materially change the principal business of the Corporation;

(g)change the name under which the Corporation conducts its business;

(h)create, or change the composition of, the Board or any committee of the Board or delegate any authority to any such committee;

(i)create any joint venture, partnership or non-wholly owned Subsidiary;

(j)make investments in any other Person (other than a wholly owned Subsidiary), including owning Equity Securities in any such Person;

(k)make any loan or advance (or permit any Subsidiary to make any loan or advance) to any Person (other than to the Corporation or to a wholly owned Subsidiary), except such advances and similar expenditures conducted in the ordinary course of business;

(l)guarantee, or permit any Subsidiary of the Corporation to guarantee, the indebtedness of any Person in excess of $150,000 (other than that of the Corporation or that of a wholly-owned Subsidiary of the Corporation), except in the ordinary course of business;

(m)commence or terminate the employment of the chief executive officer, president, chief financial officer, chief operating officer or any other senior executive officer of the Corporation, with total annual cash compensation in excess of $200,000, or amend or revise the terms of any employment agreement with, or otherwise modify in any way the compensation of, any such executive officer;

(n)enter into, or amend or otherwise materially modify any contract or agreement which provides for a payment in excess of $150,000 with any officer, director, stockholder, employee, consultant or Affiliate of the Corporation or any Subsidiary (a “Related Person”), including for the sale or repurchase of any of the Corporation’s Equity Securities;

(o)transfer any material technology or intellectual property, other than the granting of licenses in the ordinary course of business;

(p)grant any exclusive rights to any intellectual property of the Corporation;

(q)enter into any contract, commitment or arrangement (other than the Management Agreement) with respect to the receipt by the Corporation or any Subsidiary thereof of either (i) investment banking services with respect to material issuances of securities or (ii) advisory services with respect to mergers and acquisitions involving the Corporation (or any Subsidiary thereof);

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(r)settle any material lawsuit, proceeding or investigation involving a monetary payment by the Corporation or any of its Subsidiaries in excess of $150,000;

(s)adopt or amend the Corporation’s Restricted Stock Plan;

(t)consummate any securitization transaction or similar material financing;

(u)originate any financing leases or loans, extend credit, or acquire any portfolios of leases or loans that materially deviate from the Corporation’s Credit Policies and Procedures or Origination Parameters;

(v)effect or implement any material changes to, or materially deviate from, the Corporation’s Credit Policies and Procedures or Origination Parameters;

(w)create, or authorize the creation of, or issue, or authorize the issuance of, any bond, debentures, notes or other debt security, or permit any Subsidiary of the Corporation to take any such action with respect to any such debt security, or otherwise incur any indebtedness in excess of $150,000 in the aggregate, other than trade payables incurred in the ordinary course of business and borrowings under then-existing credit facilities in the ordinary course of business; or

(x)agree to take any of the foregoing actions.

4.2.   Investor Stockholder Protective Covenants.

The Corporation shall not take any of the following actions without the prior written approval of the holders of a majority of all then outstanding Investor Shares:

(a)(A) issue or authorize any Equity Securities (other than Common Stock issued pursuant to the Corporation’s Restricted Stock Plan), (B) redeem, repurchase or acquire any Equity Securities, or (C) re-price any stock options;

(b)repurchase or redeem any debt or equity or amend the material terms of any existing (or previously approved) debt (except to the extent such debt becomes due in accordance with its terms);

(c)effect any acquisition by the Corporation of any business (whether by way of merger, purchase of stock or assets);

(d)take any action that would result in a Liquidation;

(e)in any manner alter or change the terms, designations, powers, preferences or relative, participating, optional or other special rights, or the qualifications, limitations or restrictions, of the Series A Preferred Stock, or agree to any action which may impair the Corporation’s ability to honor the rights and preferences of the Series A Preferred Stock;

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(f)effect any changes in the Charter or Bylaws of the Corporation or similar governing documents (including this Agreement);

(g)alter the size of the Board (other than pursuant to Section 2.6 hereof) or any committee thereof;

(h)in any manner, directly or indirectly, and whether in cash, securities, dividends or other property, pay or declare or set apart for payment, any dividends or make any other distribution on or with respect to any Equity Securities;

(i)formally initiate a process with respect to, or consummate, an IPO;

(j)voluntarily file for bankruptcy protection;or

(k)agree to take any of the foregoing actions.

4.3.   RCC Protective Covenants.

The Corporation shall not take any of the following actions without the prior written approval of RCC:

(a)effect any changes in the Charter or Bylaws of the Corporation other than (i) any changes required to be made by a prospective investor in connection with an Equity Investment or (ii) changes that would not have a disproportionate adverse effect on RCC in its capacity as a holder of Series A Preferred Stock;

(b)alter the size of or change the composition of the Board or any committee thereof (other than (i) pursuant to the Board Expansion Option or (ii) in connection with an Equity Investment);

(c)enter into, or amend or otherwise modify any contract or agreement with a Related Person (other than (i) any contract or agreement entered into with such Related Person on terms not less favorable to the Corporation or Subsidiary, as the case may be, than would be obtained in a transaction with a Person which is not a Related Person or (ii) in connection with an Equity Investment); or

(d)so long as RCC holds Series B Preferred Stock or Series D Preferred Stock, take any action that contravenes, conflicts with or would otherwise have a discriminatory effect on the rights, powers, preferences or privileges of the Series B Preferred Stock (so long as RCC holds any Series B Preferred Stock) or the Series D Preferred Stock (so long as RCC holds any Series D Preferred Stock); provided, however, that the issuance of Equity Securities in connection with an Equity Investment shall not be considered to contravene, conflict with or otherwise have a discriminatory effect on the rights, powers, preferences or privileges of the Series B Preferred Stock or the Series D Preferred Stock.

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4.4.   Subsidiaries and Committees.

At any time that the Corporation has any Subsidiary or committee, it shall not permit such Subsidiary or committee, as the case may be, to take any of the foregoing actions set forth in Sections 4.1, 4.2 or 4.3 hereof (with all references to the Corporation deemed to be references to such Subsidiary or committee) without the prior written approval of an Investor Director, Eos or RCC, as the case may be.

ARTICLE V

ADDITIONAL AGREEMENTS

5.1.   Information Rights.

(a)The Corporation shall deliver the following reports to each Stockholder holding more than five percent (5%) of the outstanding Common Stock Equivalents:

(i)as soon as available, and in any event within thirty (30) calendar days after the end of each month of each fiscal year of the Corporation (subject to extension as agreed to by Eos), unaudited consolidated and consolidating balance sheets of the Corporation and its Subsidiaries as of the end of such period, and consolidated and consolidating statements of income and cash flows of the Corporation and its Subsidiaries for the period then ended, including a report containing a management’s discussion and analysis of such financial results prepared in conformity with GAAP, except as otherwise noted therein, and subject to the absence of footnotes and to year-end adjustments;

(ii)as soon as available and in any event within forty-five (45) calendar days after the end of each of the first three quarters of each fiscal year of the Corporation (subject to extension as agreed to by Eos), unaudited consolidated and consolidating balance sheets of the Corporation and its Subsidiaries as of the end of such period, and consolidated and consolidating statements of income and cash flows of the Corporation and its Subsidiaries for the period then ended prepared in conformity with GAAP, except as otherwise noted therein, and subject to the absence of footnotes and to year-end adjustments;

(iii)as soon as available, and in any event within ninety (90) calendar days after the end of each fiscal year of the Corporation (subject to extension as agreed to by Eos), (A) a consolidated and consolidating balance sheet of the Corporation and its Subsidiaries as of the end of such year, and consolidated and consolidating statements of income and cash flows of the Corporation and its Subsidiaries for the year then ended prepared in conformity with GAAP, consistently applied and except as otherwise noted therein, together with an auditor's report thereon of a public accounting firm of established national reputation and (B) the audited annual financial statements for such fiscal year (including the notes, exhibits or schedules thereto and any affirmations or certificates filed therewith);

(iv)to the extent the Corporation (or any Subsidiary thereof) is required to prepare such financial statements (or obtain such audit letters), any financial statements actually prepared by the Corporation (or any such Subsidiary), or audit letters actually obtained by the Corporation (or any such Subsidiary) from any auditor of such financial statements, in each case as soon as available to the Corporation (or such Subsidiary);

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(v)as soon as available, and in any event within fifteen (15) calendar days prior to the beginning of the fiscal year to which the annual budget shall apply, the annual budget and business plan of the Corporation and its Subsidiaries; and

(vi)as soon as available, and in any event within fifteen (15) calendar days after the end of each calendar year of the Corporation, updated copies of the Corporation’s Credit Policies and Procedures and Origination Parameters, provided that such Credit Policies and Procedures have materially changed or have been amended in such calendar year.

(b)The Corporation and its Subsidiaries shall provide to each Investor and RCC, true and correct copies of all documents, reports, financial data and other information as an Investor or RCC may reasonably request.  The Corporation shall permit any authorized representatives designated by an Investor or RCC to visit and inspect any of the properties of the Corporation and its Subsidiaries, including its and their books of account, and to discuss its and their affairs, finances and accounts with its and their officers, all at such times as an Investor may reasonably request.

5.2.   Conversion of Series A Preferred Stock.

Immediately prior to the consummation of an IPO, the Corporation and the Stockholders shall take all actions necessary to effect the mandatory conversion of the then outstanding Series A Preferred Stock as contemplated by Article IV, Section 8(a) of the Charter, including, without limitation, amending the Charter to authorize additional shares of Common Stock or effect a reverse stock split solely for the purpose of providing for the conversion of the Series A Preferred Stock.

5.3.   Conversion of Series B Preferred Stock.

Immediately prior to the closing of an IPO, the Corporation, the Board and the holder(s) of the then outstanding Series B Preferred Stock shall take all actions necessary to convert, effective as of the closing of such IPO, all of the then outstanding shares of Series B Preferred Stock into a subordinated promissory note (the “Series B Note”).  Such Series B Note shall contain the following terms: (i) an original principal amount equal to the Series B Preference Amount at the time of such IPO, (ii) an interest rate equal to eight percent (8%) per annum and (iii) a maturity date of the third anniversary of such IPO.  The terms of such Series B Note shall be structured so as not to violate the terms of any warehouse lines of credit or similar debt facilities that are in place at the time of such IPO.  The terms of the subordination of such Series B Note shall be reasonably acceptable to the holder(s) of the then outstanding Series B Preferred Stock.

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5.4.   Resignations.

Each of Crit DeMent and Miles Herman agree to resign as directors and/or managers of LFC, LEAF Funding, Inc. and LEAF Asset Management, LLC prior to December 15, 2011.

ARTICLE VI

MISCELLANEOUS

6.1.   Termination.

This Agreement shall automatically terminate and be of no further force or effect as of the Termination Date.

6.2.   Legend on Stock Certificates.

Each certificate representing shares of capital stock that are subject to this Agreement shall bear a legend substantially in the following form:

“THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT TO A STOCKHOLDERS’ AGREEMENT DATED AS OF NOVEMBER 16, 2011 (AS THE SAME MAY BE AMENDED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME), BY AND AMONG LEAF COMMERCIAL CAPITAL, INC. AND CERTAIN HOLDERS OF ITS OUTSTANDING CAPITAL STOCK. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF LEAF COMMERCIAL CAPITAL, INC.”

6.3.   Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial.

Other than with respect to matters relating to the internal governance of the Corporation, this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of New York to be applied.  All matters which are the subject of this Agreement relating to matters of internal governance of the Corporation shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of Delaware to be applied.

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ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS AGREEMENT MAY BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING.  EACH OF THE PARTIES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM.  ANY JUDGMENT MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

6.4.   Remedies.

The parties hereto shall each have and retain all rights and remedies existing in their favor under this Agreement, at law or equity, including, without limitation, rights to bring actions for specific performance and/or injunctive or other equitable relief (including the remedy of rescission) to enforce or prevent a breach or violation of any provision of this Agreement.  All such rights and remedies shall, to the extent permitted by applicable law, be cumulative and the existence, assertion, pursuit or exercise of any thereof by a party shall not preclude such party from exercising or pursuing any other rights or remedies available to it.

6.5.   Severability.

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by Law, the parties waive any provision of Law which renders any such provision prohibited or unenforceable in any respect.

6.6.   Assignments; Successors and Assigns.

Except in connection with any Transfer of Shares in accordance with this Agreement, the rights of each party under this Agreement may not be assigned.  This Agreement shall bind and inure to the benefit of the parties and their respective successors, permitted assigns, legal representatives and heirs.

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6.7.   Amendments; Waivers.

This Agreement may only be modified or amended by an instrument in writing signed by Eos and RCC; provided, however, that any amendment or waiver (i) that would not have a disproportionate effect on the rights, preferences, powers and privileges hereunder of RCC (whether by merger, consolidation or otherwise, other than a Sale of the Corporation) in relation to the effect on the rights, preferences, powers and privileges hereunder of Eos or (ii) in connection with an Equity Investment or a Realization Event Trigger, shall be effective without the consent of RCC.  The holders of a majority of all then outstanding Investor Shares may grant a waiver or effect any modification or amendment on behalf of all Investors and the holders of a majority of all then outstanding Existing Stockholder Shares may grant a waiver or effect any modification or amendment on behalf of all Existing Stockholders.  Each waiver shall be effective only in the specific instance and for the specific purpose for which it was given.

6.8.   Notices.

Except as otherwise expressly set forth in this Agreement, all notices, requests, and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively delivered to and received by a party:  (i) upon personal delivery; (ii) if sent by fax with confirmation that the proper number of pages were transmitted without error to such party’s fax number, on the Business Day the fax was sent if delivered during normal business hours, or else on the next succeeding Business Day; (iii) five (5) calendar days after having been sent by certified United States postal mail with return receipt requested to such party’s address; or (iv) on the day of delivery if delivered by nationally recognized overnight courier with confirmation of delivery to such party’s address.  All notices shall be addressed as follows (or to such other address as the party to whom such notice or other communication is to be given may have furnished to each other party in writing in accordance herewith):

if to the Corporation:

LEAF Commercial Capital, Inc.

One Commerce Square

2005 Market Street, 14th Floor

Philadelphia, Pennsylvania 19103

Attention:  Crit DeMent

Facsimile:  (215) 640-6330

with a copy (which shall not constitute notice) to:

Ballard Spahr LLP

1735 Market Street, 51st Floor

Philadelphia, Pennsylvania 19103

Attention:  Gerald J. Guarcini, Esq.

Facsimile:  (215) 864-8999

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if to Eos:

Eos Management, L.P.

320 Park Avenue

New York, New York  10022

Attention:  Brendan Moore

Facsimile:  (212) 832-5815

with a copy (which shall not constitute notice) to:

Winston & Strawn LLP

200 Park Avenue

New York, New York 10166

Attention: Bradley C. Vaiana, Esq.

Facsimile (212) 294-4700

if to the Stockholders, to their respective addresses set forth on Annex I and II hereto.

6.9.   Captions.

The titles, captions and table of contents contained in this Agreement are inserted in this Agreement only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision of this Agreement.  Unless otherwise specified to the contrary, all references to Articles and Sections are references to Articles and Sections of this Agreement and all references to Schedules or Exhibits, if any, are references to Schedules and Exhibits, respectively, to this Agreement.

6.10.   Number; Gender.

Whenever the context so requires, the singular number will include the plural and the plural will include the singular, and the gender of any pronoun will include the other genders.

6.11.   Entire Agreement.

This Agreement contains the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings with respect to such subject matter.  The parties hereto represent and warrant that there are no other agreements or understandings regarding any of the subject matter hereof other than as set forth herein and covenant not to enter into any such agreements or understandings after the date hereof except pursuant to an amendment, modification or waiver of the provisions of this Agreement.

6.12.   Counterparts; Facsimile Signatures.

This Agreement may be executed and delivered by facsimile or portable document format (.pdf) in two (2) or more counterparts, each of which will be deemed an original, and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one (1) of such counterparts.

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6.13.   Conflicting Agreements.

No Stockholder shall enter into any stockholder agreements or arrangements of any kind with any Person with respect to any Equity Securities on terms inconsistent with the provisions of this Agreement (whether or not such agreements or arrangements are with other Stockholders or with Persons that are not parties to this Agreement), including agreements or arrangements with respect to the acquisition or disposition of Equity Securities in a manner which is inconsistent with this Agreement.

6.14.   Third Party Reliance.

Notwithstanding anything contained herein to the contrary, the covenants of the Corporation contained in this Agreement (a) are being given by the Corporation as an inducement to the Stockholders to enter into this Agreement (and the Corporation acknowledges that the Stockholders have expressly relied thereon) and (b) are solely for the benefit of the Stockholders. Accordingly, no third party (including any holder of capital stock of the Corporation) or anyone acting on behalf of anyone thereof other than the Stockholders, shall be a third party or other beneficiary of such covenants and no such third party shall have any rights of contribution against the Stockholders or the Corporation with respect to such covenants or any matter subject to or resulting in indemnification under this Agreement or otherwise.

6.15.   Consultation with Counsel, etc.

Each Stockholder who or which executes and delivers a counterpart signature page to this Agreement hereby acknowledges that he, she or it has had the opportunity to consult with his, her or its own counsel with respect to the subject matter of this Agreement, and has read and understands all of the provisions of this Agreement.  Each Stockholder who or which executes and delivers a counterpart signature page to this Agreement hereby further acknowledges that he, she or it has had the opportunity to ask questions of, and to seek additional information from, the Corporation with respect to each of the matters set forth herein.

6.16.   Prevailing Party.

If any party to this Agreement brings an action or proceeding directly or indirectly based upon this Agreement or the matters contemplated hereby against any other party hereto (or its Affiliates), the Prevailing Party shall be entitled to recover, in addition to any other appropriate amounts, its reasonable fees, costs and expenses in connection with such action or proceeding, including reasonable attorneys’ fees, fees of expert witnesses and expenses and court costs.  In any action seeking monetary damages, (A) the party bringing such action must expressly state a claimed dollar amount in its complaint or as a counterclaim in its answer and (B) the parties agree that they may not amend their respective complaint or answer to change the dollar amount of damages originally sought.

6.17.   Interpretation.

Notwithstanding anything to the contrary contained herein or in the Bylaws, to the extent that any provision contained in this Agreement conflicts with any provision contained in the Bylaws, the provision contained in this Agreement shall govern.

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6.18.   Construction.

The term “Agreement” means this agreement together with all Schedules, Annexes and Exhibits hereto, if any, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof.  Unless the context otherwise requires, words importing the singular shall include the plural, and vice versa.  The use in this Agreement of the term “including” means “including, without limitation.” The words “herein”, “hereof’, “hereunder”, “hereby”, “hereto”, “hereinafter”, and other words of similar import refer to this Agreement as a whole, including the Schedules, Annexes and Exhibits, if any, as the same may from time to time be amended, modified, supplemented or restated, and not to any particular article, section, subsection, paragraph, subparagraph or clause contained in this Agreement.  All references to articles, sections, subsections, clauses, paragraphs, schedules and exhibits mean such provisions of this Agreement and the Schedules, Annexes and Exhibits attached to this Agreement, except where otherwise stated.  The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require.

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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders’ Agreement on the date first written above.

COMPANY

LEAF COMMERCIAL CAPITAL, INC.

By:                /s/ Crit DeMent

Name:           Crit DeMent

Title:              CEO

[Signature Page to Stockholders’ Agreement]

INVESTORS:
EOS PARTNERS, L.P.,
a Delaware limited partnership
By:	EOS GENERAL, L.L.C.,
	a Delaware limited liability company,
	its general partner
	By:	/s/ Steven M. Friedman
		Name:  Steven M. Friedman
		Title:    Manager
EOS CAPITAL PARTNERS III, L.P.,
a Delaware limited partnership
By:	ECP GENERAL III, L.P.,
	a Delaware limited partnership,
	its general partner
	By:	ECP III, LLC,
		a Delaware limited liability company,
		its general partner
		By:	/s/ Steven M. Friedman
			Name:  Steven M. Friedman
			Title:    President
EOS CAPITAL PARTNERS IV, L.P.,
a Delaware limited partnership
By:	ECP GENERAL IV, L.P.,
	a Delaware limited partnership,
	its general partner
	By:	ECP IV, LLC,
		a Delaware limited liability company,
		its general partner
		By:	/s/ Steven M. Friedman
			Name:  Steven M. Friedman
			Title:    President

[Signature Page to Stockholders’ Agreement]

EXISTING STOCKHOLDERS

RESOURCE TRS, INC.

By:                /s/ Jeffrey D. Blomstrom

Name:           Jeffrey D. Blomstrom

Title:              Senior Vice President

[Signature Page to Stockholders’ Agreement]

 

LEAF FINANCIAL CORPORATION

By:                /s/ Crit DeMent

Name:           Crit DeMent

Title:              CEO

ANNEX I

INVESTORS

Investor

Eos Capital Partners III, L.P.

c/o Eos Partners, L.P.

320 Park Avenue

New York, New York  10022

Telephone:                      (212) 832-5800

Facsimile:                      (212) 832-5815

Attn:  Brendan Moore

Eos Capital Partners IV, L.P.

c/o Eos Partners, L.P.

320 Park Avenue

New York, New York  10022

Telephone:                      (212) 832-5800

Facsimile:                      (212) 832-5815

Attn:  Brendan Moore

Eos Partners, L.P.

c/o Eos Partners, L.P.

320 Park Avenue

New York, New York  10022

Telephone:                      (212) 832-5800

Facsimile:                      (212) 832-5815

Attn: Brendan Moore

In each case, with a copy (which shall not constitute notice) to:

Winston & Strawn LLP

200 Park Avenue

New York, NY 10166

Attention:  Bradley C. Vaiana, Esq.

Telephone:  (212) 294-2610

Facsimile:  (212) 294-4700

ANNEX II

EXISTING STOCKHOLDERS

Existing Stockholder

Resource TRS, Inc.

c/o Resource Capital Corp.

712 Fifth Avenue, 12th Floor

New York, NY  10019

Attn:  David Bryant

with a copy (which shall not constitute notice) to:

Covington & Burling LLP

620 Eighth Avenue

The New York Times Building

New York, New York 10018

Email: sinfante@cov.com

Fax: (646) 441-9039

Attn: Stephen A. Infante

LEAF Financial Corporation

One Commerce Square

2005 Market Street, 15th Floor

Philadelphia, Pennsylvania 19103

Email: cdement@LEAFnow.com

Facsimile: (215) 640-6330

Attn: Crit DeMent

with a copy (which shall not constitute notice) to:

Ballard Spahr LLP

1735 Market Street, 51st Floor

Philadelphia, Pennsylvania 19103

Email: guarcini@ballardspahr.com

Fax:  (215) 864-8999

Attn: Gerald J. Guarcini

Crit DeMent

One Commerce Square

2005 Market Street, 15th Floor

Philadelphia, PA 19103

EXHIBIT A

STOCKHOLDERS’ AGREEMENT JOINDER

By execution of this Joinder, the undersigned agrees to become a party to that certain Stockholders’ Agreement dated as of November 16, 2011, among LEAF Commercial Capital, Inc. and the Stockholders which are parties thereto, as the same may be amended, restated or otherwise modified from time to time.  The undersigned shall have all the rights, and shall observe all the obligations, applicable to a Stockholder and [Investor] [Existing] [Management Stockholder] thereunder.

Name:  __________________________

Address for Notices: with copies to:

EXHIBIT B

LEAF COMMERCIAL CAPITAL, INC.

INDEMNIFICATION COMMITTEE CHARTER

PURPOSE

The Indemnification Committee (the “Committee”) of the Board of Directors (the “Board”) of LEAF Commercial Capital, Inc. (the “Corporation”) is a standing committee whose purpose is to assist the Board in fulfilling its responsibilities and taking all affirmative actions it deems in the best interest of the Corporation in connection with enforcing and effecting the rights of the Corporation under the Stock Purchase Agreement, including, without limitation, Article X thereof, dated November 16, 2011, by and among the Corporation, LEAF Financial Corporation, Resource TRS, Inc., Resource Capital Corp., Resource America, Inc. and the Purchasers named therein.

COMMITTEE MEMBERSHIP

The Committee shall be comprised of the Eos Directors, one Independent Director and the Management Director (as such terms are defined in the stockholders agreement to which the Corporation is a party), each of whom may not be removed so long as he or she is a director.

COMMITTEE STRUCTURE AND OPERATIONS

The Committee shall meet at such times as the Committee or its chair deems necessary to perform the Committee’s responsibilities.  The Committee may meet by telephone or video conference.  In addition, the Committee may take action by written consent.  The Committee may delegate authority to one or more members when appropriate.

In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Corporation, and has the authority to engage independent counsel and other advisers as it determines necessary to carry out its duties.  The Corporation shall provide funding, as determined by the Committee, for payment of compensation to any advisers the Committee retains.

COMMITTEE AUTHORITY

The Committee shall have the full and absolute authority to cause the Corporation to take all actions the Committee deems are in the best interest of the Corporation with respect to its purpose as set forth herein.

Adopted by the Committee on November 16, 2011, to be effective upon resolution of the Board.

EXHIBIT C

FINANCIAL COVENANTS

●   Tangible Net Worth

●   The Corporation shall, commencing on the month ending December, 2011 and on a monthly basis thereafter, maintain on a consolidated basis, as of the end of each fiscal month, Tangible Net Worth of not less than the Minimum Tangible Net Worth.

●   “Tangible Net Worth” means, with respect to the Corporation, total assets of the Corporation and its Subsidiaries (determined on a consolidated basis) minus the sum of (a) intangible assets (including goodwill), (b) receivables from stockholders and affiliates (excluding any amounts due from LFC pursuant to the Amended and Restated Sub-Servicing Agreement (as such term is defined in the Stock Purchase Agreement)), and (c) Total Liabilities, in each case, calculated in accordance with GAAP applied consistently with the conventions, procedures, methodologies, and principals used in preparing the Corporation’s Audited Financial Statements.  For the purposes of the foregoing calculation, intangible assets shall exclude unamortized debt discounts and expenses and unamortized deferred charges.  In all instances, total assets and Total Liabilities shall exclude any mark-to-market gain or loss on any swap or other hedge transaction.

●   “Total Liabilities” means the sum of current liabilities plus long term liabilities, in each case calculated in accordance with GAAP applied consistently with the conventions, procedures, methodologies, and principals used in preparing the Corporation’s Audited Financial Statements.  Total Liabilities shall not include deferred tax liabilities.

●   “Minimum Tangible Net Worth” as of any test date, shall be an amount equal to the sum of (a) $55,000,000 plus (b) 50% of the Net Worth Differential.

●   “Net Worth Differential” means the amount by which the High Water Tangible Net Worth exceeds the Closing Date Tangible Net Worth.

● “High Water Tangible Net Worth” shall be an amount equal to the greater of (A) the Tangible Net Worth as of the closing date and (B) the maximum Tangible Net Worth as of any test date following the closing date.

●   “Closing Date Tangible Net Worth” shall be $70,592,132.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Dec. 31, 2011

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 19 - COMMITMENTS AND CONTINGENCIES

LEAF lease valuation commitment.  In accordance with the November 2011 LCC Transaction, the Company and RCC have undertaken a contingent obligation with respect to the value of the equity on the balance sheet of LRF3.  To the extent that the value of the equity on the balance sheet of LRF3 is less than $18.7 million (the value of the equity of LRF3 on the date it was contributed by RCC to LEAF), as of the final testing date within 90 days of December 31, 2013, the Company and RCC have agreed to be jointly and severally obligated to contribute cash to LEAF to the extent of any shortfall.

Broker-dealer capital requirement.  Resource Securities serves as a dealer-manager for the sale of securities of direct participation investment programs, both public and private, sponsored by subsidiaries of the Company who also serve as general partners and/or managers of these programs.  Additionally, Resource Securities serves as an introducing agent for transactions involving sales of securities of financial services companies, REITs and insurance companies for the Company and for RCC.  As a broker-dealer, Resource Securities is required to maintain minimum net capital, as defined in regulations under the Securities Exchange Act of 1934, as amended, which was $100,000 as of December 31, 2011 and September 31, 2011.  As of December 31, 2011 and September 30, 2011, Resource Securities net capital was $295,000 and $254,000, respectively, which exceeded the minimum requirements by $195,000 and $154,000, respectively.

Clawback liability.  On November 1, 2009 and January 28, 2010, the general partners of two of the Trapeza entities, which are owned equally by the Company and its co-managing partner, repurchased substantially all of the remaining limited partnership interests in the two Trapeza entities, with potential clawback liabilities for $4.4 million.  The Company contributed $2.2 million (its 50% share). The clawback liability was $1.2 million at December 31 and September 30, 2011, respectively.

Legal proceedings.  In September 2011, First Community Bank, (“First Community”) filed a complaint against First Tennessee Bank and approximately thirty other defendants consisting of investment banks, rating agencies, collateral managers, including Trapeza Capital Management, LLC (“TCM”), and issuers of CDOs, including Trapeza CDO XIII, Ltd. and Trapeza CDO XIII, Inc.  TCM and the Trapeza CDO issuers are collectively referred to as Trapeza.  The complaint includes causes of action against TCM for fraud, negligent misrepresentation, violation of the Tennessee Securities Act of 1980 and unjust enrichment.  First Community alleges, among other things, that it invested in certain CDOs, that the defendant rating agencies assigned inflated investment grade ratings to the CDOs, and that the defendant investment banks, collateral managers and issuers (including Trapeza) fraudulently and/or negligently made “materially false and misleading representations and omissions” that First Community relied on in investing in the CDOs, including both written representations in offering materials and unspecified oral representations.  Specifically, with respect to Trapeza, First Community alleges that it purchased $20 million of notes in the D tranche of the Trapeza CDO XIII transaction from J.P. Morgan.  Trapeza believes that none of First Community's claims have merit and intends to vigorously contest this action.

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

Real estate commitments.  As a specialized asset manager, the Company sponsors and manages investment funds in which it may make an equity investment along with outside investors.  This equity investment is generally based on a percentage of funds raised and varies among investment programs.  With respect to RRE Opportunity REIT, the Company is committed to invest 1% of the equity raised to a maximum amount of $2.5 million.

In July 2011, the Company entered into an agreement with one of the tenant in common (“TIC”) programs it sponsored and manages.  This agreement requires the Company to fund up to $1.9 million, primarily for capital improvements, for the underlying property over the next two years.  The Company advanced funds totaling $1.4 million as of December 31, 2011.

The liabilities for the real estate commitments will be recorded in the future as the amounts become due and payable.

General corporate commitments. The Company is also party to employment agreements with certain executives that provide for compensation and other benefits, including severance payments under specified circumstances.

As of December 31, 2011, except for the clawback liability recorded for the two Trapeza entities, the real estate commitments, and executive compensation, the Company did not believe it was probable that any payments would be required under any of its commitments and contingencies, and accordingly, no liabilities for these obligations were recorded in the consolidated financial statements.

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SUPPLEMENTAL CASH FLOW INFORMATION

3 Months Ended

Dec. 31, 2011

SUPPLEMENTAL CASH FLOW INFORMATION [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 3 − SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents supplemental cash flow information (in thousands) (unaudited):

	Three Months Ended December 31,
	2011			2010
Cash paid during the period for:
Interest	$	2,077		$	1,563
Income taxes		118			19
Non-cash effects from the deconsolidation of LEAF: (1)
Cash	$	2,284		$	−
Restricted cash		20,282			−
Receivables		954			−
Receivables from managed entities and related parties, net		(3,411	)		−
Investments in commercial finance assets, net		199,955			−
Investments in unconsolidated entities		7,049			−
Property and equipment, net		3,754			−
Deferred tax assets, net		4,558			−
Goodwill		7,969			−
Other assets		6,806			−
Accrued expense and other liabilities		(10,208	)		−
Payables to managed entities and related parties		(98	)		−
Borrowings		(202,481	)		−
Accumulated other comprehensive loss		255			−
Noncontrolling interests		(37,668	)		−

(1) As a result of the deconsolidation of LEAF during the three months ended December 31, 2011, the amounts set forth above were removed from the Company's consolidated balance sheets.  The sum of the assets removed equates to the sum of the liabilities and equity that were similarly eliminated and, as such, there was no change in net assets.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Dec. 31, 2011

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements reflect the Company's accounts and the accounts of the Company's majority-owned and/or controlled subsidiaries.  The Company also consolidates entities that are variable interest entities (“VIEs”) where it has determined that it is the primary beneficiary of such entities.  Once it is determined that the Company holds a variable interest in a VIE, management performs a qualitative analysis to determine (i) if the Company has the power to direct the matters that most significantly impact the VIE's financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE.  If the Company's variable interest possesses both of these characteristics, the Company is deemed to be the primary beneficiary and would be required to consolidate the VIE. This assessment must be done on an ongoing basis. The portions of these entities that the Company does not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements.

Variable interests in the Company's real estate segment have historically related to subordinated financings in the form of mezzanine loans or unconsolidated real estate interests.  As of December 31 and September 30, 2011, the Company had one such variable interest in an entity that it consolidated.  The Company will continually assess its involvement with VIEs and reevaluate the requirement to consolidate them.  See Note 8 for additional disclosures pertaining to VIEs.

All intercompany transactions and balances have been eliminated in the Company's consolidated financial statements.

Financing Receivables

Receivables from Managed Entities.  The Company performs a review of the collectability of its receivables from managed entities on a quarterly basis.  The Company analyzes the expected future cash flows of the managed entity.  With respect to receivables from its commercial finance investment partnerships, this takes into consideration several assumptions by management, specifically concerning estimates of future bad debts and recoveries.  For receivables from the real estate investment entities for which there are uncertainties regarding collectability, the Company estimates the cash flows through the sale of the underlying properties, which is based on projected net operating income as a multiple of published capitalization rates, which is then reduced by the underlying mortgage balances and priority distributions due to the investors in the entity.  The Company will record an allowance against the related receivable from managed entities to the extent that the estimated cash flows are insufficient to fully recover its receivable balance.

Recent Accounting Standards

Accounting Standards Issued But Not Yet Effective

The Financial Accounting Standards Board (“FASB”) has issued the following guidance that is not yet effective for the Company as of December 31, 2011:

Comprehensive income (loss).  In June 2011, the FASB issued an amendment to eliminate the option to present components of other comprehensive income (loss) as part of the statement of changes in stockholders' equity.  The amendment requires that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income (loss) or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income (loss) and its components followed consecutively by a second statement that should present total other comprehensive income (loss), the components of other comprehensive income (loss), and the total of comprehensive income (loss).  In December 2011, the FASB updated the guidance to defer the requirement related to the presentation of reclassification adjustments.  The Company plans to provide the disclosures as required by this amendment beginning October 1, 2012.

Accounting Standards Issued But Not Yet Effective – (Continued)

Fair value measurements.  In May 2011, the FASB issued an amendment to revise the wording used to describe the requirements for measuring fair value and for disclosing information about fair value measurements.  For many of the requirements, the FASB does not intend for the amendments to result in a change in the application of the current requirements.  Some of the amendments clarify the FASB's intent about the application of existing fair value measurement requirements, such as specifying that the concepts of highest and best use and valuation premise in a fair value measurement are relevant only when measuring the fair value of nonfinancial assets.  Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements such as specifying that, in the absence of a Level 1 input, a reporting entity should apply premiums or discounts when market participants would do so when pricing the asset or liability. This guidance will become effective for the Company beginning January 1, 2012 and is not expected to have a material impact on the Company's consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Sep. 30, 2011
ASSETS
Cash	$ 12,803	$ 24,455
Restricted cash	607	20,257
Receivables	479	1,981
Receivables from managed entities and related parties, net	54,348	54,815
Investments in commercial finance, net	0	192,012
Investments in real estate	19,100	18,998
Investment securities, at fair value	17,330	15,124
Investments in unconsolidated entities	13,197	12,710
Property and equipment, net	4,294	7,942
Deferred tax assets, net	47,184	51,581
Goodwill	0	7,969
Other assets	8,993	14,662
Total assets	178,335	422,506
Liabilities:
Accrued expenses and other liabilities	29,327	40,887
Payables to managed entities and related parties	275	1,232
Borrowings	28,471	222,659
Total liabilities	58,073	264,778
Commitments and contingencies
Equity:
Preferred stock, $1.00 par value, 1,000,000 shares authorized; none outstanding	0	0
Common stock, $.01 par value, 49,000,000 shares authorized; 28,779,998 and 28,779,998 shares issued, respectively (including nonvested restricted stock of 644,723 and 649,007, respectively)	281	281
Additional paid-in capital	281,357	281,686
Accumulated deficit	(48,416)	(48,032)
Treasury stock, at cost; 9,313,932 and 9,126,966 shares, respectively	(99,775)	(98,954)
Accumulated other comprehensive loss	(13,504)	(14,613)
Total stockholders' equity	119,943	120,368
Noncontrolling interests	319	37,360
Total equity	120,262	157,728
Liabilities and Equity	$ 178,335	$ 422,506

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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 563	$ (1,192)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	3,087	1,911
Provision for credit losses	2,250	1,606
Equity in earnings of unconsolidated entities	(557)	(1,427)
Distributions from unconsolidated entities	1,163	663
Gain on sale of leases and loans	(37)	(11)
(Gain) loss on sale of loans and investment securities, net	(58)	1,461
Gain on deconsolidation of LEAF	(8,749)	0
Loss on extinguishment of debt	2,190	0
Gain on sale of management contract	0	(6,520)
Deferred income tax provision	154	422
Equity-based compensation issued	498	781
Equity-based compensation received	0	(57)
Changes in operating assets and liabilities	(1,412)	(611)
Net cash used in operating activities	(908)	(2,974)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(106)	(38)
Payments received on real estate loans and real estate	1,550	0
Investments in unconsolidated real estate entities	(127)	(283)
Purchase of commercial finance assets	(18,483)	(10,690)
Principal payments received on leases and loans	9,031	0
Cash divested in deconsolidation of LEAF	(2,284)	0
Proceeds from sale of management contract	0	9,095
Purchase of loans and investments	(600)	0
Proceeds from sale of loans and investments	207	2,946
Net cash (used in) provided by investing activities	(10,812)	1,030
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings	128,845	1,000
Principal payments on borrowings	(123,823)	(1,908)
Dividends paid	(569)	(551)
Repurchase of common stock	(939)	0
Preferred stock dividends paid by LEAF to RCC	(188)	0
Payment of debt financing costs	(1,839)	0
(Increase) decrease in restricted cash	(633)	6,617
Other	(411)	73
Net cash provided by financing activities	443	5,231
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Operating	(375)	0
Net cash used in discontinued operations	(375)	0
(Decrease) increase in cash	(11,652)	3,287
Cash at beginning of year	24,455	11,243
Cash at end of period	$ 12,803	$ 14,530

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

3 Months Ended

Dec. 31, 2011

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS [Abstract]

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 16 - 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,
	2011		2011
Receivables from managed entities and related parties, net:
Commercial finance investment entities (1)	$	27,765	$	29,725
Real estate investment entities (2)		20,182		19,796
Financial fund management investment entities		2,725		2,652
RCC		3,416		2,539
LEAF		101		−
Other		159		103
Receivables from managed entities and related parties	$	54,348	$	54,815
Payables due to managed entities and related parties, net:
Real estate investment entities	$	241	$	1,010
RCC		34		222
Payables to managed entities and related parties	$	275	$	1,232

(1) Reflects $10.3 million of reserves for credit losses related to management fees owed from three commercial finance investment entities that, based on a change in estimated cash distributions, are not expected to be collectible.

(2) Reflects $2.3 million of reserves for credit losses related to management fees owed from two real estate investment entities that, based on projected cash flows, are not expected to be collectible.

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,
	2011			2010
Fees from unconsolidated investment entities:
Real estate(1)	$	3,768		$	3,060
Financial fund management		850			1,594
Commercial finance (2)		−			−
RCC:
Management, incentive and servicing fees		3,830			3,910
Dividends		631			611
Reimbursement of costs and expenses		705			468
Resource Real Estate Opportunity REIT, Inc. – reimbursement of costs and expenses		105			443
Atlas Energy, L.P.– reimbursement of net costs and expenses		169			190
LEAF:
Reimbursement of net costs and expenses		60			−
Payment for rent and related costs		(120	)		−
Payment for sub-servicing the lease investment partnerships		(405	)		−
1845 Walnut Associates Ltd. – payment for rent and operating expenses		(106	)		(161	)
Ledgewood P.C. – payment for legal services		(155	)		(41	)
Graphic Images, LLC – payment for printing services		(8	)		(5	)
9 Henmar LLC – payment for broker/consulting fees		(18	)		(21	)
The Bancorp, Inc. – reimbursement of net costs and expenses		45			−

(1) Reflects discounts recorded by the Company of $76,000 and $113,000 recorded in the three months ended December 31, 2011 and 2010, respectively, in connection with management fees from its real estate investment entities that it expects to receive in future periods.

(2) During the three months ended December 31, 2011 and 2010, the Company waived $1.5 million and $2.4 million, respectively, of its fund management fees from its commercial finance investment entities, respectively.

Relationship with LEAF.  The Company maintains a shared service agreement with LEAF for the reimbursement of various costs and expenses it incurs on behalf of LEAF.  In addition, the Company subleases office space in Philadelphia, Pennsylvania from LEAF under a lease that expires in August 2013.

Sub-servicing agreement with LEAF for the commercial finance funds.  The Company entered into a sub-servicing agreement with LEAF to provide management services for the commercial finance funds.  The fee is equal to LEAF's costs to provide these services up to a maximum of 1% of the net present value of all lease and loan contracts comprising each of the commercial finance funds respective borrowing bases under such commercial finance funds' credit facilities or securitizations.  In addition, LEAF is entitled to an evaluation fee equal to one half of any acquisition or similar fee collected by the Company in connection with the acquisition of any new lease or loan contracts for which LEAF provides evaluation services.

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FAIR VALUE

3 Months Ended

Dec. 31, 2011

FAIR VALUE [Abstract]

FAIR VALUE

NOTE 18 – FAIR VALUE

Assets and liabilities are categorized into one of three levels based on the assumptions (inputs) used in valuing the asset or liability.  Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment.  The three levels are defined as follows:

Level 1 − Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. 

Level 2 − Observable inputs other than quoted prices included within Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 − Unobservable inputs that reflect the entity's own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and that are, consequently, not based on market activity, but upon particular valuation techniques.

As of December 31, 2011, the fair value of the Company's asset recorded at fair value on a recurring basis was as follows (in thousands):

	Level 1		Level 2		Level 3		Total
Asset:
Investment securities	$	14,349	$	−	$	2,981	$	17,330

As of September 30, 2011, the fair values of the Company's assets and liability recorded at fair value on a recurring basis were as follows (in thousands):

	Level 1		Level 2		Level 3		Total
Assets:
Investment securities	$	12,768	$	−	$	2,356	$	15,124
Retained financial interest – commercial finance		−		−		22		22
Total	$	12,768	$	−	$	2,378	$	15,146
Liability:
Interest rate swap	$	−	$	404	$	−	$	404

The following table presents additional information about assets which are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair (in thousands):

				Retained
	Investment			Financial
	Securities			Interest
For the Three Months Ended December 31, 2011:
Balance, beginning of year	$	2,356		$	22
Purchases		600			−
Income accreted		193			−
Payments and distributions received		(239	)		−
Deconsolidation of LEAF		−			(22	)
Change in unrealized losses - included in accumulated other comprehensive loss		71			−
Balance, end of period	$	2,981		$	−
For the Fiscal Year Ended September 30, 2011:
Balance, beginning of year	$	6,223		$	273
Purchases, sales, issuances and settlements, net		(2,946	)		−
Loss on sale of investment securities, net		(1,470	)		−
Income accreted		948			−
Payment and distributions received		(861	)		(251	)
Change in unrealized losses - included in accumulated other comprehensive loss		462			−
Balance, end of year	$	2,356		$	22

The following is a discussion of the assets and liabilities that are recorded at fair value on a recurring and non-recurring basis as well as the valuation techniques applied to each fair value measurement:

Receivables from managed entities.  The Company recorded a discount on certain of its receivable balances due from its real estate and commercial finance managed entities due to the extended term of the repayment to the Company.  The discount was computed based on estimated inputs, including the repayment term (Level 3).

Investment securities.  The Company uses quoted market prices (Level 1) to value its investments in RCC and TBBK common stock.  The fair value of CDO investments is based primarily on internally generated expected cash flow models that require significant management judgments and estimates due to the lack of market activity and unobservable pricing inputs.  Unobservable inputs into these models include default, recovery, discount and deferral rates, prepayment speeds and reinvestment interest spreads (Level 3).

Investment in LEAF.  The Company's investment in LEAF was valued at $1.7 million based on a third-party valuation in conjunction with the November 16, 2011 deconsolidation of LEAF (see Note 1).

The following items are included in the Company's fair value disclosures at September 30, 2011; however, due to the LEAF transaction, they are no longer included in the consolidated financial statements.

Retained interest - commercial finance.  During fiscal 2010, the Company sold leases and loans to third-parties in which portions of the proceeds were retained by the purchasers.  The purchasers have the right to return leases and loans that default within periods ranging from approximately six to forty-eight months after the date of sale and to deduct the applicable percentage from the retained proceeds.  The Company determines the fair value of these retained interests by calculating the present value of future expected cash flows using key assumptions for credit losses and discount rates based on historical experience and repayment terms (Level 3).

Interest rate swaps.  These instruments are valued by a third-party pricing agent using an income approach and utilizing models that use as their primary basis readily observable market parameters.  This valuation process considers factors including interest rate yield curves, time value, credit factors and volatility factors.  Although the Company determined that the majority of the inputs used to value its derivatives fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with these derivatives utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.  However, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of these derivative positions and  determined that the credit valuation adjustments were not significant to the overall valuation of these derivatives.  As a result, the Company determined that these derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

Guggenheim - secured revolving facility.  The proceeds from this loan were allocated to the revolving facility and the warrants issued to the lender based on their relative fair values, as determined by an independent third-party appraiser.  The appraiser determined the fair value of the debt based primarily on the interest rates of similarly rated notes with similar terms.  The appraiser assessed the fair value of the equity of LEAF in making its determination of the fair value of the warrants.

Impaired loans and leases - commercial finance.  Leases and loans are considered impaired when they are 90 or more days past due and are placed on non-accrual status.  The Company records an allowance for the impaired loans and leases based upon historical experience (Level 3).

The Company recognized the following changes in carrying value of the assets and liabilities measured at fair value on a non-recurring basis, as follows (in thousands):

	Level 1		Level 2		Level 3		Total
For the Three Months Ended December 31, 2011:
Assets:
Receivables from managed entities – commercial finance and real estate	$	−	$	−	$	30,331	$	30,331
Investment in LEAF		−		−		1,749		1,749
Total	$	−	$	−	$	32,080	$	32,080
For the Fiscal Year Ended September 30, 2011:
Assets:
Investments in commercial finance – impaired loans and leases	$	−	$	−	$	310	$	310
Receivables from managed entities		−		−		18,941		18,941
Total	$	−	$	−	$	19,251	$	19,251
Liabilities:
Guggenheim – secured revolving credit facility	$	−	$	−	$	49,266	$	49,266
Total	$	−	$	−	$	49,266	$	49,266

For cash, receivables and payables, the carrying amounts approximate fair value because of the short-term maturity of these instruments.

The fair value of financial instruments is as follows (in thousands):

	December 31, 2011				September 30, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Receivables from managed entities (1)	$	54,348	$	49,135	$	54,815	$	39,224
Investments in commercial finance – loans held for investment		−		−		19,640		19,550
	$	54,348	$	49,135	$	74,455	$	58,774
Borrowings:(2)
Corporate secured credit facilities and note	$	5,303	$	5,303	$	8,743	$	8,743
Real estate debt		10,660		10,660		10,700		10,700
Senior Notes		10,000		10,210		16,263		17,438
Other debt		2,508		2,084		3,807		2,909
Commercial finance debt		−		−		183,146		183,146
	$	28,471	$	28,257	$	222,659	$	222,936

(1) Certain of the receivables from managed entities at December 31, 2011 and September 30, 2011 have been valued using a present value discounted cash flow where market prices were not available.  The discount rate used in these calculations is the estimated current market rate, as adjusted for liquidity risk.

(2) The carrying value of the Company's corporate secured revolving credit facilities and term note approximates their fair values because of their variable interest rates.  The carrying value of the Company's real estate debt approximates fair value due to its recent issuance.  The Company estimated the fair value of the Senior Notes by applying the percentage appreciation in a high-yield fund with approximately similar quality and risk attributed as the Senior Notes.  The carrying value of the Company's other debt was estimated using current interest for similar loans at December 31, 2011 and September 30, 2011.  The carrying value of the Company's commercial finance debt approximated its fair value due to its recent issuance at September 30, 2011 and was deconsolidated during the Company's first quarter ended December 31, 2011.  This disclosure excludes instruments valued on a recurring basis.

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ORGANIZATION AND BASIS OF QUARTERLY PRESENTATION

3 Months Ended

Dec. 31, 2011

ORGANIZATION AND BASIS OF QUARTERLY PRESENTATION [Abstract]

ORGANIZATION AND BASIS OF QUARTERLY PRESENTATION

NOTE 1 – ORGANIZATION AND BASIS OF QUARTERLY PRESENTATION

Resource America, Inc. (the "Company") (NASDAQ: REXI) is a specialized asset management company that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its real estate,  financial fund management, and commercial finance operating segments.  As a specialized asset manager, the Company seeks to develop investment funds for outside investors for which the Company provides asset management services, typically under long-term management and operating arrangements either through a contract with, or as the manager or general partner of, the sponsored fund.  The Company limits its investment funds to investment areas where it owns existing operating companies or has specific expertise.  The Company manages assets on behalf of institutional and individual investors and Resource Capital Corp. (“RCC”) (NYSE: RSO), a diversified real estate finance company that qualifies as a real estate investment trust (“REIT”).

LEAF Commercial Capital, Inc. (“LEAF”).  In January 2011, the Company formed LEAF to conduct its equipment lease origination and servicing operations and to obtain outside equity and debt financing sources.  LEAF Financial Corporation retained the management of the four equipment leasing partnerships, which are sub-serviced by LEAF. On November 16, 2011, the Company and LEAF, together with RCC, entered into a stock purchase agreement and related agreements (collectively the “November 2011 LCC Transaction”) with Eos Partners, L.P., a private investment firm, and its affiliates (“Eos”).  Pursuant to the November 2011 LCC Transaction, Eos invested $50.0 million in cash in LEAF in exchange for 50,000 shares of newly-issued 12% Series A Participating Preferred Stock (the “Series A Preferred Stock”) and warrants to purchase 2,954 shares of LEAF common stock for an exercise price of $0.01 per share, collectively representing, on a fully-diluted basis, a 45.1% interest in LEAF.  In exchange for its prior interest in LEAF, RCC received 31,341 shares of Series A Preferred Stock, 4,872 shares of newly-issued 8% Series B Redeemable Preferred Stock (the “Series B Preferred Stock”) and 2,364 shares of newly-issued Series D Redeemable Preferred Stock (the “Series D Preferred Stock”), collectively representing, on a fully-diluted basis, a 26.7% interest in LEAF.  The Company retained 18,414 shares of LEAF common stock, representing a fully-diluted interest of 15.7%, and senior management of LEAF maintained a 10% fully-diluted interest.  As a result of the November 2011 LCC Transaction, the Company deconsolidated LEAF (see Note 3) and has accounted for its investment in LEAF on the equity method beginning on November 17, 2011.

The Company utilized several approaches, including discounted expected cash flows, market approach and comparable sales transactions to estimate the fair value of its investment in LEAF as a result of the transaction.  These approaches required assumptions and estimates of many critical factors, including revenue and market growth, operating cash flows, market multiples, and discount rates, which were based on the current economic environment and credit market conditions.  The Company's investment in LEAF was valued at $1.7 million based on a third-party valuation.  Accordingly, the Company recorded a gain of $8.7 million in conjunction with the transaction and resulting deconsolidation of LEAF.  Based upon terms in the November 2011 LCC Transaction, the Company calculated its share of losses incurred by LEAF for the period November 17, 2011 to December 31, 2011 using the equity method of accounting based upon its share of common stock ownership of LEAF during that period.

On December 29, 2011, the Company entered into a sale and purchase agreement and related agreements, collectively the (“SPA”), with CVC Capital Partners SICAV-FIS, S.A. (“CVC”), pursuant to which the Company will sell 100% of the common equity interests of Apidos Capital Management, LLC (“Apidos”), its CLO management subsidiary, to CVC in exchange for (i) $25 million in cash, (ii) a 33% limited partner interest in CVC Credit Partners, L.P, a newly-formed Cayman Islands limited partnership to be jointly owned by the Company and CVC (the “Partnership”), and (iii) a 33% interest in the Partnership's general partner, a Jersey corporation (“the General Partner”).  Prior thereto, CVC will have contributed to the Partnership its credit management subsidiary, CVC Cordatus Group Limited (“Cordatus”). The Company will retain a preferred equity interest in Apidos, which will entitle the Company to receive distributions from the Partnership equal to 75% of the incentive management fees from the legacy Apidos portfolios. Consummation of the transactions contemplated by the SPA is subject to UK Financial Services Authority and Jersey Financial Services Commission approvals and receipt of certain third-party consents and rating agency confirmations that the transaction will not lead to a downgrade of some of the Apidos CLO obligations.  If the regulatory approvals are not obtained by May 31, 2012, the SPA will automatically terminate.

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CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) (USD $)	Dec. 31, 2011	Sep. 30, 2011
Equity:
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	49,000,000	49,000,000
Common stock, shares issued (in shares)	28,779,998	28,779,998
Common stock issued shares, non-vested restricted shares (in shares)	644,723	649,007
Treasury stock shares (in shares)	9,313,932	9,126,966

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BORROWINGS

3 Months Ended

Dec. 31, 2011

BORROWINGS [Abstract]

BORROWINGS

NOTE 11 – BORROWINGS

The credit facilities and other debt of the Company and related borrowings outstanding are as follows (in thousands):

	As of December 31,				September 30,
	2011				2011
	Amount of Facility		Borrowings Outstanding		Borrowings Outstanding
Corporate and Real estate debt:
TD Bank, N.A. – secured revolving credit facility (1)	$	6,997	$	5,303	$	7,493
TD Bank, N.A. – term loan		−		−		1,250
Republic Bank – secured revolving credit facility		3,500		−		−
Total corporate borrowings				5,303		8,743
Senior Notes (2)				10,000		16,263
Mortgage debt				10,660		10,700
Note payable to RCC				1,677		1,705
Other debt				831		548
Total corporate and real estate borrowings				28,471		37,959
Commercial finance debt				−		184,700
Total borrowings outstanding			$	28,471	$	222,659

(1) The amount of the facility as shown has been reduced for outstanding letters of credit totaling $503,000 at December 31, 2011.

(2) At September 30, 2011, the outstanding Senior Notes were reflected net of an unamortized discount of $2.6 million related to the fair value of detachable warrants issued to the note holders.

Corporate and Real Estate Debt

TD Bank, N.A. (“TD Bank”).  In November 2011, the Company amended its agreement to extend the maturity of the TD Bank facility from August 31, 2012 to August 31, 2013 and repaid the outstanding term loan in the amount of $1.3 million.  The interest rate on borrowings is either (a) the prime rate of interest plus 2.25% or (b) LIBOR plus 3%, with a floor of 6%.  The Company is also charged a fee of 0.5% on the unused facility amount as well as a 5.25% fee on the $503,000 of outstanding letters of credit.

The facility requires that the Company repay the facility in an amount equal to 30% of the aggregate net proceeds (gross sales proceeds less reasonable and customary costs and expenses related to the sale) for certain asset sales.  Borrowings are secured by a first priority security interest in certain of the Company's assets and the guarantees of certain subsidiaries, including (i) the present and future fees and investment income earned in connection with the management of, and investments in, sponsored CDO issuers, (ii) a pledge of 18,972 shares of TBBK common stock, and (iii) the pledge of 1,823,309 shares of RCC common stock.  Availability under the facility is limited to the lesser of (a) 75% of the net present value of future management fees to be earned or (b) the maximum revolving credit facility amount.

The December 31, 2011 principal balance on the secured credit facility was $5.3 million and the availability on the line was $1.7 million, as reduced for outstanding letters of credit.  Weighted average borrowings for the three months ended December 31, 2011 and 2010 were $5.4 million and $13.8 million, at a weighted average borrowing rate of 6.0% and 7.0% and an effective interest rate (inclusive of the amortization of deferred finance costs) of 10.6% and 10.9%, respectively.  Weighted average borrowings for the term note for the three months ended December 31, 2011 were $771,000 at a weighted average borrowing rate of 6% and an effective interest rate (inclusive of the accelerated amortization of deferred finance costs) of 38.2%.

Republic First Bank (“Republic Bank”).  In February 2011, the Company entered into a $3.5 million revolving credit facility with Republic Bank.  The facility bears interest at the prime rate of interest plus 1%, with a floor of 4.5%.  The loan is secured by a pledge of 700,000 shares of RCC stock and a first priority security interest in an office building located in Philadelphia, Pennsylvania.  Availability under this facility is limited to the lesser of (a) the sum of (i) 25% of the appraised value of the real estate, based upon the most recent appraisal delivered to the bank and (ii) 100% of the cash and 75% of the market value of the pledged RCC shares held in the pledged account; and (b) 100% of the cash and 100% of the market value of the pledged RCC shares held in the pledged account.  There were no borrowings under this facility for the three months ended December 31, 2011.  In January 2012, the Company amended this facility to extend the maturity date from December 28, 2012 to December 1, 2013 and to add an unused facility fee equal to 0.25% per year.

Senior Notes

In November 2011, the Company redeemed $8.8 million of the existing notes for cash and modified the remaining $10.0 million of notes to a reduced interest rate of 9% and extended the maturity to October 2013.  The detachable 5-year warrants to purchase 3,690,195 shares of common stock issued with the original notes remain outstanding.  The Company accounted for the warrants as a discount to the original Senior Notes.  Upon the modification and partial repayment of the Senior Notes, the Company expensed the remaining $2.2 million of unamortized discount.  The effective interest rate (inclusive of the amortization of the warrant discount prior to the refinancing) was 20.6% and 21.1% for the three months ended December 31, 2011 and 2010, respectively.

Other Debt –Corporate

Capital leases.  In December 2011, the Company entered into a capital lease for the purchase of equipment at an interest rate of 7.2%.  The two-year lease requires monthly payments of $22,697.  The principal balance of the lease at December 31, 2011 was $487,000.

Commercial Finance Debt – No Longer Consolidated with the Company

Due to the November 2011 LCC Transaction and resulting deconsolidation of LEAF, the Company's commercial finance facilities are no longer included in the Company's consolidated financial statements.

Securitization of leases and loans. On October 28, 2011, LEAF completed a $105.0 million securitization.  A newly-formed subsidiary of LEAF issued eight classes of notes which are asset-backed debt, secured and payable by certain assets of LEAF.  The notes included eight fixed rate classes of notes ranging from 0.4% to 5.5%, rated by both Dominion Bond Rating Service, Inc. (“DBRS”) and Moody's Investors Services, Inc., and mature from October 2012 to March 2019.  The weighted average borrowings for the period from October 1 to November 16, 2011 were $42.7 million, at a weighted average borrowing rate of 2.6% and an effective interest rate (inclusive of amortization of deferred financing costs and interest rate swaps) of 5.6%.

Guggenheim Securities LLC (“Guggenheim”).  At December 31, 2010, LEAF Financial had a short-term bridge loan with Guggenheim for borrowings up to $21.8 million.  The bridge facility was repaid in January 4, 2011 and terminated on February 28, 2011.  Beginning in January 2011, Guggenheim provided LEAF with a revolving warehouse credit facility with availability up to $110.0 million and committed to further expand the borrowing limit to $150.0 million.  LEAF, through its wholly-owned subsidiary, issued to Guggenheim, as initial purchaser, six classes of DBRS-rated variable funding notes, with ratings ranging from “AAA” to “B”, for up to $110.0 million.  The notes are secured and payable only from the underlying equipment leases and loans.  Interest is calculated at a rate of 30-day London Interbank Offered Rate (“LIBOR”) plus a margin rate applicable to each class of notes.  The revolving period of the facility ends on December 31, 2012 and the stated maturity of the notes is December 15, 2020, unless there is a mutual agreement to extend.  Principal payments on the notes are required to begin when the revolving period ends.  The Company was not an obligor or a guarantor of these securities and the facility was non-recourse to the Company.  The weighted average borrowings for the period from October 1 to November 16, 2011 were $68.8 million, at a weighted average borrowing rate of 4.2% and an effective interest rate (inclusive of amortization of deferred financing costs and interest rate swaps) of 5.1%.  The weighted average borrowings on the bridge loan for the three months ended December 31, 2010 were $20.9 million at a weighted average interest rate of 10.8%.

Series 2010-2 term securitization.  In May 2010, LEAF Receivables Funding 3, LLC, a subsidiary of LEAF (“LRF3”), issued $120.0 million of equipment contract- backed notes (“Series 2010-2”) to provide financing for leases and loans.  In the connection with the formation of LEAF in January 2011, RCC contributed these notes, along with the underlying lease portfolio to LEAF.  LRF3 is the sole obligator of these notes.  The weighted average borrowings for the period from October 1 to November 16, 2011 were $70.1 million, at a weighted average borrowing rate of 5.1% and an effective interest rate (inclusive of amortization of discount and deferred finance costs) of 8.5%.

Note payable to RCC − commercial finance. On July 20, 2011, RCC entered into an agreement with LEAF pursuant to which RCC agreed to provide a $10.0 million loan to LEAF, of which $6.9 million was funded as of September 30, 2011, with additional funding of $3.1 million prior to the November 16, 2011 deconsolidation.  The loan bears interest at a fixed rate of 8.0% per annum on the unpaid principal balance, payable quarterly.  The loan was secured by the commercial finance assets of LEAF and LEAF's interest in LRF3.  In the November 2011 LCC Transaction, RCC received  $8.5 million from LCC in payment of the $10.0 million outstanding balance and extinguished the loan.

Debt repayments

Annual principal payments on the Company's aggregate borrowings over the next five years ending December 31, and thereafter, are as follows (in thousands):

2013	$	761
2014		15,729
2015		197
2016		1,888
2017		222
Thereafter		9,674
	$	28,471

Covenants

The TD Bank credit facility is subject to certain financial covenants, which are customary for the type and size of the facility, including debt service coverage and debt to equity ratios.  The debt to equity ratio restricts the amount of recourse debt the Company can incur based on a ratio of recourse debt to net worth.

The mortgage on the Company's hotel property contains financial covenants related to the net worth and liquid assets of the Company. Although non-recourse in nature, the loan is subject to limited standard exceptions (or “carveouts”) which the Company has guaranteed.  These carveouts will expire as the loan is paid down over the next ten years.  The Company has control over the operations of the underlying property, which mitigates the potential risk associated with these carveouts, and accordingly, no liabilities for these obligations have been recorded in the consolidated financial statements.  To date, the Company has not been required to make any carveout payments.

The Company was in compliance with all of its debt covenants as of December 31, 2011.

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Document And Entity Information (USD $)	3 Months Ended
	Dec. 31, 2011	Feb. 02, 2012	Mar. 31, 2011
Entity Registrant Name	RESOURCE AMERICA, INC.
Entity Central Index Key	0000083402
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 36,833,000
Entity Common Stock, Shares Outstanding		19,647,622
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2011

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COMPREHENSIVE INCOME

3 Months Ended

Dec. 31, 2011

COMPREHENSIVE INCOME (LOSS) [Abstract]

COMPREHENSIVE INCOME

NOTE 12 – COMPREHENSIVE INCOME

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

	Three Months Ended December 31,
	2011			2010
Net income (loss)	$	563		$	(1,192	)
Other comprehensive income (loss):
Unrealized gains on investment securities available-for-sale, net of tax of $616 and $(634)		985			1,013
Less:  reclassification for realized losses, net of tax of $0 and $564		−			906
		985			1,919
Minimum pension liability adjustment, net of tax of $0 and $0		−			−
Less: reclassification for realized losses, net of tax of $36 and $32		47			43
Unrealized gains on hedging contracts, net of tax of $100 and $41		126			58
Less:  reclassification for realized foreign currency translation losses		−			368
Comprehensive income		1,721			1,196
Add:  Comprehensive (income) loss attributable to noncontrolling interests		(427	)		613
Comprehensive income attributable to common shareholders	$	1,294		$	1,809

The following are changes in accumulated other comprehensive loss by category (in thousands):

	Investment Securities Available-for-Sale			Cash Flow Hedges (1)			SERP Pension Liability			Total
Balance, beginning of year, net of tax of $(7,147), $(202), and $(2,271)	$	(11,421	)	$	(222	)	$	(2,970	)	$	(14,613	)
Current period changes		985			77			47			1,109
Balance, end of period, net of tax of $(6,531), $(101) and $(2,235)	$	(10,436	)	$	(145	)	$	(2,923	)	$	(13,504	)

(1) Included in accumulated other comprehensive loss as of December 31 and September 30, 2011 is a net unrealized loss of $30,000 (net of tax benefit of $21,000) and a net unrealized loss of $41,000 (net of tax benefit of $28,000), respectively, related to hedging instruments held by investment funds sponsored by LEAF Financial, in which the Company owns an equity interest.  In addition, at September 30, 2011, the Company had a net unrealized loss of $181,000 (net of tax benefit and noncontrolling interests of $223,000) included in accumulated other comprehensive loss for hedging activity of LEAF.  As of December 31, 2011, due to the November 2011 deconsolidation of LEAF, the Company owns an equity interest in LEAF and has included in accumulated other comprehensive loss its percentage of LEAF's hedging activity of $115,000 (net of tax benefit of $80,000).  The Company has no other hedging activity as of December 31, 2011.

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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Dec. 31, 2011	Dec. 31, 2010
REVENUES:
Real estate	$ 8,666	$ 6,874
Financial fund management	6,579	8,330
Commercial finance	3,419	1,476
Revenues	18,664	16,680
COSTS AND EXPENSES:
Real estate	7,192	5,461
Financial fund management	5,804	6,720
Commercial finance	1,963	4,273
General and administrative	2,896	3,116
Gain on sale of leases and loans	(37)	(11)
Provision for credit losses	2,250	1,606
Depreciation and amortization	2,061	1,125
Costs and Expenses	22,129	22,290
OPERATING LOSS	(3,465)	(5,610)
OTHER INCOME (EXPENSE):
Gain on sale of management contract	0	6,520
Gain on deconsolidation of LEAF	8,749	0
Loss on extinguishment of debt	(2,190)	0
Gain (loss) on sale of investment securities, net	58	(1,461)
Interest expense	(2,974)	(2,369)
Other income, net	559	1,086
Other income (expense)	4,202	3,776
Income (loss) from continuing operations before taxes	737	(1,834)
Income tax provision (benefit)	154	(642)
Income (loss) from continuing operations	583	(1,192)
Loss from discontinued operations, net of tax	(20)	0
Net income (loss)	563	(1,192)
Add: net (income) loss attributable to noncontrolling interests	(378)	625
Net income (loss) attributable to common shareholders	185	(567)
Amounts attributable to common shareholders:
Income (loss) from continuing operations	205	(567)
Discontinued operations	(20)	0
Net income (loss) attributable to common shareholders	$ 185	$ (567)
Basic income (loss) per share:
Continuing operations	$ 0.01	$ (0.03)
Discontinued operations	$ 0	$ 0
Net income (loss)	$ 0.01	$ (0.03)
Weighted average shares outstanding	19,641	19,076
Diluted income (loss) per share:
Continuing operations	$ 0.01	$ (0.03)
Discontinued operations	$ 0	$ 0
Net income (loss)	$ 0.01	$ (0.03)
Weighted average shares outstanding	20,039	19,076
Dividends declared per common share	$ 0.03	$ 0.03

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INVESTMENT SECURITIES

3 Months Ended

Dec. 31, 2011

INVESTMENT SECURITIES [Abstract]

INVESTMENT SECURITIES

NOTE 6 − INVESTMENT SECURITIES

Components of the Company's investment securities are as follows (in thousands):

	December 31,		September 30,
	2011		2011
Available-for-sale securities	$	17,280	$	14,884
Trading securities		50		240
Total investment securities, at fair value	$	17,330	$	15,124

Available-for-sale securities.  The following table discloses the pre-tax unrealized gains (losses) relating to the Company's investments in equity and collateralized debt obligation (“CDO”) securities (in thousands):

	Cost or Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
December 31, 2011:
Equity securities	$	32,653	$	28	$	(18,382	)	$	14,299
CDO securities		1,593		1,388		−			2,981
Total	$	34,246	$	1,416	$	(18,382	)	$	17,280
September 30, 2011:
Equity securities	$	32,411	$	27	$	(19,910	)	$	12,528
CDO securities		1,039		1,317		−			2,356
Total	$	33,450	$	1,344	$	(19,910	)	$	14,884

Equity Securities.  The Company holds 2.5 million shares of RCC common stock as well as options to acquire an additional 2,166 shares (exercise price of $15.00 per share; expire in March 2015).  The Company also holds 18,972 shares of The Bancorp, Inc. (“TBBK”) (NASDAQ: TBBK) common stock.  A portion of these investments are pledged as collateral for one of the Company's secured corporate credit facilities.

CDO securities.  The CDO securities represent the Company's retained equity interest in three CDO issuers that it has sponsored and manages.  The fair value of these retained interests is impacted by the fair value of the investments held by the respective CDO issuers, which are sensitive to interest rate fluctuations and credit quality determinations. The primary inputs used in producing the internally generated expected cash flows models to determine the fair value are as follows:  (i) constant default rate (2%); (ii) loss recovery percentage (70%); (iii) constant prepayment rate (20%); (iv) reinvestment price on collateral (98% for the first year, 99% for years thereafter); and (v) discount rate (20%).

Trading Securities.  The Company held an additional 6,992 and 33,509 shares of TBBK common stock valued at $50,000 and $240,000 as of December 31, 2011 and September 30, 2011, respectively, in a Rabbi Trust for the Supplemental Employment Retirement Plan (“SERP”) for its former Chief Executive Officer.  The Company sold 26,517 and 20,225 of shares held in the Trust during the three months ended December 31, 2011 and 2010, respectively, and recognized gains of $17,000 and $9,000, respectively.  For the three months ended December 31, 2010, the Company also recorded an unrealized trading gain of $374,000.

Unrealized losses along with the related fair value, aggregated by the length of time the investments were in a continuous unrealized loss position, are as follows (in thousands, except number of securities):

	Less than 12 Months						More than 12 Months
	Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses			Number of Securities
December 31, 2011:
Equity securities	$	−	$	−		−	$	14,162	$	(18,382	)		1
CDO securities		−		−		−		−		−			−
Total	$	−	$	−		−	$	14,162	$	(18,382	)		1
September 30, 2011:
Equity securities	$	−	$	−		−	$	12,393	$	(19,910	)		1
CDO securities		−		−		−		−		−			−
Total	$	−	$	−		−	$	12,393	$	(19,910	)		1

The unrealized losses in the above table are considered to be temporary impairments due to market factors and not reflective of credit deterioration.  The Company considers its role as the external manager of RCC and the value of its management contract, which includes a substantial fee for termination of the manager.  Further, because of its intent and ability to hold its investment in RCC, the Company does not consider the unrealized losses to be other-than-temporary impairments.

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INVESTMENTS IN REAL ESTATE

3 Months Ended

Dec. 31, 2011

INVESTMENTS IN REAL ESTATE [Abstract]

INVESTMENTS IN REAL ESTATE

NOTE 5 – INVESTMENTS IN REAL ESTATE

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

	December 31,		September 30,
	2011		2011
Properties owned, net of accumulated depreciation of $4,986 and $4,785:
Hotel property (Savannah, Georgia)	$	12,145	$	12,051
Office building (Philadelphia, Pennsylvania)		3,143		3,165
Multifamily apartment complex (Kansas City, Kansas)		1,555		1,525
		16,843		16,741
Other real estate holdings		2,257		2,257
Investments in real estate, net	$	19,100	$	18,998

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OTHER INCOME, NET

3 Months Ended

Dec. 31, 2011

OTHER INCOME, NET [Abstract]

OTHER INCOME, NET

NOTE 17 − OTHER INCOME, NET

The following table details other income, net (in thousands):

	Three Months Ended December 31,
	2011			2010
RCC dividend income	$	631		$	611
Unrealized gains on trading securities		−			374
Interest income		124			125
Other expense, net		(196	)		(24	)
Other income, net	$	559		$	1,086

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NONCONTROLLING INTERESTS

3 Months Ended

Dec. 31, 2011

NONCONTROLLING INTERESTS [Abstract]

NONCONTROLLING INTERESTS

NOTE 13 – NONCONTROLLING INTERESTS

The following table presents the rollforward of activity in noncontrolling interests that were included in the Company's consolidated balance sheet for the three months ended December 31, 2011 (in thousands):

Noncontrolling interests, beginning of year	$	37,360
Net income		378
Other comprehensive income		49
Additional cash contribution made by the Company's partner in the hotel property		85
Transactions related to LEAF:
Cash portion of LEAF preferred stock dividends to RCC		(98	)
Additional amounts attributed to management holdings		213
Deconsolidation of LEAF		(37,668	)
		(37,553	)
Noncontrolling interests, end of period	$	319

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PROPERTY AND EQUIPMENT

3 Months Ended

Dec. 31, 2011

PROPERTY AND EQUIPMENT [Abstract]

PROPERTY AND EQUIPMENT

NOTE 9 − PROPERTY AND EQUIPMENT

Property and equipment, net, consist of the following (in thousands):

	Estimated Useful	December 31,			September 30,
	Life	2011			2011
Furniture and equipment	3-7 years	$	6,155		$	5,620
Leasehold improvements	1-9 years		2,652			2,656
Real estate assets – consolidated VIE	40 years		1,600			1,600
LEAF property and equipment			−			11,939
			10,407			21,815
Accumulated depreciation and amortization			(6,113	)		(5,839	)
Accumulated depreciation and amortization – LEAF			−			(8,034	)
Property and equipment, net		$	4,294		$	7,942

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INVESTMENTS IN UNCONSOLIDATED ENTITIES

3 Months Ended

Dec. 31, 2011

INVESTMENTS IN UNCONSOLIDATED ENTITIES [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

NOTE 7 − INVESTMENTS IN UNCONSOLIDATED ENTITIES

As a specialized asset manager, the Company develops various types of investment vehicles, which it manages under long-term management agreements or similar arrangements.  The following table details the Company's investments in these vehicles, including the range of interests it owns (in thousands, except percentages):

	Range of Combined Ownership Interests		December 31, 2011		September 30, 2011
Real estate investment entities		2% – 10%	$	7,763	$	8,439
Financial fund management partnerships		2% − 11%		3,577		3,476
Trapeza entities		33% − 50%		867		795
LEAF		15.7%  (1)		990		−
Commercial finance investment entities		1% − 6%		−		−
Investments in unconsolidated entities			$	13,197	$	12,710

(1) Based upon terms of the agreements for the deconsolidation of LEAF, the Company is calculating its share of losses incurred by LEAF for the period from November 17 to December 31, 2011 based on the equity method of accounting.

Two of the Trapeza entities that have incentive distributions, also known as carried interests, are subject to a potential clawback to the extent that such distributions exceed the cumulative net profits of the entities, as defined in the respective partnership agreements (see Note 19).  The general partner of those entities is owned equally by the Company and its co-managing partner.  Performance-based incentive fees in interim periods are recorded based upon a formula as if the contract were terminated at that date.  On a quarterly basis (interim measurement date), the Company quantifies the cumulative net profits/net losses (as defined under the Trapeza partnership agreements) and allocates income/loss to limited and general partners according to the terms of such agreements.

The Trapeza entities include the Company's 50% equity interest in one of the managers of the Trapeza CDO entities, Trapeza Capital Management, LLC (“TCM”).  The Company does not control TCM and, accordingly, does not consolidate it.

Summarized operating data for TCM is presented in the following table (in thousands):

	Three Months Ended December 31,
	2011			2010
Management fees	$	981		$	978
Operating expenses		(266	)		(288	)
Other expense		(16	)		(31	)
Net income	$	699		$	659

LEAF's operations were included in the Company's consolidated results from October 1, 2011 until its deconsolidation on November 16, 2011, and thereafter, its results are reflected as an equity loss.  There is no comparable information for the prior year as LEAF was not formed until January 4, 2011.  Summarized operating data for LEAF for the three months ended December 31, 2011 is presented below (in thousands):

	For the period from October 1 to November 16, 2011			For the period from November 17 to December 31, 2011			Total for the Three Months Ended December 31, 2011
Finance revenues	$	4,134		$	4,169		$	8,303
Operating expenses		(3,553	)		(3,512	)		(7,065	)
Other expense, net		(1,054	)		(1,458	)		(2,512	)
Net loss	$	(473	)	$	(801	)	$	(1,274	)

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VARIABLE INTEREST ENTITIES

3 Months Ended

Dec. 31, 2011

VARIABLE INTEREST ENTITIES [Abstract]

VARIABLE INTEREST ENTITIES

NOTE 8 – VARIABLE INTEREST ENTITIES

In general, VIEs are entities in which equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. The Company has variable interests in VIEs through its management contracts and investments in various securitization entities, including collateralized loan obligation (“CLO”) and CDO issuers.  Since the Company serves as the asset manager for the investment entities it sponsored and manages, the Company is generally deemed to have the power to direct the activities of the VIE that most significantly impact the entity's economic performance.  In the case of an interest in a VIE managed by the Company, the Company will perform an additional qualitative analysis to determine if its interest (including any investment as well as any management fees that qualify as variable interests) could absorb losses or receive benefits that could potentially be significant to the VIE.  This analysis considers the most optimistic and pessimistic scenarios of potential economic results that could reasonably be experienced by the VIE.  Then, the Company compares the benefits it would receive (in the optimistic scenario) or the losses it would absorb (in the pessimistic scenario) as compared to all benefits and losses absorbed by the VIE in total. If the benefits or losses absorbed by the Company were significant as compared to total benefits and losses absorbed by all variable interest holders, then the Company would conclude it is the primary beneficiary.

Consolidated VIE.  The following table reflects the assets and liabilities of a real estate VIE which was included in the Company's consolidated balance sheets (in thousands):

	December 31,		September 30,
	2011		2011
Cash and property and equipment, net	$	912	$	955
Accrued expenses and other liabilities		260		300

VIEs Not Consolidated.  The Company's investments in RCC, Resource Real Estate Opportunity REIT, Inc. (“RRE Opportunity REIT”), a fund that is currently in the offering stage, and its investments in the structured finance entities that hold investments in bank loans (“Apidos entities”),  trust preferred assets (“Trapeza entities”) and asset-backed securities (“Ischus entities”), were all determined to be VIEs that the Company does not consolidate as it does not have the obligation of, or right to, losses or earnings that would be significant to those entities.  With respect to RRE Opportunity REIT, the Company has advanced offering costs that are being reimbursed as the REIT raises additional equity.  Except for those advances, the Company has not provided financial or other support to these VIEs and has no liabilities, contingent liabilities, or guarantees (implicit or explicit) related to these VIEs at December 31, 2011.

The following table presents the carrying amounts of the assets in the Company's consolidated balance sheet that relate to the Company's variable interests in identified nonconsolidated VIEs and the Company's maximum exposure to loss associated with these VIEs in which it holds variable interests at December 31, 2011 (in thousands):

	Receivables from Managed Entities and Related Parties, Net (1)		Investments		Maximum Exposure to Loss in Non-Consolidated VIEs
RCC	$	3,277	$	14,162	$	17,439
RRE Opportunity REIT		−		519		519
Apidos entities		2,257		2,981		5,238
Ischus entities		270		−		270
Trapeza entities		−		867		867
	$	5,804	$	18,529	$	24,333

(1) Exclusive of expense reimbursements due to the Company.

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ACCRUED EXPENSES AND OTHER LIABILITIES

3 Months Ended

Dec. 31, 2011

ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]

ACCRUED EXPENSES AND OTHER LIABILITIES

NOTE 10 – ACCRUED EXPENSES AND OTHER LIABILITIES

The following is a summary of the components of accrued expenses and other liabilities (in thousands):

	December 31,		September 30,
	2011		2011
SERP liability (see Note 15)	$	6,902	$	7,049
Due to brokers		5,304		8,254
Accrued wages and benefits		3,257		1,770
Real estate loan commitment		1,927		2,147
Trapeza clawback (see Note 19)		1,181		1,181
Accounts payable and other accrued liabilities		10,756		10,000
LEAF payables		−		10,486
Accrued expenses and other liabilities	$	29,327	$	40,887

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BENEFIT PLANS

3 Months Ended

Dec. 31, 2011

BENEFIT PLANS [Abstract]

BENEFIT PLANS

NOTE 15 – BENEFIT PLANS

Supplemental Employment Retirement Plan (“SERP”). The Company established a SERP, which has Rabbi and Secular Trust components, for Mr. Edward E. Cohen (“Mr. E. Cohen”), while he was the Company's Chief Executive Officer.  The Company pays an annual benefit equal to $838,000 during his lifetime or for a period of 10 years from June 2004, whichever is longer.  The Company held 6,992 and 33,509 shares of TBBK common stock, respectively, as of December 31, 2011 and September 30, 2011, to support the Rabbi Trust portion of the SERP.

The components of net periodic benefit costs for the SERP were as follows (in thousands):

	Three Months Ended December 31,
	2011			2010
Interest costs	$	80		$	92
Less: expected return on plan assets		(18	)		(17	)
Plus:  amortization of unrecognized loss		83			74
Net cost	$	145		$	149

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OPERATING SEGMENTS

3 Months Ended

Dec. 31, 2011

OPERATING SEGMENTS [Abstract]

OPERATING SEGMENTS

NOTE 20 − OPERATING SEGMENTS

The Company's operations include three reportable operating segments that reflect the way the Company manages its operations and makes its business decisions.  In addition to its reporting operating segments, certain other activities are reported in the “all other” category.  Summarized operating segment data is as follows (in thousands) (unaudited):

	Real Estate			Financial Fund Management			Commercial Finance			All Other (1)			Total
Three Months Ended December 31, 2011
Revenues from external customers	$	8,060		$	5,913		$	4,134		$	−		$	18,107
Equity in earnings (losses) of unconsolidated entities		606			666			(715	)		−			557
Total revenues		8,666			6,579			3,419			−			18,664
Segment operating expenses		(7,192	)		(5,804	)		(1,963	)		−			(14,959	)
General and administrative expenses		(78	)		(869	)		−			(1,949	)		(2,896	)
Gain on sale of leases and loans		−			−			37			−			37
Provision for credit losses		(104	)		−			(2,146	)		−			(2,250	)
Depreciation and amortization		(323	)		(37	)		(1,556	)		(145	)		(2,061	)
Gain on deconsolidation of LEAF		−			−			8,749			−			8,749
Loss on extinguishment of debt		−			−			−			(2,190	)		(2,190	)
Gain on sale of investment securities, net		−			41			−			17			58
Interest expense		(215	)		−			(1,691	)		(1,068	)		(2,974	)
Other income (expense), net		117			577			−			(135	)		559
Pretax income attributable to noncontrolling interests (2)		(25	)		−			(224	)		−			(249	)
Income (loss) including noncontrolling interests before intercompany interest expense and taxes		846			487			4,625			(5,470	)		488
Intercompany interest (expense) income		−			−			(29	)		29			−
Income (loss) from continuing operations including noncontrolling interests before taxes	$	846		$	487		$	4,596		$	(5,441	)	$	488
Three Months Ended December 31, 2010
Revenues from external customers	$	6,791		$	6,675		$	1,787		$	−		$	15,253
Equity in earnings (losses) of unconsolidated entities		83			1,655			(311	)		−			1,427
Total revenues		6,874			8,330			1,476			−			16,680
Segment operating expenses		(5,461	)		(6,720	)		(4,273	)		−			(16,454	)
General and administrative expenses		(97	)		(994	)		−			(2,025	)		(3,116	)
Gain on sale of leases and loans		−			−			11			−			11
Provision for credit losses		−			−			(1,606	)		−			(1,606	)
Depreciation and amortization		(315	)		(45	)		(628	)		(137	)		(1,125	)
Gain on sale of management contract		−			6,520			−			−			6,520
(Loss) gain on sale of investment securities, net		−			(1,470	)		−			9			(1,461	)
Interest expense		(275	)		−			(611	)		(1,483	)		(2,369	)
Other income, net		122			659			2			303			1,086
Pretax (income) loss attributable to noncontrolling interests (2)		(4	)		−			967			−			963
Income (loss) including noncontrolling interests before intercompany interest expense and taxes		844			6,280			(4,662	)		(3,333	)		(871	)
Intercompany interest (expense) income		−			−			(1,554	)		1,554			−
Income (loss) from operations including noncontrolling interests before taxes	$	844		$	6,280		$	(6,216	)	$	(1,779	)	$	(871	)

	Real Estate		Financial Fund Management		Commercial Finance		All Other (1 )			Total
Segment assets:
December 31, 2011	$	162,757	$	36,927	$	30,516	$	(51,865	)	$	178,335
December 31, 2010	$	155,930	$	41,889	$	76,646	$	(41,291	)	$	233,174

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

(2) In viewing its segment operations, management includes the pretax (income) loss attributable to noncontrolling interests.  However, these interests are excluded from (loss) income from operations as computed in accordance with U.S. GAAP and should be deducted to compute (loss) income from operations as reflected in the Company's consolidated statements of operations.

Geographic Information.  During the three months ended December 31, 2010, the Company recognized a $5.1 million net gain on the sale of its management contract with, and equity investment in, Resource Europe CLO I.  There were no other revenues generated from the Company's European operations for the three months ended December 31, 2011 and 2010.  Included in the segment assets are European assets of $1.5 million and $10.4 million as of December 31, 2011 and 2010, respectively.

Major Customer.  For the three months ended December 31, 2011, the total of the management, incentive and servicing fees that the Company received from RCC were 21% of its consolidated revenues as compared to 23% for the three months ended December 31, 2010.  These fees have been reported as revenues by the Company's reporting segments.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (unaudited) (USD $) In Thousands, unless otherwise specified	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total	Comprehensive Income [Member]
Balance at Sep. 30, 2011	$ 281	$ 281,686	$ (48,032)	$ (98,954)	$ (14,613)	$ 120,368	$ 37,360	$ 157,728
Increase (Decrease) Equity [Roll Forward]
Net income		0	185	0	0	185	378	563	563
Treasury shares issued	0	(70)	0	118	0	48	0	48	0
Stock-based compensation	0	450	0	0	0	450	0	450	0
Repurchases of common stock	0	0	0	(939)	0	(939)	0	(939)	0
Cash dividends	0	0	(569)	0	0	(569)	0	(569)	0
Contribution	0	0	0	0	0	0	85	85	0
Deconsolidation of LEAF (see Note 1)	0	(709)	0	0	0	(709)	(37,553)	(38,262)	0
Other comprehensive income	0	0	0	0	1,109	1,109	49	1,158	1,158
Balance at Dec. 31, 2011	$ 281	$ 281,357	$ (48,416)	$ (99,775)	$ (13,504)	$ 119,943	$ 319	$ 120,262	$ 1,721

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FINANCING RECEIVABLES

3 Months Ended

Dec. 31, 2011

FINANCING RECEIVABLES [Abstract]

FINANCING RECEIVABLES

NOTE 4 – FINANCING RECEIVABLES

The following tables reflect the aging of the Company's past due financing receivables, gross of allowances for credit losses (1) (in thousands):

	30-89 Days Past Due		Greater Than 90 Days		Greater Than 181 Days		Total Past Due		Current		Total
As of December 31, 2011:
Receivables from managed entities and related parties: (1)
Commercial finance investment entities	$	−	$	−	$	37,801	$	37,801	$	271	$	38,072
Real estate investment entities		1,176		1,683		14,282		17,141		5,309		22,450
Financial fund management entities		119		218		28		365		2,360		2,725
RCC		1,855		−		−		1,855		1,561		3,416
Other		−		−		−		−		260		260
		3,150		1,901		52,111		57,162		9,761		66,923
Rent receivables – real estate		1		14		15		30		12		42
Total financing receivables	$	3,151	$	1,915	$	52,126	$	57,192	$	9,773	$	66,965
As of September 30, 2011:
Receivables from managed entities and related parties: (2)
Commercial finance investment entities	$	−	$	−	$	37,547	$	37,547	$	490	$	38,037
Real estate investment entities		1,324		1,511		17,405		20,240		1,734		21,974
Financial fund management entities		2,395		93		28		2,516		136		2,652
RCC		−		−		−		−		2,539		2,539
Other		−		−		−		−		103		103
		3,719		1,604		54,980		60,303		5,002		65,305
Investments in commercial finance		984		526		−		1,510		190,932		192,442
Rent receivables – real estate		1		11		−		12		3		15
Total financing receivables	$	4,704	$	2,141	$	54,980	$	61,825	$	195,937	$	257,762

(1) As of December 31, 2011, receivables related to the Company's commercial finance and real estate investment entities are presented gross of allowances for credit losses of $10.3 million and $2.3 million, respectively.  The remaining receivables have no related allowance for credit losses.

(2) As of September 30, 2011, receivables are presented gross of an allowance for credit losses of $8.3 million and $2.2 million related to the Company's commercial finance and real estate investment entities, respectively.  The remaining receivables from managed entities and related parties have no related allowance for credit losses.

The following table summarizes the Company's financing receivables on nonaccrual status (in thousands):

	December 31,		September 30,
	2011		2011
Investments in commercial finance:
Leases and loans	$	−	$	526

The following tables summarize the activity in the allowance for credit losses for the Company's financing receivables (in thousands):

Three Months Ended December 31, 2011:	Receivables from Managed Entities		Investment in Commercial Finance -Leases and Loans			Rent Receivables		Total
Balance, beginning of year	$	10,490	$	430		$	15	$	10,935
Provision for credit losses		2,085		151			14		2,250
Charge-offs		−		(124	)		−		(124	)
Recoveries		−		25			−		25
Deconsolidation of LEAF		−		(482	)		−		(482	)
Balance, end of period	$	12,575	$	−		$	29	$	12,604
Ending balance, individually evaluated for impairment	$	12,575	$	−		$	29	$	12,604
Ending balance, collectively evaluated for impairment		−		−			−		−
Balance, end of period	$	12,575	$	−		$	29	$	12,604

			Investments in Commercial Finance
Three Months Ended December 31, 2010:	Receivables from Managed Entities		Leases and Loans			Future Payment Card Receivables			Investment in Real Estate Loans			Total
Balance, beginning of year	$	1,075	$	770		$	130		$	49		$	2,024
Provision for credit losses		1,411		183			12			−			1,606
Charge-offs		−		(1,000	)		(26	)		(49	)		(1,075	)
Recoveries		−		127			14			−			141
Balance, end of period	$	2,486	$	80			130		$	−		$	2,696
Ending balance, individually evaluated for impairment	$	2,486	$	−		$	−		$	−		$	2,486
Ending balance, collectively evaluated for impairment		−		80			130			−			210
Balance, end of period	$	2,486	$	80		$	130		$	−		$	2,696

The Company's gross financing receivables related to the balance in the allowance for credit losses as of December 31, 2011 are as follows (in thousands):

	Receivables from Managed Entities		Rent Receivables		Total
Ending balance, individually evaluated for impairment	$	66,923	$	42	$	66,965
Ending balance, collectively evaluated for impairment		−		−		−
Balance, end of period	$	66,923	$	42	$	66,965

The Company's financing receivables (presented exclusive of any allowance for credit losses) as of September 30, 2011 relate to the balance in the allowance for credit losses, as follows (in thousands):

	Receivables from Managed Entities		Rent Receivables		Leases and Loans		Total
Ending balance, individually evaluated for impairment	$	65,305	$	15	$	−	$	65,320
Ending balance, collectively evaluated for impairment		−		−		192,442		192,442
Balance, end of year	$	65,305	$	15	$	192,442	$	257,762

The following tables disclose information about the Company's impaired financing receivables (in thousands):

	Net Balance		Unpaid Balance		Specific Allowance		Average Investment in Impaired Assets
As of December 31, 2011:
Financing receivables without a specific valuation allowance:
Receivables from managed entities – commercial finance	$	−	$	−	$	−	$	−
Receivables from managed entities – real estate		−		−		−		−
Rent receivables – real estate		−		−		−		−
Financing receivables with a specific valuation allowance:
Receivables from managed entities – commercial finance	$	27,713	$	38,020	$	10,307	$	38,184
Receivables from managed entities – real estate		2,063		4,331		2,268		4,059
Rent receivables – real estate		13		42		29		34
Total:
Receivables from managed entities – commercial finance	$	27,713	$	38,020	$	10,307	$	38,184
Receivables from managed entities – real estate		2,063		4,331		2,268		4,059
Rent receivables – real estate		13		42		29		34
As of September 30, 2011:
Financing receivables without a specific valuation allowance:
Receivables from managed entities – commercial finance	$	−	$	−	$	−	$	−
Receivables from managed entities – real estate		−		−		−		−
Leases and loans		−		−		−		−
Rent receivables – real estate		−		−		−		−
Financing receivables with a specific valuation allowance:
Receivables from managed entities – commercial finance	$	14,990	$	23,302	$	8,312	$	23,377
Receivables from managed entities – real estate		2,353		4,531		2,178		3,897
Leases and loans		310		526		216		318
Rent receivables – real estate		−		15		15		7
Total:
Receivables from managed entities – commercial finance	$	14,990	$	23,302	$	8,312	$	23,377
Receivables from managed entities – real estate		2,353		4,531		2,178		3,897
Leases and loans		310		526		216		318
Rent receivables – real estate		−		15		15		7

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SUBSEQUENT EVENTS

3 Months Ended

Dec. 31, 2011

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 21 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events and determined that no events have occurred which would require an adjustment to the consolidated financial statements.

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EARNINGS PER SHARE

3 Months Ended

Dec. 31, 2011

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

NOTE 14 − EARNINGS PER SHARE

Basic earnings per share (“Basic EPS”) is computed using the weighted average number of common shares outstanding during the period, inclusive of nonvested share-based awards that are entitled to receive non-forfeitable dividends.  The diluted earnings per share (“Diluted EPS”) computation takes into account the effect of potential dilutive common shares.  Potential common shares, consisting primarily of stock options, warrants and director deferred shares, are calculated using the treasury stock method.

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

	Three Months Ended
	December 31,
	2011		2010
Shares:
Basic shares outstanding		19,641		19,076
Dilutive effect of equity award plans		398		−
Dilutive shares outstanding		20,039		19,076

Diluted EPS for the quarter ended December 31, 2011 excluded the following antidilutive securities: outstanding options to purchase a total of 1.0 million shares of common stock at a weighted average price per share of $16.14 and warrants to purchase 3,690,000 shares of common stock at a weighted average exercise price per share of $5.11.

For the quarter ended December 31, 2010, Basic EPS and Diluted EPS shares were the same because the impact of potential dilutive securities would have been antidilutive.  Accordingly, the following were excluded from the Diluted EPS computation as of December 31, 2010: outstanding options to purchase a total of 2.5 million shares of common stock at a weighted average price per share of $9.03, warrants to purchase 3,690,000 shares of common stock at a weighted average exercise price per share of $5.11. Additionally excluded were 69,300 shares of restricted stock outstanding (at a fair value of $16.42 per share) that did not have participating rights and, as such, were excluded from the Diluted EPS calculation.