**EXECUTION**





**ASSIGNMENT,
      ASSUMPTION AND AMENDMENT** **AGREEMENT**





**ASSIGNMENT,
      ASSUMPTION AND AMENDMENT** **AGREEMENT** , dated
      as
      of September 29, 2006 (this “ Agreement ”),
      among
      LEAF FUNDING, INC., a Delaware corporation (“ LEAF
      Funding ”),
      LEAF
      INSTITUTIONAL DIRECT MANAGEMENT, LLC, a Delaware limited liability company
      (“ LEAF
      IDM ”),
      LEAF
      FINANCIAL CORPORATION, a Delaware corporation (" LEAF
      Financial "),
      LEASE
      EQUITY APPRECIATION FUND II, L.P., a Delaware limited partnership (“ LEAF
      II ”),
      LEAF
      II B SPE, LLC, a Delaware limited liability company (“ LEAF
      II B SPE ”), MERRILL
      LYNCH EQUIPMENT FINANCE LLC ,
      a
      Delaware limited liability company (“ MLEF ”),
      MERRILL LYNCH COMMERCIAL FINANCE CORP., a Delaware corporation (" Lender ”),
      and
      U.S. BANK NATIONAL ASSOCIATION, as Custodian and Paying Agent (" U.S.
      Bank ").




**WITNESSETH** :




**WHEREAS** ,
      capitalized terms used herein not otherwise defined herein shall have the
      meanings ascribed thereto in Appendix A attached hereto;




**WHEREAS** ,
      LEAF
      Funding, LEAF IDM, LEAF Financial, MLEF, the Lender and U.S. Bank are parties
      to
      the Transaction Documents (as such term is defined in that certain Purchase,
      Sale and Contribution Agreement, dated as of April 8, 2003, between LEAF Funding
      and LEAF IDM, as amended, supplemented or otherwise modified prior to the date
      hereof, and referred to herein as the “ Existing
      Transaction Documents ”),
      pursuant to which (i) LEAF Funding shall from time to time sell to LEAF IDM,
      and
      LEAF IDM shall from time to time purchase from LEAF Funding, all of LEAF
      Funding’s right, title and interest in, to and under certain Purchased
      Contracts; (ii) LEAF IDM shall from time to time sell to MLEF, and MLEF shall
      from time to time purchase from LEAF IDM, all of LEAF IDM’s right, title and
      interest in, to and under such Purchased Contracts; (iii) the Lender shall
      from
      time to time lend to MLEF amounts sufficient to purchase such Purchased
      Contracts, and MLEF’s obligations to the Lender shall be secured by, among other
      things, MLEF’s right, title and interest in, to and under such Purchased
      Contracts; and (iv) the Servicer shall service such Purchased Contracts;




**WHEREAS** ,
      the
      parties hereto intend that MLEF transfer, assign and convey to LEAF II B SPE
      all
      of MLEF’s right title and interest in, to and under the Purchased Contracts and
      the Existing Transaction Documents, and in connection therewith, LEAF II B
      SPE
      shall assume and undertake to perform all of MLEF’s liabilities and obligations
      under the Purchased Contracts and the Existing Transaction
      Documents;







**WHEREAS** ,
      the
      parties hereto intend that LEAF IDM transfer, assign and convey to LEAF II
      all
      of LEAF IDM’s right title and interest in, to and under the Purchased Contracts
      and the Existing Transaction Documents, and in connection therewith, LEAF II
      shall assume and undertake to perform all of LEAF IDM’s liabilities and
      obligations under the Purchased Contracts and the Existing Transaction
      Documents; and




**WHEREAS** ,
      the
      parties hereto intend to amend the Transaction Documents in order to give effect
      to the foregoing transactions on the terms and subject to the satisfaction
      of
      the conditions set forth herein.




**NOW,
      THEREFORE** ,
      in
      consideration of the premises and of the mutual covenants and agreements
      contained herein, the parties hereto hereby agree as follows:




SECTION
      1.  Assignment
      and Assumption; Purchase Price .
      On the
      Effective Date (as defined in Section 3 hereof), subject to the terms and
      conditions hereof:




(a)  MLEF
      hereby sells, transfers, assigns and otherwise conveys, without recourse, to
      LEAF II B SPE and LEAF II B SPE hereby purchases from MLEF, all of MLEF’s right,
      title and interest in, to and under each of the Purchased Contracts owned by
      MLEF as of the date hereof, together with all of MLEF’s right, title and
      interest in, to and under each of the Transaction Documents. MLEF’s sale,
      transference and assignment hereunder of the Purchased Contracts and MLEF’s
      right, title and interest in, to and under each of the Transaction Documents
      is
      final and irrevocable from and after the Effective Date, and none of LEAF
      Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall have any
      right to require that such transference and assignment terminate or that MLEF
      repurchase such Purchased Contracts or MLEF’s right, title and interest in, to
      and under each of the Transaction Documents from LEAF II B SPE.




(b)  MLEF
      delegates, transfers, assigns and otherwise conveys, with recourse, to LEAF
      II B
      SPE, and LEAF II B SPE hereby assumes from MLEF, all of MLEF’s duties,
      obligations and liabilities in, to and under each of the Purchased Contracts
      owned by MLEF as of the date hereof, together with all of MLEF’s right, title
      and interest in, to and under each of the Transaction Documents. MLEF’s
      delegation, transference and assignment hereunder of the Purchased Contracts
      and
      MLEF’s right, title and interest in, to and under each of the Transaction
      Documents is final and irrevocable from and after the Effective Date, and none
      of LEAF Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall
      have
      any right to require that such delegation, transference and assignment terminate
      or that MLEF re-assume such duties, obligations and liabilities from LEAF II
      B
      SPE.




(c)  LEAF
      IDM
      hereby sells, transfers, assigns and otherwise conveys, without recourse, to
      LEAF II and LEAF II hereby purchases from LEAF IDM, all of LEAF IDM’s right,
      title and interest in, to and under each of the Purchased Contracts owned by
      LEAF IDM as of the date hereof, together with all of LEAF IDM’s right, title and
      interest in, to and under each of the Transaction Documents. LEAF IDM’s sale,
      transference and assignment hereunder of the Purchased Contracts and LEAF IDM’s
      right, title and interest in, to and under each of the Transaction Documents
      is
      final and irrevocable from and after the Effective Date, and none of LEAF
      Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall have any
      right to require that such transference and assignment terminate or that LEAF
      IDM repurchase such Purchased Contracts or LEAF IDM’s right, title and interest
      in, to and under each of the Transaction Documents from LEAF II.







(d)  LEAF
      IDM
      delegates, transfers, assigns and otherwise conveys, with recourse, to LEAF
      II,
      and LEAF II hereby assumes from LEAF IDM, all of LEAF IDM’s duties, obligations
      and liabilities in, to and under each of the Purchased Contracts owned by LEAF
      IDM as of the date hereof, together with all of LEAF IDM’s right, title and
      interest in, to and under each of the Transaction Documents. LEAF IDM’s
      delegation, transference and assignment hereunder of the Purchased Contracts
      and
      LEAF IDM’s right, title and interest in, to and under each of the Transaction
      Documents is final and irrevocable from and after the Effective Date, and none
      of LEAF Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall
      have
      any right to require that such delegation, transference and assignment terminate
      or that LEAF IDM re-assume such duties, obligations and liabilities from LEAF
      II.




(e)  Each
      of
      the parties hereto consents to the foregoing sales, transfers, assignments,
      conveyances and delegations and each party hereto hereby acknowledge and agrees
      that all property, whether tangible or intangible, as sold, transferred,
      assigned, conveyed and delegated is done so subject to the continuing first
      priority Lien of the Lender therein.




(f)  In
      consideration of the foregoing, LEAF II B SPE shall pay to MLEF a net amount
      equal to $188,734,807.55 (the “ Purchase
      Price ”),
      which
      shall include LEAF II B SPE’s assumption of the indebtedness and liabilities of
      MLEF then due and owing under the Existing Transaction Documents in the
      principal amount of $173,043.222.82. All amounts payable to MLEF in cash shall
      be paid in same day funds, without defense, setoff or counterclaim, and shall
      be
      made to an account of MLEF or Affiliate thereof that has been notified to LEAF
      II in writing




SECTION
      2.  Amendment .
      As of
      the Effective Date:




(a)  Purchase,
      Sale and Contribution Agreement .
      The
      Purchase, Sale and Contribution Agreement is hereby amended as
      follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.




(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(iii)  Each
      reference therein to the phrase “the applicable Collection Account” is hereby
      amended by deleting it in its entirety and, in lieu thereof, inserting the
      phrase “the Collection Account”.




(iv)  The
      Definitions and Rules of Construction attached thereto as Appendix A is hereby
      amended and restated in its entirety in the form of Appendix A attached
      hereto.




(v)  The
      Form
      of Purchase Date Notice attached thereto as Exhibit A is hereby amended and
      restated in its entirety in the form of Exhibit I attached hereto.




(vi)  Section
      2.02 thereof is hereby amended by deleting it in its entirety and, in lieu
      thereof, the following:







“ SECTION
      2.02 Purchase
      Price . In
      consideration of the sale, transference and assignment of the Purchased
      Contracts to be sold, transferred and assigned on any Purchase Date, LEAF II
      shall pay to LEAF Funding the Purchase Price for each Purchased Contract on
      the
      applicable Purchase Date, which shall be paid in immediately available funds
      on
      such Purchase Date in accordance with the funding instructions set forth in
      the
      applicable Purchase Date Notice.”




(vii)  Section
      2.03 thereof is hereby amended by deleting it in its entirety and, in lieu
      thereof, inserting “Section 2.03 Intentionally Omitted.”




(viii)  Section
      3.02(a)(iii)(A)(1) thereof is hereby amended by deleting it in its entirety
      and,
      in lieu thereof, inserting “(1) Intentionally Omitted;”.




(ix)  Section
      3.02(f)(i)(A) thereof is hereby amended by deleting it in its entirety and,
      in
      lieu thereof, inserting “(A) Intentionally Omitted;”.




(b)  Purchase
      and Sale Agreement .
      The
      Purchase and Sale Agreement is hereby amended as follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.




(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(iii)  Each
      reference therein to the phrase “the applicable Collection Account” is hereby
      amended by deleting it in its entirety and, in lieu thereof, inserting the
      phrase “the Collection Account”.




(iv)  Section
      2.02 thereof is hereby amended by deleting it in its entirety and, in lieu
      thereof, the following:




“SECTION
      2.02 Purchase
      Price .
      In
      consideration of the sale, transference and assignment of the Purchased
      Contracts to be sold, transferred and assigned on any Purchase Date, LEAF II
      B
      SPE shall pay to LEAF II the Purchase Price for each Purchased Contract on
      the
      applicable Purchase Date, which shall be paid in immediately available funds
      on
      such Purchase Date in accordance with the funding instructions set forth in
      the
      applicable Purchase Date Notice. Notwithstanding anything herein or in any
      other
      Transaction Document to the contrary, as of each Purchase Date, the excess,
      if
      any, of the fair market value of any Purchased Contract over the Purchase Price
      for such Purchased Contract on such Purchase Date shall be deemed to be a
      contribution to the capital of LEAF II B SPE by LEAF II, which shall increase
      LEAF II’s beneficial ownership interest in LEAF II B SPE.”




(v)  Section
      2.04 thereof is hereby amended by deleting it in its entirety.







(vi)  Article
      VIII thereof is hereby amended by inserting the following at the end
      thereof:




“SECTION
      8.14 Relationship
      of LEAF II and LEAF II B SPE .






(a)  The
      relationship between LEAF II and LEAF II B SPE shall be that of buyer and
      seller. Neither is a trustee or agent for the other, nor does either have
      fiduciary obligations to other. This Agreement shall not be construed to create
      a partnership or joint venture between LEAF II and LEAF II B SPE.




(b)  LEAF
      II B
      SPE shall maintain at all times a telephone number different from any telephone
      numbers of LEAF II. LEAF II B SPE shall use stationery separate from that of
      LEAF II.




(c)  LEAF
      II B
      SPE and LEAF II shall take steps to ensure that their respective creditors
      are
      aware that LEAF II B SPE is a legal entity separate and distinct from any other
      Entity and maintains its assets, and conducts its operations, separate from
      those of any other Entity. Neither LEAF II B SPE nor LEAF II shall fail to
      correct any known misunderstanding regarding their separate identity. LEAF
      II
      shall not purport to operate as an integrated, single economic unit with LEAF
      II
      B SPE in dealing with any unaffiliated Entity. LEAF II shall not finance LEAF
      II
      B SPE’s operations or guarantee LEAF II B SPE’s obligations. LEAF II B SPE shall
      pay from its own funds, to the extent funds are available, its operating
      expenses and liabilities, including legal fees and expenses, or shall reimburse
      LEAF II for any such expenses or liabilities paid by LEAF II on LEAF II B SPE’s
      behalf. LEAF II B SPE shall not hold out the assets or creditworthiness of
      LEAF
      II as being available for the payment of LEAF II B SPE’s liabilities or
      obligations, and LEAF II B SPE shall not hold out its assets or creditworthiness
      as being available for the payment of the liabilities or obligations of LEAF
      II
      or any of its affiliates other than LEAF II B SPE. LEAF II shall not hold out
      the assets or creditworthiness of LEAF II B SPE, nor shall LEAF II B SPE permit
      LEAF II to hold its assets or creditworthiness, as being available for the
      payment of the liabilities or obligations of LEAF II or any of its affiliates
      (other than LEAF II B SPE). LEAF II shall not hold out the assets or
      creditworthiness of it or any of its affiliates (other than LEAF II B SPE)
      as
      being available for the payment of the liabilities or obligations of LEAF II
      B
      SPE. LEAF II B SPE shall not permit the assets or creditworthiness of LEAF
      II or
      any of its affiliates (other than LEAF II B SPE) to be held out as being
      available for payment of the liabilities or obligations of LEAF II B SPE.
      Neither LEAF II nor LEAF II B SPE shall use or permit the separate trust
      existence of LEAF II B SPE to be used by LEAF II to abuse creditors or to
      perpetrate a fraud, injury, or injustice on creditors.







(d)  LEAF
      II
      and LEAF II B SPE shall each conduct its respective business separate and apart
      from the business conducted by the other. LEAF II B SPE shall maintain its
      books
      and records distinct and separately identifiable from the corporate records
      of
      LEAF II and any other Entity. LEAF II B SPE shall prepare financial records
      distinct and separately identifiable from the financial records of LEAF II
      or
      any of its affiliates (other than LEAF II B SPE). LEAF II B SPE shall prepare
      and maintain such statements and reports in accordance with generally accepted
      accounting principles. LEAF II shall indicate in such consolidated financial
      statements that the assets of LEAF II B SPE are not available to satisfy the
      creditors of any Entity other than LEAF II B SPE. To the extent that LEAF II
      B
      SPE is required to file tax returns under applicable law, LEAF II B SPE shall
      file such tax returns separate from those of any other Entity. LEAF II B SPE
      shall keep its funds and bank accounts separate and apart from the funds of
      LEAF
      II and any of its affiliates (other than LEAF II B SPE), and shall maintain
      its
      other assets separately identifiable and distinguishable from the assets of
      LEAF
      II and any of its affiliates (other than LEAF II B SPE). LEAF II B SPE shall
      not
      commingle its funds or other assets with those of any other Entity.




(e)  LEAF
      II B
      SPE shall act solely in its own name and solely through its duly Authorized
      Officers or agents. LEAF II B SPE shall comply with the provisions of its
      limited liability company agreement, and shall comply in all material respects
      with the laws of the State of Delaware, insofar as they pertain to its
      separateness. In addition, LEAF II, as the sole member of LEAF II B SPE, shall
      execute such consents as may be necessary to authorize action by LEAF II B
      SPE,
      and LEAF II B SPE shall maintain appropriate records of its written consents
      and
      shall observe all requisite corporate formalities insofar as they pertain to
      LEAF II B SPE’s separate existence.




(f)  All
      transactions between LEAF II and LEAF II B SPE are and shall be duly authorized
      and documented, and recorded accurately in their respective books and records.
      All such transactions shall be fair to each party, constitute exchanges for
      fair
      consideration and for reasonably equivalent value, and shall be made in good
      faith and without any intent to hinder, delay, or defraud creditors. LEAF II
      B
      SPE shall not take any action, and shall not engage in transactions with LEAF
      II
      or any of its Affiliates (other than LEAF II B SPE) except as directed by LEAF
      II, and LEAF II shall not give any directions that are prohibited by LEAF II
      B
      SPE’s limited liability company agreement.”




(c)  Loan
      Agreement .
      The
      Loan Agreement is hereby amended as follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.







(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(iii)  The
      form
      of Class A Note attached thereto as Exhibit A is hereby amended and restated
      in
      its entirety in the form of Exhibit II attached hereto.




(iv)  The
      form
      of Class B Note attached thereto as Exhibit B is hereby deleted in its
      entirety.




(v)  Section
      2.01 thereof is hereby amended by deleting it in its entirety and, in lieu
      thereof, the following:




“SECTION
      2.01 Commitment .
      During
      the Effective Period, subject to the terms and conditions herein set forth,
      the
      Lender agrees to make Advances to LEAF II B SPE in an aggregate principal amount
      not to exceed the Commitment. The Commitment shall automatically and permanently
      be reduced to zero on the Expiry Date. Subject to the terms, provisions and
      limitations set forth herein, LEAF II B SPE may borrow and repay, but not
      reborrow, Advances on or after the Closing Date and prior to the Expiry
      Date.”




(vi)  Section
      2.02(a) thereof is hereby amended by deleting it in its entirety and, in lieu
      thereof, the following:




“(a)
      Upon
      receipt of the Purchase Date Notice, and subject to the terms and conditions
      hereof, the Lender shall make Advances to LEAF II B SPE on the applicable
      Purchase Date in an aggregate amount equal to (x) the Advance Rate as of such
      date times (y) the
      Contract Value of each Purchased Contract to be purchased as of such Purchase
      Date.”




(vii)  Section
      2.03(c) thereof is hereby amended by deleting it in its entirety and, in lieu
      thereof, the following:




“(c)
      If
      requested in writing by the Lender, all Advances made by the Lender to LEAF
      II B
      SPE shall be evidenced by a single Note duly executed on behalf of LEAF II
      B SPE
      and delivered to and made payable to the order of the Lender in a principal
      amount equal to the amount of the Commitment.”




(viii)  The
      second sentence of Section 2.04 thereof is hereby amended by deleting it in
      its
      entirety and, in lieu thereof, the following:




“Each
      Advance shall bear interest on the principal amount thereof from time to time
      outstanding, from the date of on which such Advance is made until such principal
      amount becomes due, at a rate per annum equal to the sum of (i) the LIBO Rate, plus (ii) the
      Facility Rate; provided, upon the occurrence of a Servicer Default each Advance
      shall bear interest on the principal amount thereof from time to time
      outstanding, from the date of such occurrence until such principal amount
      becomes due, at a rate per annum equal to the Default Funding
      Rate.”







(ix)  Section
      2.05 thereof is hereby amended by deleting the phrase “the Applicable Priority
      of Payments” in its entirety and, in lieu thereof, inserting the phrase “the
      Priority of Payments”.




(x)  Section
      3.02(d) thereof is hereby amended by deleting the “and” at the end of clause
      (iii) thereof, deleting the “.” at the end of clause (iv) thereof inserting, in
      lieu thereof “ and;”, and inserting the following the following at the end
      thereof:




“(v)
      immediately prior to and after giving effect to the Advances to be made on
      such
      Purchase Date, (x) the Maximum Advance Amount as of such date does not exceed
      the aggregate amount of the Note Balance as of such date, and (y) the aggregate
      amount of the Note Balance as of such date does not exceed the Commitment in
      effect as of such date.”




(xi)  Section
      4.01 thereof is hereby amended by inserting the following the following at
      the
      end thereof:




“(f) No
      Proceedings .
      There
      are no proceedings, injunctions, writs, restraining orders or investigations
      pending or, to the best knowledge of LEAF II B SPE, threatened against LEAF
      II B
      SPE before any Governmental Authority (i) asserting the illegality, invalidity
      or unenforceability, or seeking any determination or ruling that would affect
      the legality, validity or enforceability of, this Agreement or any of the other
      Transaction Documents, (ii) seeking to prevent the consummation of any of the
      transactions contemplated by this Agreement or any of the other Transaction
      Documents, or (iii) seeking any determination or ruling that is reasonably
      likely to affect adversely the financial condition or operations of LEAF II
      B
      SPE or the validity or enforceability of, or the performance by LEAF II B SPE
      of
      its obligations under, this Agreement or any of the other Transaction
      Documents.




(g) No
      Consents .
      No
      authorization, consent, license, order or approval of, filing, registration
      or
      declaration with, or notice to, any Person, including, without limitation,
      any
      Governmental Authority, is required for LEAF II B SPE in connection with the
      execution and delivery of this Agreement or any of the other Transaction
      Documents by LEAF II B SPE or the performance of its obligations under this
      Agreement or any of the other Transaction Documents, except for the filing
      of
      documents required to have been filed on or prior to the Closing Date or a
      Purchase Date pursuant to Sections 3.01 and 3.02, all of which were so filed
      and
      are in full force and effect.




(h) Ownership;
      Liens .




(i)
      On
      each Purchase Date, LEAF II B SPE is the sole and exclusive owner of each
      Purchased Contract purchased by LEAF II B SPE on such date, each such Purchased
      Contract is free and clear of any Lien and no effective financing statement
      or
      other instrument similar in effect covering such Purchased Contract is on file
      in any recording office.







(ii)
      As
      of each Purchase Date, each Purchased Contract shall be acquired by LEAF II
      B
      SPE from LEAF II free and clear of any Lien except Permitted Liens.




(i) Location .
      The
      principal place of business and major executive office of LEAF II B SPE, and
      the
      offices where LEAF II B SPE keeps the originals of its books, records and
      documents regarding the Purchased Contracts sold hereunder, are located at
      LEAF
      II B SPE’s address specified in Section 8.09.




(j) Valid
      Lien .
      This
      Agreement creates, to secure the Obligations, a valid security interest (as
      defined in the UCC) in the Collateral and, upon the filing of the financing
      statements on Form UCC-1 described in Section 3.01, Lender will have a valid
      first priority perfected security interest in the Collateral (subject to Section
      9-315 of the UCC).




(k) Solvency .
      LEAF II
      B SPE is solvent and will not become insolvent after giving effect to the
      transactions contemplated by this Agreement. LEAF II B SPE is currently repaying
      all of its indebtedness as such indebtedness becomes due; and, after giving
      effect to the transactions contemplated by this Agreement, LEAF II B SPE will
      have adequate capital to conduct its business as presently conducted and as
      contemplated by this Agreement.




(l) Compliance .
      LEAF II
      B SPE has complied, and will comply on each Purchase Date, in all respects
      with
      all Requirements of Law with respect to it, its business and properties and
      all
      Purchased Contracts sold hereunder. LEAF II B SPE has maintained and will
      maintain all applicable permits, certifications and licenses necessary in any
      respect with respect to its business and properties and all Purchased Contracts
      sold hereunder, LEAF II B SPE has filed or caused to be filed, and will file,
      on
      a timely basis all tax returns required by any Governmental
      Authority.




(m) No
      Rescission .
      No
      Purchased Contract has been satisfied, subordinated or rescinded or, except
      as
      disclosed in writing to Lender, amended in any manner.




(n) No
      Insolvency Event .
      No
      Insolvency Event has occurred with respect to LEAF II B SPE nor, in LEAF II
      B
      SPE’s good faith judgment, is any Insolvency Event anticipated to occur with
      respect to LEAF II B SPE in the foreseeable future.







(o) Fraudulent
      Conveyance .
      LEAF II
      B SPE is not entering into the transactions contemplated hereby with any intent
      of hindering, delaying or defrauding creditors.




(p) Eligible
      Contracts .
      As of
      the relevant Purchase Date:




(i)
      each
      Purchased Contract sold on such date is an Eligible Contract and the transfer,
      sale and conveyance to LEAF II hereunder of such Purchased Contract does not
      conflict with, result in a breach of any of the provisions of, or constitute
      (with or without notice or lapse of time or both) a default under, such
      Purchased Contract or violate any Requirement of Law or subject the Lender
      to
      any fine, penalty or liability; and




(ii)
      the
      information set forth in the Purchase Date Notice with respect to each Purchased
      Contract to be purchased on such date, together with the applicable electronic
      data file provided in connection therewith, is and shall be true and
      correct.




(q) No
      Proceedings .
      There
      are no proceedings, injunctions, writs, restraining orders or investigations
      pending or, to the best knowledge of an Authorized Officer of LEAF II B SPE,
      threatened with respect to any Purchased Contract before any Governmental
      Authority asserting the illegality, invalidity or unenforceability, or seeking
      any determination or ruling that would affect the legality, validity or
      enforceability of any such Purchased Contract.




(r) Legal
      Name .
      The
      legal name of LEAF II B SPE is LEAF II B SPE, LLC.




(s) ERISA .
      No Plan
      (as defined in Section 3(3) of ERISA) maintained by LEAF II B SPE or any of
      its
      ERISA Affiliates (as defined in Section 414(b), (c), (m) or (o) of the Code)
      has
      any accumulated funding deficiency (within the meaning of Section 302 of ERISA
      or Section 412 of the Code), whether or not waived, LEAF II B SPE and each
      ERISA
      Affiliate of LEAF II B SPE have, in a timely manner, made all contributions
      required to be made by it to any Plan and Multiemployer Plan (as defined in
      Section 4001(a)(3) of ERISA) to which contributions are or have been required
      to
      be made by LEAF II B SPE or such ERISA Affiliate, and no event requiring notice
      to the Pension Benefit Guaranty Corporation under Section 302(f) of ERISA has
      occurred and is continuing or could reasonably be expected to occur with respect
      to any such Plan, in any case, that could reasonably be expected to result,
      directly or indirectly, in any Lien being imposed on the property of LEAF II
      B
      SPE or the payment of any material amount to avoid such Lien. No Reportable
      Event (as defined in Section 4043 of ERISA) with respect to LEAF II B SPE or
      any
      of its ERISA Affiliates has occurred or could reasonably be expected to occur
      that could reasonably be expected to result, directly or indirectly, in any
      Lien
      being imposed on the property of LEAF II B SPE or the payment of any material
      amount to avoid such Lien.







(t) PATRIOT
      Act .
      To the
      extent applicable, LEAF II B SPE is in compliance, in all material respects,
      with the (i) Trading with the Enemy Act, as amended, and each of the
      foreign assets control regulations of the Untied States Treasury Department
      (31
      CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation
      or
      executive order relating thereto, and (ii) the PATRIOT Act. No part of the
      proceeds of any Advance will be used, directly or indirectly, for any payments
      to any governmental official or employee, political party, official of a
      political party, candidate for political office, or anyone else acting in an
      official capacity, in order to obtain, retain or direct business or obtain
      any
      improper advantage, in violation of the United States Foreign Corrupt Practices
      Act of 1977, as amended.”




(xii)  Section
      5.01(e) thereof is hereby amended by deleting the phrase “the applicable
      Collection Account” in its entirety and, in lieu thereof, inserting the phrase
“the Collection Account”.




(xiii)  Section
      5.01(f) thereof is hereby amended by deleting it in its entirety and, in lieu
      thereof, inserting the following:




“(f) Reporting
      Requirements .




(i)
      LEAF
      II B SPE shall (A) within one Business Day after an Authorized Officer of LEAF
      II B SPE obtains knowledge of the occurrence of any Potential Termination Event
      or any Termination Event, notify (either orally or in writing) the Lender of
      such occurrence and (B) as soon as possible and in any event within three
      Business Days after an Authorized Officer of LEAF II B SPE obtains knowledge
      of
      the occurrence of any Potential Termination Event or any Termination Event,
      deliver to Lender, the Lender a statement of an Authorized Officer of LEAF
      II B
      SPE setting forth details of such Termination Event or such event and the action
      that LEAF II B SPE has taken and proposes to take with respect
      thereto.




(ii)
      As
      soon as possible and in any event within 10 Business Days after an Authorized
      Officer of LEAF II B SPE obtains knowledge thereof, LEAF II B SPE shall notify
      the Lender of any litigation, investigation or proceeding that could reasonably
      be expected to impair in any respect the ability of LEAF II B SPE to perform
      its
      obligations under this Agreement.







(iii)
      LEAF II B SPE shall promptly deliver to Lender such other information,
      documents, records or reports regarding the Purchased Contracts as Lender may
      from time to time reasonably request in order to protect Lender’s interests
      under or as contemplated by this Agreement.”




(xiv)  Section
      5.01 thereof is hereby amended by inserting the following at the end
      thereof:




“(g) Extension
      or Amendment of Contract Receivables .
      Except
      as otherwise permitted under the Servicing Agreement, LEAF II B SPE will not
      (i)
      extend, amend or otherwise modify the terms of any Purchased Contract or (ii)
      rescind or cancel any Purchased Contract.




(h) No
      Actions Against Obligors .
      Except
      in accordance with the Servicing Agreement, LEAF II B SPE will not commence
      or
      settle any legal action to enforce any rights under any Purchased
      Contract.”




(xv)  Article
      VIII thereof is hereby amended by inserting the following at the end
      thereof:




“SECTION
      8.11 Indemnification .
      Without
      limiting any other rights that any of the Indemnified Parties may have hereunder
      or under any applicable law, LEAF II B SPE hereby agrees to indemnify the
      Indemnified Parties from and against any and all Indemnified Amounts, whether
      direct, indirect or consequential, as a result of or arising from or relating
      to
      or in connection with any of the following:




(a)
      the
      reliance by any of the Indemnified Parties on any representation or warranty
      made by LEAF II B SPE under this Agreement that was incorrect in any respect
      when made or deemed made;




(b)
      any
      breach by Lender of any of its obligations under this Agreement or any other
      Transaction Document;




(c)
      any
      claim, litigation, investigation or proceeding relating to any of the foregoing,
      whether or not any Indemnified Party is a party thereto;




(d)
      any
      commingling by LEAF II B SPE of Collections with other funds of LEAF II B SPE
      or
      any of its Affiliates; or




(e)
      any
      breach by LEAF II B SPE of any obligation under, or any violation by LEAF II
      B
      SPE of any Requirement of Law with respect to, any Purchased
      Contract;







provided,  however ,
      that
      LEAF II B SPE shall not have any obligation to any Indemnified Party pursuant
      to
      this Section 8.11 for any of the foregoing (x) caused by the gross negligence
      or
      willful misconduct of such Indemnified Party as determined by a final judgment
      of a court of competent jurisdiction or (y) that arise out of facts and
      circumstances related to the Purchased Contracts occurring prior to the
      Effective Date. To the extent that the undertaking to indemnify, pay and hold
      harmless set forth in this Section 8.11 may be unenforceable because it is
      violative of any law or public policy, LEAF II B SPE shall contribute the
      maximum portion which it is permitted to pay and satisfy under applicable law,
      to the payment and satisfaction of all Indemnified Amounts incurred by the
      Indemnified Parties.




Each
      Indemnified Party shall use reasonable efforts to notify LEAF II B SPE in
      advance of making any claim under this Section. Any Indemnified Amounts due
      under this Section shall be payable when incurred and, in any event, within
      ten
      Business Days of submission of a claim by the Indemnified Party. This Section
      shall survive the payment of all amounts otherwise due under this
      Agreement.”




(d)  Servicing
      Agreement .
      The
      Servicing Agreement is hereby amended as follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.




(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(iii)  Each
      reference therein to the phrase “the applicable Collection Account” or the
      phrase “the applicable Collection Account” is hereby amended by deleting it in
      its entirety and, in lieu thereof, inserting the phrase “the Collection
      Account”.




(iv)  Each
      reference therein to the phrase “the Applicable Priority of Payments” is hereby
      amended by deleting it in its entirety and, in lieu thereof, inserting the
      phrase “the Priority of Payments”.




(v)  Section
      2.01(b) thereof is hereby amended by deleting the phrase “the Master DDA, the
      Collection Accounts and the Reserve Accounts” in its entirety and, in lieu
      thereof, inserting the phrase “the Master DDA and the Collection
      Account”.




(vi)  Section
      2.01(c)(iv) thereof is hereby amended by deleting the phrase “and all funds on
      deposit in the applicable Reserve Account” in its entirety.




(vii)  Section
      2.01(c)(v) thereof is hereby amended by deleting it in its entirety and, in
      lieu
      thereof, inserting the phrase “Intentionally Omitted”.




(viii)  Section
      2.01(f)(ii) thereof is hereby amended by deleting it in its entirety and, in
      lieu thereof, inserting the following:







“(ii)
      at
      the Servicer’s expense, with the prior written consent of the Lender, and
      subject to Section 2.01(g), entering into subservicing arrangements with
      any Person for the purpose of administering or collecting the
      Collections.”




(ix)  Section
      4.01(b)(i) thereof is hereby amended by deleting the phrase “the Master DDA, the
      Collection Accounts and the Reserve Accounts” in its entirety and, in lieu
      thereof, inserting the phrase “the Master DDA and the Collection
      Account”.




(e)  Back-up
      Servicing Agreement .
      The
      Back-up Servicing Agreement is hereby amended as follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.




(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(iii)  Section
      2.04 thereof is hereby amended by deleting the phrase “the Applicable Priority
      of Payments” in its entirety and, in lieu thereof, inserting the phrase “the
      Priority of Payments”.




(f)  Paying
      Agent Agreement .
      The
      Paying Agent Agreement is hereby amended as follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.




(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(iii)  Each
      reference therein to the phrase “the applicable Collection Account” or the
      phrase “the applicable Collection Account” or the phrase “either Collection
      Account” is hereby amended by deleting it in its entirety and, in lieu thereof,
      inserting the phrase “the Collection Account”.




(iv)  Each
      reference therein to the phrase “the Applicable Priority of Payments” is hereby
      amended by deleting it in its entirety and, in lieu thereof, inserting the
      phrase “the Priority of Payments”.




(v)  Section
      3(a) thereof is hereby amended by deleting the phrase “the Master DDA, the
      Collection Accounts and the Reserve Accounts” in its entirety and, in lieu
      thereof, inserting the phrase “the Master DDA and the Collection
      Account”.




(vi)  Section
      5(b) thereof is hereby amended as follows by deleting it in its entirety and,
      in
      lieu thereof, inserting the phrase “Intentionally Omitted”.







(vii)  Sections
      6(b), 6(c) and 6(d) thereof are each hereby amended by deleting it in its
      entirety.




(viii)  Section
      7(b) thereof is hereby amended by deleting the phrase “and funds on deposit in
      the applicable Reserve Account, in each case,”; in its entirety.




(g)  Custodial
      Agreement .
      The
      Paying Agent Agreement is hereby amended as follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.




(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(h)  Master
      DDA Control Agreement .
      The
      Master DDA Control Agreement is hereby amended as follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.




(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(i)  Master
      DDA Intercreditor Agreement .
      The
      Master DDA Intercreditor Agreement is hereby amended as follows:




(i)  Each
      reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
      SPE, as assignee of MLEF.




(ii)  Each
      reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
      assignee of LEAF IDM.




(j)  Addressees .
      Each of
      the Transaction Documents is amended to provide that notice information for
      each
      of the addressees in the Transaction Documents shall be as follows:




If
      to
      LEAF Funding:





LEAF
      Funding, Inc.


c/o
      LEAF
      Financial Corporation


1818
      Market Street, 9 th floor


Philadelphia,
      PA 19103




Tel:  (215)
      569-1844


Fax:  (215)
      569-0675


Attn:  Crit
      DeMent







With
      copies to:




Dar
      Patel, Esq.


General
      Counsel


LEAF
      Financial Corporation


(same
      info as above)




and:




Richard
      Abt, Esq.


Ledgewood


1900
      Market Street, Suite 750


Philadelphia,
      PA 19103




Tel:  (215)
      731-9450


Fax:  (215)
      735-2513




If
      to
      LEAF II:




Lease
      Equity Appreciation Fund II, L.P.


c/o
      LEAF
      Financial Corporation


(same
      as
      above)




If
      to
      LEAF II B SPE:




LEAF
      II B
      SPE, LLC


c/o
      LEAF
      Financial Corporation


(same
      as
      above)




If
      to the
      Lender:




Merrill
      Lynch Commercial Finance Corp.


4
      World
      Financial Center,10 th Fl.


New
      York,
      NY 10080


Tel:  (212)
      449-9369


Fax:  (212)
      449-9015


Attn:  Jeffrey
      S. Cohen





If
      to
      U.S. Bank:





U.S.
      Bank
      National Association


180
      East
      Fifth Street


St.
      Paul,
      MN 55101


Tel:  (651)
      244-0727


Fax:  (651)
      244-1917


Attn:
      Structured Finance/Leaf Financial







SECTION
      3.  Conditions
      Precedent to the Effectiveness of this Agreement .
      This
      Agreement shall become effective as of the date hereof (the “ Effective
      Date ”)
      provided that each of the following conditions precedent shall have been
      satisfied, or waived by the Lender and U.S. Bank, on or before such
      date:




(a)  Purchase
      Price .
      LEAF II
      B SPE shall have paid to MLEF the Purchase Price in accordance with the terms
      and conditions hereof.




(b)  Collection
      Accounts and Reserve Accounts .
      The
      Paying Agent shall have (i) renamed the currently existing “Collection Account
      (Pool A)” as “Merrill Lynch Commercial Finance Corp., as Lender, Account of LEAF
      II B SPE, LLC”, which account, as of the Effective Date and thereafter, shall
      for all purposes of the Transaction Documents be the “Collection Account”, (ii)
      transferred all amounts then on deposit in the Collection Account (Pool B),
      Reserve Account (Pool A) and Reserve Account (Pool B) into the Collection
      Account, and (iii) terminated each of the Collection Account (Pool B), Reserve
      Account (Pool A) and Reserve Account (Pool B).




(c)  Delivery
      of Agreements, Documents, Instruments, Etc .
      The
      Lender shall have received each of the following, each, unless otherwise noted,
      dated as of Effective Date:




(i)  this
      Agreement, executed and delivered by a duly Authorized Officer of each party
      hereto;




(ii)  a
      Note,
      executed and delivered by a duly Authorized Officer of LEAF II B
      SPE;




(iii)  an
      Effective Date Notice in form of Exhibit III attached hereto executed and
      delivered by a duly Authorized Officer of LEAF Financial, LEAF Funding, LEAF
      IDM, LEAF II and LEAF II B SPE;




(iv)  copies
      of
      the organizational documents of each of LEAF II and LEAF II B SPE, certified
      by
      the Secretary of State of the State of Delaware, or, if such document is of
      a
      type that may not be so certified, certified by the secretary of each of LEAF
      II
      and LEAF II B SPE, as applicable, together with a good standing certificate
      from
      the Secretary of State of the State of Delaware and, if applicable, each other
      jurisdiction in the United States in which each of LEAF II and LEAF II B SPE
      is
      qualified to do business and, to the extent generally available, a certificate
      or other evidence of good standing as to payment of any applicable franchise
      or
      similar taxes from the appropriate taxing authority of each jurisdiction of
      organization, each dated a recent date prior to the Effective Date;




(v)  resolutions
      of the board of directors (or any duly authorized committee thereof) or members
      of each of LEAF II and LEAF II B SPE approving and authorizing the execution,
      delivery and performance by such Person of the Transaction Documents to which
      it
      is a party, certified as of the Effective Date by the secretary of each of
      LEAF
      II and LEAF II B SPE, as applicable, as being in full force and effect without
      modification or amendment;







(vi)  signature
      and incumbency certificates of the officers of each of LEAF II and LEAF II
      B SPE
      executing the Transaction Documents to which it is a party;




(vii)  executed
      copies of one or more favorable written opinions of counsel for LEAF Financial,
      LEAF Funding, LEAF IDM, LEAF II and LEAF II B SPE in form and substance
      satisfactory to the Lender and its counsel, dated as of the Effective Date
      and
      covering substantially such matters as LEAF II B SPE or the Lender may
      reasonably request (this Agreement constituting a written request by each of
      LEAF Financial, LEAF Funding, LEAF IDM, LEAF II and LEAF II B SPE to such
      counsel to deliver such opinions to LEAF II B SPE and the Lender), including,
      without limitation, (x) concerning the potential application to LEAF Funding,
      LEAF II and LEAF II B SPE of the doctrine of “substantive consolidation” under
      the federal bankruptcy laws and (y) concerning the true sale nature of the
      transactions contemplated hereby and the other Transaction Documents;
      and




(viii)  financing
      statements relating to the conveyance of the Purchased Contracts, naming LEAF
      II
      as debtor, LEAF II B SPE as secured party and LEAF II B SPE as assignee thereof,
      or other similar instruments or documents, as may be necessary or, in the
      opinion of the Lender, desirable under the UCC of any appropriate jurisdiction
      or other applicable law to perfect LEAF II’s ownership of the Purchased
      Contracts and a first priority security interest therein, which financing
      statements, instruments or documents shall be filed with the Secretary of State
      of the State of Delaware and such other filing offices as may be necessary
      or
      appropriate.




(d)  Representations
      and Warranties .
      As of
      the date hereof, the representations and warranties made herein by LEAF Funding,
      LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall be true and correct
      in
      all material respects on and as of such date as if made on and as of such date
      (except to the extent such representation or warranty expressly relates to
      an
      earlier date, in which case such representation or warranty shall be true and
      correct in all material respects as of such earlier date).




(e)  No
      Potential Termination Event or Termination Event .
      No
      Potential Termination Event or Termination Event shall have occurred and be
      continuing or shall occur as a result of this Agreement.




SECTION
      4.  Representations
      and Warranties .
      To
      induce MLEF, the Lender and U.S. Bank to enter into this Agreement, each of
      LEAF
      Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE hereby represent
      and warrant to MLEF, the Lender and U.S. Bank as follows as of the date
      hereof:




(a)  Representations
      and Warranties - Transaction Documents .
      The
      representations and warranties made by each of LEAF Funding, LEAF IDM, LEAF
      Financial, LEAF II and LEAF II B SPE in any Transaction Document (giving effect
      to the transactions contemplated hereby) are true and correct in all material
      respects on and as of such date as if made on and as of such date (except to
      the
      extent such representation or warranty expressly relates to an earlier date,
      in
      which case such representation or warranty shall be true and correct in all
      material respects as of such earlier date).







(b)  Representations
      and Warranties - This Agreement .




(i)  It
      is
      duly organized and validly existing as a corporation, limited liability company
      or limited partnership, as the case may be, in good standing under the laws
      of
      the State of Delaware. It has full power, authority and legal right to own
      its
      properties and conduct its business, as presently owned and conducted, and
      as is
      proposed to be conducted under this Agreement (and, in the case of LEAF II
      B
      SPE, the Note), and to execute, deliver and perform its obligations under this
      Agreement (and, in the case of LEAF II B SPE, the Note).




(ii)  It
      is
      duly qualified to do business (or is exempt from such qualification
      requirements), is in good standing, and has obtained all Governmental
      Authorizations in each jurisdiction in which qualification and such Governmental
      Authorization are required in connection with the conduct its business, as
      presently owned and conducted, and as is proposed to be conducted under this
      Agreement (and, in the case of LEAF II B SPE, the Note), and the execution,
      delivery and performance of its obligations under this Agreement (and, in the
      case of LEAF II B SPE, the Note), except to the extent that any failure to
      be so
      qualified could not reasonably be expected to have a material adverse
      effect.




(iii)  Its
      execution, delivery and performance of this Agreement (and, in the case of
      LEAF
      II B SPE, the Note) and the consummation of the transactions contemplated by
      this Agreement (and, in the case of LEAF II B SPE, the Note) have been duly
      and
      validly authorized by all necessary action on the part of it.




(iv)  This
      Agreement (and, in the case of LEAF II B SPE, the Note) constitutes a valid
      and
      legally binding obligation of it, enforceable against it in accordance with
      its
      terms, except as such enforceability may be limited by applicable bankruptcy,
      reorganization, insolvency, moratorium or other similar laws affecting
      creditors’ rights generally, now and hereafter in effect, and except as such
      enforceability may be limited by general principles of equity (whether
      considered in a suit at law or in equity).




(v)  Its
      execution and delivery of this Agreement (and, in the case of LEAF II B SPE,
      the
      Note), its performance of the transactions contemplated hereby and its
      fulfillment of the terms hereof and thereof applicable to it do not (A)
      contravene it’s organizational documents, (B) conflict with or violate any
      Requirements of Law applicable to it, (C) violate any provision of, or require
      any filing, registration, consent or approval under, any Requirement of Law
      presently in effect having applicability to it, except for such filings,
      registrations, consents or approvals as have already been obtained or made
      and
      are in full force and effect, and (D) conflict with, result in any breach of
      any
      of the terms or provisions of, or constitute (with or without notice or lapse
      of
      time or both) a default under, any indenture, Purchased Contract, agreement,
      mortgage, deed of trust or other instrument to which it is a party or by which
      it or its properties or assets are bound which conflict, violation, default
      or
      breach would have an adverse effect on it’s ability to perform its obligations
      hereunder or on the ownership of the Purchased Contracts.







(vi)  There
      are
      no proceedings, injunctions, writs, restraining orders or investigations pending
      or, to the best knowledge of it, threatened against it before any Governmental
      Authority (A) asserting the illegality, invalidity or unenforceability, or
      seeking any determination or ruling that would affect the legality, validity
      or
      enforceability of, this Agreement (and, in the case of LEAF II B SPE, the Note),
      (B) seeking to prevent the consummation of any of the transactions contemplated
      by this Agreement (and, in the case of LEAF II B SPE, the Note), or (C) seeking
      any determination or ruling that is reasonably likely to affect adversely the
      financial condition or operations of it or the validity or enforceability of,
      or
      the performance by it of its obligations under, this Agreement (and, in the
      case
      of LEAF II B SPE, the Note).




(vii)  No
      authorization, consent, license, order or approval of, filing, registration
      or
      declaration with, or notice to, any Person, including, without limitation,
      any
      Governmental Authority, is required for it in connection with the execution
      and
      delivery of this Agreement (and, in the case of LEAF II B SPE, the Note) by
      it
      or the performance of its obligations under this Agreement (and, in the case
      of
      LEAF II B SPE, the Note), except for the filing of documents required to have
      been filed on or promptly after the Effective Date.




(c)  No
      Potential Termination Event or Termination Event .
      No
      Potential Termination Event or Termination Event has occurred and is continuing
      or shall occur as a result of this Agreement.




SECTION
      5.  Reference
      to and Effect on the Transaction Documents. As of
      the Effective Date, any reference in any Transaction Document to a Transaction
      Document shall be to such Transaction Document as amended hereby.




SECTION
      6.  Counterparts .
      This
      Agreement may be executed by one or more of the parties to this Agreement on
      any
      number of separate counterparts (including by facsimile transmission of
      signature pages hereto), and all of said counterparts taken together shall
      be
      deemed to constitute one and the same instrument.




SECTION
      7.  Severability .
      Any
      provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision in
      any
      other jurisdiction.




SECTION
      8.  Integration .
      This
      Agreement and the other Transaction Documents represent the agreement of LEAF
      Funding, LEAF IDM, LEAF Financial, LEAF II, LEAF II B SPE, MLEF, the Lender
      and
      U.S. Bank with respect to the subject matter hereof, and there are no promises,
      undertakings, representations or warranties by LEAF II B SPE, Lender or U.S.
      Bank relative to subject matter hereof not expressly set forth or referred
      to
      herein or in the Transaction Documents.







SECTION
      9.  GOVERNING
      LAW AND THE
      RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
      CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
      YORK.




SECTION
      10.  PATRIOT
      ACT .
      Purchaser hereby notifies each of LEAF Funding, LEAF IDM, LEAF Financial, LEAF
      II, LEAF II B SPE that pursuant to the requirements of the PATRIOT Act, it
      is
      required to obtain, verify and record information that identifies each such
      Person, which information includes the name and address of each such Person
      and
      other information that will allow such Purchaser to identify each of LEAF
      Funding, LEAF IDM, LEAF Financial, LEAF II, LEAF II B SPE in accordance with
      the
      PATRIOT Act.




[remainder
      of page intentionally left blank]







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




LEAF
      FINANCIAL CORPORATION


By:


Name:


Title:




LEAF
      FUNDING, INC.


By:


Name:


Title:




LEAF
      INSTITUTIONAL DIRECT MANAGEMENT, LLC


By:
      LEAF
      Funding, Inc., its sole member


By:


Name:


Title:




LEASE
      EQUITY APPRECIATION FUND II, L.P.


By:
      LEAF
      Financial Corporation, its general partner


By:


Name:


Title:




LEAF
      II B
      SPE, LLC


By:
      Lease
      Equity Appreciation Fund II, L.P., its sole member


By:
      LEAF
      Financial Corporation, its general partner


By:


Name:


Title:









MERRILL
      LYNCH EQUIPMENT FINANCE LLC


By:


Name:


Title:




MERRILL
      LYNCH COMMERCIAL FINANCE CORP.


By:


Name:


Title:




U.S.
      BANK
      NATIONAL ASSOCIATION


By:


Name:


Title:







N236634.4




**Appendix
      A**




**[as
      attached]**







N236634.4




**Exhibit
      I**




**[as
      attached]**












N236634.4




**Exhibit
      II**




**[as
      attached]**












**Exhibit
      III**




**[as
      attached]**

















N236634.4




Appendix
      A




**DEFINITIONS
      AND RULES OF CONSTRUCTION**




**I. AMENDMENT
      AND
      RESTATEMENT**




Pursuant
      to the Assignment, Assumption and Amendment Agreement (as defined herein),
      this
      Appendix A amends and restates in its entirety the existing Appendix A.




II. General.




These
      definitional provisions are intended for use in connection with the Transaction
      Documents (as defined herein) and is attached to and made a part of the
      Purchase, Sale and Contribution Agreement (as defined herein).




**III. Defined
        Terms.**




Unless
      the context requires a different meaning, capitalized terms are used in this
      Appendix A and in each of the other Transaction Documents (as defined herein)
      as
      follows:




“ Accounts ”
means
      the Master DDA, the Collection Account and the Security Deposit
      Account.




“ Accrual
      Period ”
means
      in respect of any Advance, (i) initially, the period from and including the
      Purchase Date for such Advance to but excluding the Payment Date following
      the
      first calendar month after the calendar month such Purchase Date occurred,
      and
      (ii) thereafter, the period from and including each Payment Date in respect
      of
      such Advance to but excluding the next Payment Date, up to but excluding the
      earlier of (x) the date on which LEAF II B SPE is required to repay such Advance
      pursuant to the terms of the Loan Agreement, and (y) the date on which such
      Advance is repaid in full.





“ Advance ”
means
      a
      loan made by the Lender to LEAF II B SPE pursuant to Section 2.02(a) of the
      Loan Agreement, the proceeds of which were used to purchase
      Contracts.





“ Adverse
      Claim ”
means
      a
      lien, security interest, charge or encumbrance, or other right or claim in,
      of
      or on any Person’s assets or properties in favor of any other
      Person.





“ Affiliate ”
means,
      with respect to any specified Person, another Person that directly, or
      indirectly through one or more intermediaries, controls or is controlled by
      or
      is under common control with the Person specified. For purposes of this
      definition, “control” means the power to direct the management and policies of a
      Person, directly or indirectly, whether through ownership of voting securities,
      by contract or otherwise; and “controlled” and “controlling” have meanings
      correlative to the foregoing.




“ Assignment,
      Assumption and Amendment Agreement ”
means
      that certain Assignment, Assumption and Amendment Agreement, dated as of
      September 29, 2006, among LEAF Financial, LEAF Funding, LEAF IDM, LEAF II,
      LEAF
      II B SPE, MLEF, the Lender and U.S. Bank National Association.




“ Authorized
        Officer ”
means
        as to Person, any of the Chief Executive Officer, any President, any Senior
        Vice
        President, any Executive Vice President or any Vice President or the Treasurer
        thereof, as the case may be, or, if such Person is managed by another Person
        (such other Person, a “ Manager ”),
        any
        of the Chief Executive Officer, any President, any Senior Vice President,
        any
        Executive Vice President or any Vice President or the Treasurer of such Manager,
        or the Manager of such Manager.




“ Authorized
      Officer’s Certificate ”
means,
      with respect to any Person, a certificate signed by an Authorized
      Officer.




“ Authorized
      Representative ”
has
      the
      meaning specified in Section 19 of the Custodial Agreement.




“ Back-up
      Servicer ”
means
      U.S. Bank National Association in its capacity as the Back-up Servicer under
      the
      Back-up Servicing Agreement, together with its successors and assigns.




“ Back-up
      Servicing Agreement ”
means
      the Back-up Servicing Agreement, dated as of April 8, 2003, among LEAF
      Financial, the Back-up Servicer and the Lender, as amended, supplemented or
      otherwise modified from time to time.




“ Back-up
      Servicing Fee ”
means
      the fee to be paid to the Back-up Servicer in accordance with the fee agreement
      among LEAF Financial, the Back-up Servicer and the Lender, as amended,
      supplemented or otherwise modified from time to time.




“ Back-up
      Servicer Fee Rate ”
means,
      as of any date of determination, the rate per annum, expressed as a percentage,
      at which the fee payable to the Back-up Servicer is calculated as of such
      date.





“ Bankruptcy
      Code ”
means
      The Bankruptcy Reform Act of 1978, as amended from time to time, and as codified
      as 11 U.S.C. Section 101 *et
      seq.*




“ Base
      Rate ”
means
      the rate of interest publicly announced by JPMorgan Chase Bank., its successors
      or any other commercial bank designated by the Lender to LEAF II B SPE from
      time
      to time in New York, New York from time to time as its prime rate or base rate.
      The prime rate or base rate is determined from time to time by such bank as
      a
      means of pricing some loans to its borrowers an neither tied to any external
      rate of interest or index nor necessarily reflects the lowest rate of interest
      actually charged by such bank to any particular class or category of customers.
      Each change in the Base Rate shall be effective from and including the date
      such
      change is publicly announced as being effective.




“ Board ”
means
      the Board of Governors of the Federal Reserve System or any successor
      thereto.




“ Business
        Day ”
means
        any day other than a Saturday, Sunday or other day on which commercial banks
        in
        New York City or Minneapolis, Minnesota are authorized or required to close
        or
        on which the New York Stock Exchange, the Lender or the Custodian is closed; provided , however ,
        that,
        when used in connection with the calculation of the LIBO Base Rate, the term
        “Business Day” shall also exclude any day on which banks are not open for
        dealings in dollar deposits in the London interbank market.




“ Closing
      Date ”
means
      the date on which the conditions set forth in Section 4.01 of the Loan
      Agreement are satisfied and the initial Advances are made.




“ Code ”
means
      the Internal Revenue Code of 1986, as amended, reformed or otherwise modified
      from time to time, and any successor statute of similar import, in each case
      as
      in effect from time to time. References to sections of the Code also refer
      to
      any successor sections.




“ Collateral ”
has
      the
      meaning specified therefor in Section 7.01 of the Loan Agreement.




“ Collection
      Account ”
means
      an account established by the Paying Agent on or before the initial Purchase
      Date entitled “Merrill Lynch Commercial Finance Corp., as Lender, Account of
      LEAF II B SPE, LLC”, and into which all Collections shall be deposited in
      accordance with the terms of applicable Transaction Documents.




“ Collections ”
means,
      with respect to any Contract, as of any date of determination or for any period,
      the sum all amounts received by the Servicer under or in respect of such
      Contract, including, without limitation, all scheduled and unscheduled payments,
      taxes and assessments in respect of such Contract or the Subject Equipment,
      insurance monitoring fees, insurance proceeds, payments under hedging
      agreements, late fees, renewal payments, termination payments, disposition
      proceeds, post maturity collections and Residual Proceeds.




“ Commitment ”
means
      the commitment of the Lender to make Advances to LEAF II B SPE in an aggregate
      amount not to exceed $200,000,000, as such amount may be terminated or reduced
      from time to time in accordance with the terms of the Loan Agreement.




“ Concentration
      Limits ”
means,
      as of any date of determination, the following limits for individual or
      affiliated lessees:




(a)  the
      aggregate outstanding Contract Value of Purchased Contracts of no one lessee
      and
      its Affiliates as of such date shall account for more than
      $3,000,000;




(b)  the
      aggregate outstanding Contract Value of Purchased Contracts of any 3 lessees
      and
      their respective Affiliates taken together as of such date shall account for
      no
      more than $8,000,000;




(c)  the
      aggregate outstanding Contract Value of Purchased Contracts with respect to
      Subject Equipment located in the State of California as of such date shall
      exceed more than 30% of the aggregate outstanding Contract Value of all of
      the
      Purchased Contracts as of such date;







(d)  the
      aggregate outstanding Contract Value of Purchased Contracts with respect to
      Subject Equipment located in any State of the United States (other than
      California) as of such date shall exceed more than 20% of the aggregate
      outstanding Contract Value of all of the Purchased Contracts as of such
      date;




(e)  the
      aggregate outstanding Contract Value of Purchased Contracts that relate to
      individual equipment categories and SIC codes as of such date shall not exceed
      more than 35% of the aggregate outstanding Contract Value of all of the
      Purchased Contracts as of such date;




(f)  the
      aggregate outstanding Contract Value of Purchased Contracts having remaining
      terms exceeding between 86 and 180 months as of such date shall not exceed
      15%
      of the aggregate outstanding Contract Value of all of the Purchased Contracts
      as
      of such date;




(g)  the
      aggregate outstanding Contract Value of Purchased Contracts with respect to
      Subject Equipment from no one single vendor or manufacturer and its Affiliates
      as of such date shall exceed more than 35% of the aggregate outstanding Contract
      Value of all of the Purchased Contracts as of such date; and




(h)  the
      aggregate outstanding Contract Value of Purchased Contracts that have a final
      or
      balloon payment equal to 34% of original Contract Value thereof as of such
      date
      shall not exceed 10% of the aggregate outstanding Contract Value of all of
      the
      Purchased Contracts as of such date.




“ Contract ”
means
      a
      finance lease, fair market value lease or secured equipment note(s), together
      with (i) all right, title and interest of in the Subject Equipment with respect
      to such Contract, (ii) all Contract Receivables with respect to such Contract,
      (iv) all Collections with respect to such Contract and (iv) all other Related
      Property with respect to such Contract.




“ Contract
      File ”
means,
      unless the Originator Checklist otherwise indicates by an asterisk or other
      mark
      that additional items shall be required, with respect to any Contract, a file
      containing each of the following:




(a)  an
      original, certified copy or faxed copy of the master Contract, if applicable
      for
      the underlying transaction, and Contract schedule (provided, however, that
      a
      faxed copy shall be stamped “ORIGINAL” and the Originator Checklist shall
      contain a notation that the Contract File contains such faxed
      copy);




(b)  an
      original or copy of a delivery and acceptance for leases (which may be part
      of
      the Contract) for Contracts with an original cost greater than $50,000 (unless
      otherwise not required and so indicated on the Originator
      Checklist);




(c)  original
      or copy of an invoice relating to the Subject Equipment;




(d)  evidence
      of insurance for Contracts with an original cost greater than $100,000 (unless
      otherwise not required and so indicated on the Originator
      Checklist);




(e)  copies
      of
      UCC filings for the Subject Equipment with an original cost greater than $25,000
      for finance leases and loans and in excess of $50,000 on all fair market value
      leases, as determined by the amount listed on the Originator Checklist or
      information found in the Contract File; and







(f)  in
      the
      case of a QSP Contract (noted on the Originator Checklist as Originator being
      paid), proof of issuance of payment by the QSP for the Subject Equipment.




In
      addition, with respect to any Contract, each of the following may be present
      in
      the Contract File and noted on the Originator Checklist, provided , however ,
      that
      the absence of any item listed in (a) through (f) below shall
      not
      be reported as an Exception on any Contract File Schedule and Exception Report
      or Trust Receipt :




(a)  an
      original or faxed copy of a personal, corporate or other guaranty (which may
      be
      part of the Contract) as required in the original credit approval;




(b)  an
      original or faxed copy of a corporate resolution and secretary’s certificate, as
      appropriate for the transaction;




(c)  an
      original or faxed copy of a bill of sale, in the case of a sale lease back
      transaction;




(d)  copies
      of
      photo identification; and




(e)  an
      original or copy of a landlord or mortgagee waiver.




Provided ,
      with
      respect to any loan identified as an acquisition loan on the Originator
      Checklist, the term “Contract File”, unless the Originator Checklist otherwise
      indicates (by an asterisk or other mark) that additional items shall be
      required, means the following:




(a)  an
      original, certified copy or faxed copy of a loan Contract or master loan
      Contract;




(b)  an
      original, certified copy or faxed copy (if not part of the loan Contract and
      so
      noted on the Originator Checklist) of a term note;




(c)  an
      original or certified copy of a security agreement;




(d)  an
      original or copy of a sale agreement between seller and buyer, if
      applicable;




(e)  original
      or copy of an invoice;




(f)  evidence
      of insurance for Contracts with an original cost of greater than $100,000
      (unless otherwise not required and so indicated on the Originator
      Checklist);




(g)  copies
      of
      UCC filings for loans with an original cost greater than $25,000, as determined
      by the amount listed on the Originator Checklist or information found in the
      Contract File; and







(h)  in
      the
      case of a QSP Contract, proof of issuance of payment by the QSP for the Subject
      Equipment.




In
      addition, with respect to any acquisition loan, the file may contain each of
      the
      following, which may be noted on the Originator Checklist, provided , however ,
      that
      the absence of any item listed in (a) through (m) below shall not be reported
      as
      an Exception on any Contract File Schedule and Exception Report or Trust
      Receipt:




(a)  an
      original or faxed copy of a personal, corporate or other guaranty (which may
      be
      part of the Contract) as required in the original credit approval;




(b)  an
      original or faxed copy of a corporate resolution and secretary certificate
      as
      appropriate for the transaction;




(c)  an
      original or faxed copy of a bill of sale;




(d)  an
      original or faxed copy of an escrow agreement;




(e)  copies
      of
      photo identification;




(f)  copies
      of
      lien searches and applicable releases;




(g)  an
      original or copy of a landlord or mortgagee waiver;




(h)  a
      copy of
      an office lease or sublease;




(i)  evidence
      of insurance coverage with respect to (i) liability insurance and (ii)
      malpractice insurance;




(j)  copies
      of
      licenses;




(k)  a
      copy of
      wire instructions for funding proceeds of the term note;




(l)  an
      original or certified copy of the assignment of office lease; and




(m)  a
      copy of
      the site inspection report.




“ Contract
      File Schedule and Exception Report ”
means
      a
      list of Purchased Contracts held by the Custodian on each Business Day for
      the
      benefit of LEAF II B SPE and Lender, which includes codes indicating any
      Exceptions with respect to each Purchased Contract listed thereon. Each Contract
      File Schedule and Exception Report shall set forth (i) the Purchased
      Contracts held by the Custodian, and (ii) all Exceptions with respect
      thereto, with any updates thereto from the time last delivered.




“ Contract
      Receivable ”
means,
      with respect to any Contract, (i) all “accounts” (as such term is defined in the
      UCC, together with all proceeds thereon) created by or that otherwise arise
      under such Contract, (ii) all Collections with respect to such accounts and
      (iii) all Related Property with respect to accounts.







“ Contract
      Value ”
means
      (i) with respect to any Contract that is not delinquent or is 120 days or less
      delinquent, as of any date of determination, the present value of the remaining
      scheduled payments of such Contract, excluding any residual payment, discounted
      at the Discount Rate and (ii) with respect to any Contract that is more than
      120
      days delinquent, as of any date of determination, an amount equal to
      zero.




“ Cumulative
      Losses ”
means,
      as of any date of determination, an amount equal to the difference of (i) the
      sum of the Contract Value at the related Purchase Date of all Purchased
      Contracts that (x) are more than 180 days past due as of such date or (y) LEAF,
      in its capacity as the Servicer, has charged off in accordance with the Policy
      and Procedures as of such date, over (ii) the
      aggregate amount received by the Servicer (net of any related expenses) in
      connection with the realization of the full amounts due and to become due under
      such Purchased Contracts and the sale of any property acquired in respect
      thereof.




“ Custodial
      Identification Certificate ”
means
      the certificate executed by LEAF Financial in connection with the delivery
      of
      Contract Files to be held by the Custodian pursuant to the Custodial Agreement,
      a form of which is attached as Annex 1 to the
      Custodial Agreement.




“ Custodian ”
means
      U.S. Bank National Association or any successor custodian appointed in
      accordance with the terms of the Custodial Agreement.




“ Custodian
      Fee Rate ”
means,
      as of any date of determination, the rate per annum, expressed as a percentage,
      at which the fee payable to the Custodian is calculated as of such
      date.




“ Custodial
      Agreement ”
means
      the Custodial Agreement, dated as of April 8, 2003, among LEAF Funding, LEAF
      II,
      the Servicer, the Lender, LEAF II B SPE and the Custodian, as amended,
      supplemented or otherwise modified from time to time.




“ Default
      Funding Rate ”
means
      as of any date of determination, a rate equal to the sum of (a) the Base Rate
      as
      of such date, and (b) 1.50%, per annum.




“ Delinquency
      Rate ”
means,
      as of any date of determination, the ratio, expressed as a percentage, of (i)
      the aggregate outstanding Contract Value of all Purchased Contracts which are
      60
      days or more past due as of such date to (ii) the aggregate outstanding Contract
      Value of all Purchased Contracts as of such date.




“ Discount
      Rate ”
means
      as of any date of determination, a rate equal to the sum of (a) the Funded
      Rate,
      (b) the Servicing Fee Rate, (c) the Back-up Servicing Fee Rate, and (d) the
      Custodian Fee Rate, in each case as in effect as of such date.




“ Dollar ,”
      “ Dollars ”
and
      the
      symbol “ $ ”
each
      means lawful money of the United States of America.




“ Effective
      Date ”
has
      the
      meaning specified therefor in the Assignment, Assumption and Amendment
      Agreement.




“ Effective
      Period ”
means
      the period beginning on the Closing Date and terminating on the Expiry
      Date.







“ Eligible
      Contract ”
means
      a
      Contract that meets each of the following criteria:




(a)  the
      Subject Equipment with respect to such Contract has been purchased (i) directly
      by LEAF Funding from a vendor or manufacturer, or (ii) in the case of a QSP
      Contract, by LEAF Funding from a QSP, and such QSP has purchased the Subject
      Equipment directly from a vendor or manufacturer;




(b)  such
      Contract contains a “Hell or High Water” clause that unconditionally obligates
      the lessee to make periodic Contract payments (including taxes), notwithstanding
      damage to or destruction of the Subject Equipment, or any other event, including
      obsolescence thereof;




(c)  such
      Contract is non-cancelable by the lessee, does not contain any early termination
      option (or, if it does have such an option, it also contains a make-whole
      provision)




(d)  such
      Contract is denominated in Dollars and for which all payments thereunder are
      payable in Dollars and with respect to which there is no option to change the
      currency or country in which such payments are made;




(e)  the
      Subject Equipment is located in the United States, Puerto Rico or
      Canada;




(f)  all
      payments payable under such Contract are absolute, unconditional obligations
      of
      the lessees without right to offset for any reason;




(g)  such
      Contract requires the lessee to maintain the Subject Equipment in good working
      order, to bear all the costs of operating the Subject Equipment, including
      the
      taxes, maintenance and insurance relating thereto;




(h)  such
      Contract provides that the Servicer may accelerate all Contract payments if
      the
      lessee is in default under such Contract;




(i)  such
      Contract provides for periodic Contract payments, which are principally due
      and
      payable on a monthly basis and the next payment due date is within 30 days
      of
      applicable Purchase Date with respect to such Contract;




(j)  such
      Contract provides that in the event of a casualty loss, the Servicer may require
      the lessee, at the lessee's expense, to pay Servicer the sum of all unpaid
      rents
      and other payments due under such Contract, all accelerated future payments
      due
      under such Contract (discounted to a present value payoff amount) and the booked
      residual value of the Subject Equipment;




(k)  such
      Contract provides that the lessee may not elect to utilize any security deposit
      thereunder to offset any payment thereunder;




(l)  such
      Contract includes only the remaining non-cancelable contractual payments
      purchased and funded but not more than the Maximum Contract Term;







(m)  the
      Contract Value with respect to such Contract does not include the amount of
      any
      security deposits held by LEAF Funding or the Servicer (without the prior
      written consent of the Lender);




(n)  such
      Contract shall not be modified, waived, or amended in any way which could
      adversely affect the lessor, its assigns or obligees;




(o)  for
      each
      Contract in which LEAF Funding is paying a vendor directly, LEAF Funding shall
      have followed its standard guidelines regarding site inspections;




(p)  the
      maximum remaining term of such Contract shall not exceed 180
      months;




(q)  the
      funds
      to purchase such Contract have been disbursed to the applicable vendor or
      manufacturer unless LEAF Funding is acquiring a QSP Contract, in which case
      LEAF
      Funding shall have funded the originator of the transaction;




(r)  such
      Contract shall have similar characteristics to other Contracts originated by
      LEAF Financial and no procedures adverse to the interests of the Lender shall
      have been used by LEAF Financial in selecting such Contract from other Eligible
      Contracts originated by LEAF Financial;




(s)  the
      Custodian is in possession of the Contract File with respect to such Contract,
      has issued to the Lender a Trust Receipt therefor and no Exceptions have been
      cited by the Custodian;




(t)  such
      Contract was created in compliance with, and that, on the applicable Purchase
      Date does not contravene in any material respect, any applicable
      law;




(u)  such
      Contract will at all times be the legal, valid and binding payment obligation
      of
      the lessee, enforceable against such lessee in accordance with its terms, except
      as such enforceability may be limited by applicable bankruptcy, reorganization,
      insolvency, moratorium or other laws affecting creditors’ rights generally, and
      except as such enforceability may be limited by general principles of equity
      (whether considered in a suit at law or in equity);




(v)  such
      Contract has not been satisfied, subordinated or rescinded;




(w)  such
      Contract is not subject to any enforceable provision prohibiting the transfer
      by
      LEAF Funding to LEAF II B SPE of its interests therein;




(x)  such
      Contract is either (x) not subject to any foreign withholding tax or (y)
      provides for a “gross-up” or indemnity of any payments upon the imposition of
      any such tax;




(y)  with
      respect to any Contract that is a finance lease and that has a Contract Value
      of
      $25,000 or more, such Contract is secured by a first priority perfected security
      interest in the Subject Equipment;




(z)  such
      Contract has been originated by LEAF Financial in accordance with the Policy
      and
      Procedures;







(aa)  at
      the
      time of initial purchase of such Contract, the lessee thereunder is not subject
      to an Insolvency Event;




(bb)  the
      lessee or obligor thereunder is not a Governmental Authority; and




(cc)  such
      Contract does not have a Contract Value in excess of $750,000, unless the Lender
      shall have given its prior written consent with respect thereto; provided the
      Lender shall have use commercially reasonable efforts to provide such consent
      within three Business Days of any request for such consent.




“ Entity ”
means
      any individual, partnership, corporation, limited liability company, limited
      liability partnership, association, estate, trust, business trust, and
      Governmental Authority.




“ Equipment ”
means
      “equipment” as such term is defined in the UCC.




“ Equipment
      Cost ”
means,
      for any Contract, the Contract Value of such Contract as of the applicable
      Purchase Date.





“ ERISA ”
means
      the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute of similar import, in each case as in effect from time to
      time. References to sections of ERISA also refer to any successor
      sections.




“ ERISA
      Affiliate ”
means
      with respect to any Person, (i) any corporation which is a member of the
      same controlled group of corporations (within the meaning of Section 414(b)
      of the Code) as such Person; (ii) a trade or business (whether or not
      incorporated) under common control (within the meaning of Section  414(c)
      of
      the Code) with such Person; or (iii) a member of the same affiliated
      service group (within the meaning of Section 414(m) of the Code) as such
      Person, any corporation described in clause (i) above or any trade or
      business described in clause (ii) above.




“ Exception ”
means,
      with respect to any Purchased Contract, (i) any variances from the requirements
      of the definition of “ Contract
      File ”
with
      respect to such Purchased Contract , or (ii) any written notice to or actual
      knowledge of the Custodian of a Lien, other than Permitted Liens, with respect
      to such Purchased Contract.




“ Expiry
      Date ”
means
      the earliest to occur of (x) February 28, 2007, (y) the date on which
      a Termination Event shall have been deemed to have occurred or shall have been
      declared to have occurred and (z) the date on which the aggregate amount of
      the
      Commitment equals zero.




“ Facility
      Fee ”
means,
      as of any date of determination a fee payable by LEAF II B SPE to the Lender
      in
      an amount equal to (x) the Facility Fee Rate, times (y) the
      average daily amount of the Note Balance (determined as of the close of business
      on any date of determination) during the immediately preceding month, which
      fee
      shall be calculated on the basis of a 360-day year and the actual number of
      days
      elapsed and shall be payable for each Monthly Period in arrears on each Payment
      Date.








“ Facility
      Fee Rate ”
means
      0.95%, per annum.





“ Funded
      Rate ”
means
      as of any date of determination, a rate equal to the sum of the (a) Hedged
      Swap
      Rate as of such date and (b) the Facility Fee Rate.




“ FDIC ”
means
      the Federal Deposit Insurance Corporation.




“ GAAP ”
means
      the generally accepted accounting principles promulgated or adopted by the
      Financial Accounting Standards Board and its predecessors and successors from
      time to time.




“ Governmental
      Authority ”
means
      any nation or government, any state, city, town, municipality, county, local
      or
      other political subdivision thereof and any department, commission, board,
      bureau, instrumentality, agency or other entity exercising executive,
      legislative, judicial, taxing, regulatory or administrative powers or functions
      of or pertaining to government.




“ Governmental
      Authorization ”
means
      any permit, license, authorization, plan, directive, consent order or consent
      decree of or from any Governmental Authority.




“ Hedged
      Swap Rate ”
means,
      as of any date of determination, the weighted average of the fixed rates
      associated with the Hedging Agreements (weighted by notional balances) as of
      such date.




“ Hedging
      Agreement ”
means
      one or more written hedging agreements, swap agreements or similar arrangements
      acceptable to LEAF Financial, LEAF II B SPE and the Lender to which LEAF II
      B
      SPE is a party, with an aggregate notional value equal to the aggregate amount
      of the Contract Values for all Purchased Contracts as of such date, intended
      to
      offset a decline in value of Purchased Contracts due to changes in market
      interest rates.




“ Indemnified
      Amounts ”
means
      claims, damages, losses, liabilities, expenses, disbursements, obligations,
      penalties, actions, suits, judgments and amounts paid in settlement thereof
      of
      any kind or nature whatsoever (including reasonable legal fees and expenses
      in
      connection with investigating, negotiating and settling any such claim, damage,
      loss, liability, expense, disbursement, obligation, penalty, action, suit,
      judgment or amount).




“ Indemnified
      Parties ”
means
      the Lender, the Custodian, the Paying Agent, the Back-up Servicer and any of
      their respective officers, directors, shareholders, members, successors,
      assigns, servants, agents or employees.




“ Insolvency
      Event ”
means,
      as to any Person:




(a)  (i) a
      court having jurisdiction in the premises shall enter a decree or order for
      relief in respect of such Person in an involuntary case under the Bankruptcy
      Code or any applicable bankruptcy, insolvency or other similar law now or
      hereafter in effect, which decree or order is not stayed, or any other similar
      relief shall be granted under any applicable federal or state law, (ii) an
      involuntary case is commenced against such Person under any applicable
      bankruptcy, insolvency or other similar law now or hereafter in effect which
      remains undismissed, undischarged or unbonded for a period of 45 days or
      (iii) such Person shall have a decree or an order for relief entered with
      respect to it or commence a voluntary case under the Bankruptcy Code or any
      applicable bankruptcy, insolvency or other similar law now or hereafter in
      effect; or







(b)  such
      Person shall consent to the appointment of a conservator or receiver or
      liquidator in any insolvency, readjustment of debt, marshaling of assets and
      liabilities or similar proceedings of or relating to all or substantially all
      of
      its property, or a decree or order of a court or agency or supervisory authority
      having jurisdiction in the premises for the appointment of a conservator or
      receiver or liquidator in any insolvency, readjustment of debt, marshaling
      of
      assets and liabilities or similar proceedings, or for the winding-up or
      liquidation of its affairs, shall have been entered against such Person; or
      such
      Person shall admit in writing its inability to pay its debts generally as they
      become due, file a petition to take advantage of any applicable insolvency
      or
      reorganization statute, make a general assignment for the benefit of its
      creditors or voluntarily suspend payment of its obligations.




“ LEAF
      Financial ”
means
      LEAF Financial Corporation, a Delaware corporation.




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




“ LEAF
      II ”
means
      Lease Equity Appreciation Fund II, L.P., a Delaware limited partnership, as
      assignee of Leaf Institutional Direct Management, LLC, a Delaware limited
      liability company (“ LEAF
      IDM ”).




“ LEAF
      II B SPE ”
means
      LEAF II B SPE, LLC, a Delaware limited liability company, as assignee of Merrill
      Lynch Equipment Finance LLC ,
      a
      Delaware limited liability company (“ MLEF ”).




“ Lender ”
means
      Merrill Lynch Commercial Finance Corp., a Delaware corporation.





“ LIBO
      Base Rate ”
means
      for any Advance, with respect to each Accrual Period, the rate per annum equal
      to the rate appearing at page 3750 of the Telerate Screen as the one-month
      LIBOR
      (i) with respect to the Accrual Period beginning on the Closing Date, two
      (2) Business Days prior to the Closing Date, and (ii) with respect to all
      other Accrual Periods, two (2) Business Days prior to the end of the immediately
      preceding Accrual Period, and if such rate shall not be so quoted, the rate
      per
      annum at which the Reference Banks are offered Dollar deposits at or about
      11:00 a.m., New York time, on such date by prime banks in the interbank
      eurodollar market where the eurodollar and foreign currency exchange operations
      in respect of their loans are then being conducted for delivery on such day
      for
      a period of one month, and in an amount comparable to the amount of the Advances
      then being requested and to be outstanding on such day.




“ LIBO
      Rate ”
means,
      at any time, a rate per annum (rounded upwards to the nearest 1/100th of one
      percent) determined by the Lender to be equal to (i) the LIBO Base Rate
      divided by (ii) 1 minus the LIBO Reserve Requirements.







“ LIBO
      Reserve Requirements ”
shall
      mean for any calendar month and for any Lender as to which LIBO Reserve
      Requirements are actually required to be maintained, the aggregate (without
      duplication) of the rates (expressed as a decimal fraction) of reserve
      requirements in effect on such day or during such calendar month, as applicable
      (including, without limitation, basic, supplemental, marginal and emergency
      reserves under any regulations of the Board or other Governmental Authority
      having jurisdiction with respect thereto), dealing with reserve requirements
      prescribed for eurocurrency funding (currently referred to as “Eurocurrency
      Liabilities” in Regulation D of the Board) maintained by a member bank of
      such Governmental Authority.




“ Lien ”
means
      any mortgage, deed of trust, pledge, lien (statutory or otherwise), security
      interest, lease, easement, title defect, restriction, levy, execution, seizure,
      attachment, charge or other encumbrance or security or preferential arrangement
      of any nature, including, without limitation, any conditional sale or title
      retention arrangement, any capitalized lease and any assignment, deposit
      arrangement or financing lease intended as, or having the effect of,
      security.




“ Loan
      Agreement ”
means
      the Loan and Security Agreement, dated as of April 8, 2003, between LEAF II
      B
      SPE and the Lender, as amended, supplemented or otherwise modified from time
      to
      time.




“ Loan
      Documents ”
means
      the Loan Agreement, the Notes, if any, and all other agreements, instruments,
      and other documents executed and delivered pursuant thereto or otherwise
      evidencing or securing any Advance or other Obligation.




“ Master
      DDA ”
means
      a
      depositary account maintained by the Master DDA Securities Intermediary pursuant
      to the Master DDA Control Agreement or any successor securities account
      maintained pursuant to the Master DDA Control Agreement.




“ Master
      DDA Control Agreement ”
means
      the Account Control Agreement, dated as of May 21, 2003, among LEAF Funding,
      the
      Master DDA Securities Intermediary and the Lender, as amended, supplemented
      or
      otherwise modified from time to time.




“ Master
      DDA Intercreditor Agreement ”
means
      Amended and Restated Intercreditor Agreement, dated as of April 18, 2005,
      together with the joinders thereto, among Sovereign Bank, a national banking
      association; OFC Capital, a division of ALFA Financial Corporation, an Alabama
      corporation; National City Commercial Capital Corporation f/k/a Information
      Leasing Corporation, an Ohio corporation; WestLB AG, New York Branch; Commerce
      Bank, National Association, a national banking association; National City Bank,
      a national banking association; Merrill Lynch Equipment Finance LLC, a Delaware
      limited liability company; Merrill Lynch Commercial Finance Corp., a Delaware
      corporation; LEAF Institutional Direct Management, LLC, a Delaware limited
      liability company; Lease Equity Appreciation Fund I, L.P., a Delaware limited
      partnership; LEAF II; LEAF Funding; LEAF Fund I, LLC, a Delaware limited
      liability company; LEAF Fund II, LLC, a Delaware limited liability company;
      RCC
      Commercial, Inc., a Delaware corporation; Resource Capital Funding, LLC, a
      Delaware limited liability company; Black Forest Funding Corporation; Bayerische
      Hypo- Und Vereinsbank AG, New York Branch; LEAF Financial; and U.S. Bank
      National Association, a national banking association, as amended, supplemented
      or otherwise modified from time to time.




“ Master
        DDA Securities Intermediary ”
means
        U.S. Bank National Association, or any other securities intermediary that
        maintains the Master DDA pursuant to the Master DDA Control
        Agreement.




“ Matured
      Contract ”
means
      any Contract that has reached the end of its original term.




“ Maximum
      Advance Amount ”
means,
      as of any date of determination, an amount equal to (i) 92.0%, times (ii) the
      aggregate outstanding Contract Value of all of the Purchased Contracts as of
      such date.




“ Monthly
      Period ”
means
      each period that begins on the first day of a calendar month and ending on
      the
      last day of the same calendar month.




“ Multiemployer
      Plan ”
means
      any Employee Benefit Plan which is a “multiemployer plan” as defined in
      Section 3(37) of ERISA.




“ Non-Excluded
      Taxes ”
has
      the
      meaning specified therefor in Section 2.07 of the Loan
      Agreement.




“ Note ”
means
      each promissory note, if any, of LEAF II B SPE made and delivered to the Lender
      substantially in the form of Exhibit A to the Loan Agreement, as it may be
      amended, supplemented or otherwise modified from time to time.




“ Note
      Balance ”
means,
      as of any date of determination, an amount equal to (x) the aggregate principal
      amount of all Advances as of such date, less (y) the
      aggregate amount of all principal payments received by the Lender as of such
      date with respect to the Advances in accordance with the Priority of
      Payments.




“ Obligations ”
means,
      whether now existing or hereafter incurred (i) the prompt payment by LEAF II
      B
      SPE, as and when due and payable (by scheduled maturity, required prepayment,
      acceleration, demand or otherwise), of all amounts from time to time owing
      by it
      in respect of the Loan Agreement, the Notes and the other Loan Documents,
      including, without limitation, principal of and interest on the Loans
      (including, without limitation, all interest that accrues after the commencement
      of any case, proceeding or other action relating to the bankruptcy, insolvency
      or reorganization of LEAF II B SPE, whether or not a claim for post-filing
      interest is allowed in such proceeding), and all interest thereon, all fees,
      commissions, expense reimbursements, indemnifications and all other amounts
      due
      or to become due under any Loan Document; and (ii) the due performance and
      observance by LEAF II B SPE of all of its other obligations from time to time
      existing in respect of the Loan Agreement and all other Loan Documents.




“Originator
      Checklist ”
means
      a
      checklist substantially in the form attached as Exhibit
      A hereto.








“ PATRIOT
      Act ”
means
      The Uniting and Strengthening America by Providing Appropriate Tools Required
      to
      Intercept and Obstruct Terrorism, as amended (USA Patriot Act of
      2001).




“ Paying
      Agent ”
means
      U.S. Bank National Association or any successor paying agent appointed in
      accordance with the terms of the Paying Agent Agreement.




“ Paying
      Agent Agreement ”
means
      the Paying Agent Agreement, dated as of April 8, 2003, among LEAF Funding,
      LEAF
      II, the Servicer, the Lender, LEAF II B SPE and the Paying Agent, as amended,
      supplemented or otherwise modified from time to time.




“ Payment
      Date ”
means
      the twentieth (20 th )
      day of
      each calendar month or, if such day is not a Business Day, the next succeeding
      Business Day.




“ PBGC ”
means
      the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
      of Title IV of ERISA.




" Permissible
      Static Pool Loss Ratio "
      means,
      as of any date of determination, the ratio, for each Quarterly Origination
      Period, corresponding to the applicable number of months elapsed since the
      mid-point of such Quarterly Origination Period, as set forth on Schedule I
      hereto.




“ Permitted
      Liens ”
means
      (i) the Liens arising under the Purchase, Sale and Contribution Agreement,
      (ii) the Liens arising under the Purchase and Sale Agreement, (ii) the
      Liens arising under the Servicing Agreement, (iv) the Liens in favor of the
      Lender arising under the Loan Agreement, and (v) Liens for current taxes,
      assessments or other governmental charges or levies not delinquent.




“ Person ”
means
      any natural person, corporation, business trust, joint venture, association,
      limited liability company, partnership, joint stock company, corporation, trust,
      unincorporated organization or Governmental Authority.




“ Plan ”
means
      any Employee Benefit Plan, other than a Multiemployer Plan, which is subject
      to
      Section 412 of the Internal Revenue Code or Section 302 of
      ERISA.




“ Policy
      and Procedures ”
means
      those policies and procedures to be followed by LEAF Financial with respect
      to
      the origination, collection and administration of Contracts and as set forth
      in
      LEAF Financial’s Policy and Procedures Manual on the Closing Date, as the same
      may be amended or modified with the prior written consent of the
      Lender.




“ Potential
      Servicer Default ”
means
      any occurrence or event which, with the giving of notice, the passage of time
      or
      both, would constitute a Servicer Default.




“ Potential
      Termination Event ”
means
      any occurrence or event which, with the giving of notice, the passage of time,
      or both, would constitute a Termination Event.







“ Priority
      of Payments ”
means
      on each Payment Date, the application of funds that have been deposited in
      the
      Collection Account during the immediately preceding Monthly Period in the
      following order of priority:




(a)  on
      a pari
      passu basis, (i) to the Back-Up Servicer, an amount equal to the Back-Up
      Servicing Fee then due and payable, and (ii) to the Custodian, an amount equal
      to the Custodian Fee then due and payable;




(b)  if
      the
      Back-Up Servicer is the Servicer, an amount equal to the Servicing Fee then
      due
      and payable;




(c)  to
      the
      counterpart(y)(ies), the aggregate amount due under each Hedging Agreement
      as of
      such date (including any breakage fees);




(d)  to
      the
      Lender, an amount equal to the Unused Fee for the immediately preceding Monthly
      Period and, to the extent not previously paid, for all prior Monthly Periods
      (plus interest on such unpaid amounts at the applicable interest rate for
      Advances during the Monthly Period(s) such amounts were overdue (assuming the
      oldest are paid first)); provided, no Unused Fee shall be due and payable at
      any
      time the Default Funding Rate is in effect;




(e)  to
      the
      Lender, an amount equal to the aggregate amount of all interest then due and
      payable on the Advances for the immediately preceding Accrual Period and, to
      the
      extent not previously paid, for all prior Accrual Periods (plus interest on
      such
      unpaid amounts at the applicable interest rate for the Advances during the
      Accrual Period(s) such amounts were overdue (assuming the oldest are paid
      first));




(f)  to
      the
      Servicer, an amount equal to the Servicing Fee then due and payable;




(g)  to
      the
      Lender, a principal payment on the Advances in an amount equal to the excess
      of
      (i) the aggregate amount of the Note Balance as of the end of the related
      Monthly Period over (ii) the
      Maximum Advance Amount as of the end of the related Monthly Period;




(h)  the
      Lender, all other amounts due and payable thereto by LEAF II B SPE under the
      Transaction Documents;




(i)  to
      the
      Servicer, all other amounts due and payable thereto by LEAF II B SPE under
      the
      Transaction Documents;




(j)  to
      LEAF
      II B SPE, all remaining funds.




Notwithstanding
      anything herein to the contrary:





(1)  if
      a
      Termination Event shall have occurred, all amounts in the Collection Account
      remaining after the distributions set forth in clauses (a) - (e) above shall
      be
      distributed to the Lender as additional principal to be applied to the Advances
      until fully repaid;







(2)  all
      amounts deposited into the Collection Account in accordance with either Section
      2.04(b) of the Purchase, Sale and Contribution Agreement and Section 2.03(b)
      of
      the Purchase and Sale Agreement, or Section 2.06(b)(ii) of the Purchase, Sale
      and Contribution Agreement and 2.05(b)(ii) of the Purchase and Sale Agreement,
      as applicable, shall be immediately distributed to the Lender and applied to
      reduce the Note Balance then outstanding without any further application with
      respect to the Priority of Payments; and




(3)  on
      any
      Borrowing Date, provided no Termination Event shall have occurred, all amounts
      in the Collection Account as of such date in excess of the Maximum Advance
      Amount as of such date, shall, at the written request of LEAF II B SPE, be
      distributed to LEAF II B SPE.




“ Proceeding ”
means
      any suit in equity, action or law or other judicial or administrative
      proceeding.




“ Purchase
      and Sale Agreement ”
means
      the Purchase and Sale Agreement, dated as of April 8, 2003, between LEAF II
      and
      LEAF II B SPE, as amended, supplemented or otherwise modified from time to
      time.




“ Purchase
      Date ”
has
      the
      meaning set forth in Section 3.02(a) of the Purchase, Sale and Contribution
      Agreement.




“ Purchase
      Date Contract Value ”
means,
      for any Purchased Contract, the Contract Value of such Purchased Contract as
      of
      the applicable Purchase Date.




“ Purchase
      Date Notice ”
has
      the
      meaning set forth in Section 3.02(a) of the Purchase, Sale and Contribution
      Agreement.




“ Purchase
      Price ”
means,
      with respect to any Purchased Contract, the price payable in consideration
      of
      the sale of such Purchased Contract in an amount equal to the Contract Value
      of
      such Purchased Contract as of the applicable Purchase Date.




“ Purchase,
      Sale and Contribution Agreement ”
means
      the Purchase, Sale and Contribution Agreement, dated as of April 8, 2003,
      between LEAF Funding and LEAF II, as amended, supplemented or otherwise modified
      from time to time.





“ Purchased
      Contracts ”
has
      the
      meaning set forth in Section 2.01 of the Purchase, Sale and Contribution
      Agreement.





“ QSP ”
means
      a
      qualified strategic partner qualified to originate Contracts in accordance
      with
      the Policy and Procedures.





“ QSP
      Contract ”
means
      a
      Contract originated by a QSP which has purchased the Subject Equipment from
      a
      vendor or manufacturer.





“ Quarterly
      Matured Lease Pools ”
means,
      for any quarter, the aggregate amount of Residual Proceeds on Matured Leases
      for
      such quarter grouped by month of maturity.








“ Quarterly
      Origination Period ”
means
      each three-month period ending on each of March 31, June 30, September 30 and
      December 31 of each year.




“ Records ”
means
      the Contracts and all other documents, books, records and other writings and
      information (including, without limitation, computer programs, tapes, disks,
      punch cards, data processing software and related property and rights, but
      excluding any credit profiles and rights in any personally identifiable data
      of
      any lessee) maintained with respect to Contracts and the related
      lessees.




“ Reference
      Banks ”
means
      three major banks that are engaged in the London interbank market, as selected
      by the Lender.




“ Related
      Property ”
means,
      with respect to any Contract:




(a)  all
      “instruments”, “chattel paper”, “accounts”, “general intangibles”, “commercial
      tort claims”, “investment property” and “letter of credit rights” (as each such
      term is defined in the UCC) evidencing or arising under such Contract;




(b)  all
      security interests or liens and property subject thereto from time to time,
      if
      any, purporting to secure payment of such Contract;




(c)  all
      guarantees, indemnities, warranties, insurance (and proceeds thereof) or other
      agreements or arrangements of any kind from time to time supporting or securing
      payment of such Contract;




(d)  all
      Records related to such Contract;





(e)  all
      service contracts and other contracts and agreements associated with such
      Contract; and




(f)  all
      proceeds of any of the foregoing.




“ Reportable
      Event ”
means
      (i) a “reportable event” within the meaning of Section 4043 of ERISA
      and the regulations issued thereunder with respect to any Plan (excluding those
      for which the provision for 30-day notice to the PBGC has been waived by
      regulation); (ii) the failure to meet the minimum funding standard of
      Section 412 of the Internal Revenue Code with respect to any Plan (whether
      or not waived in accordance with Section 412(d) of the Internal Revenue
      Code) or the failure to make by its due date a required installment under
      Section 412(m) of the Internal Revenue Code with respect to any Plan or the
      failure to make any required contribution to a Multiemployer Plan;
      (iii) the provision by the administrator of any Plan pursuant to
      Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in
      a distress termination described in Section 4041(c) of ERISA; (iv) the
      withdrawal by LEAF Financial, any of its Subsidiaries or any of their respective
      ERISA Affiliates from any Plan with two or more contributing sponsors or the
      termination of any such Plan resulting in liability to LEAF Financial, any
      of
      its Subsidiaries or any of their respective Affiliates pursuant to
      Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of
      proceedings to terminate any Plan, or the occurrence of any event or condition
      which might constitute grounds under ERISA for the termination of, or the
      appointment of a trustee to







administer,
      any Plan; (vi) the imposition of liability on LEAF Financial, any of its
      Subsidiaries or any of their respective ERISA Affiliates pursuant to
      Section 4062(e) or 4069 of ERISA or by reason of the application of
      Section 4212(c) of ERISA; (vii) the withdrawal of LEAF Financial, any
      of its Subsidiaries or any of their respective ERISA Affiliates in a complete
      or
      partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA)
      from
      any Multiemployer Plan if there is any potential liability therefor, or the
      receipt by LEAF Financial, any of its Subsidiaries or any of their respective
      ERISA Affiliates of notice from any Multiemployer Plan that it is in
      reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
      that it intends to terminate or has terminated under Section 4041A or 4042
      of ERISA; (viii) the occurrence of an act or omission which could give rise
      to the imposition on LEAF Financial, any of its Subsidiaries or any of their
      respective ERISA Affiliates of fines, penalties, taxes or related charges under
      Chapter 43 of the Internal Revenue Code or under Section 409,
      Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any
      Employee Benefit Plan; (ix) the assertion of a material claim (other than
      routine claims for benefits) against any Employee Benefit Plan other than a
      Multiemployer Plan or the assets thereof, or against LEAF Financial, any of
      its
      Subsidiaries or any of their respective ERISA Affiliates in connection with
      any
      Employee Benefit Plan; (x) receipt from the Internal Revenue Service of
      notice of the failure of any Plan (or any other Employee Benefit Plan intended
      to be qualified under Section 401(a) of the Internal Revenue Code) to
      qualify under Section 401(a) of the Internal Revenue Code, or the failure
      of any trust forming part of any Plan to qualify for exemption from taxation
      under Section 501(a) of the Internal Revenue Code; or (xi) the
      imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
      Internal Revenue Code or pursuant to ERISA with respect to any Plan.


“ Repurchase
      Date ”
has
      the
      meaning set forth in Section 2.04(b) of the Purchase, Sale and Contribution
      Agreement.




“ Repurchase
      Notice Date ”
has
      the
      meaning set forth in Section 2.04(a) of the Purchase, Sale and Contribution
      Agreement.




“ Repurchased
      Contract ”
has
      the
      meaning set forth in Section 2.04(a) of the Purchase, Sale and Contribution
      Agreement.




“ Requirements
      of Law ”
means,
      with respect to any Person the certificate of incorporation or articles of
      association and by-laws or other organizational or governing documents of such
      Person and any law, treaty, rule or regulation, or determination of any
      arbitrator or Governmental Authority, in each case applicable to or binding
      upon
      such Person or any of its property or to which such Person or any of its
      property is subject, whether Federal, state or local (including, usury laws,
      the
      Federal Truth in Lending Act and retail installment sales acts).





“ Residual
      Proceeds ”
means
      all amounts realized on the disposal or releasing of any Subject Equipment
      that
      is subject to a Matured Contract, without deduction of any credit
      losses.




“ Residual
      Value ”
means,
      with respect to any Contract, the value of the Subject Equipment to the lessor
      thereunder at the end of such Contract, as estimated by LEAF Financial at the
      origination of such Contract in accordance with the Policy and
      Procedures.







“ S&P ”
means
      Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. or any
      successor thereto.




“ SEC ”
means
      the United States Securities and Exchange Commission.




“ Security
      Deposit Account ”
means
      an account established by the Paying Agent on or before the Effective Date
      entitled “Merrill Lynch Commercial Finance Corp., as Lender, Account of LEAF II
      B SPE, LLC”, and into which amounts with respect to respect to security deposits
      for Contracts shall be deposited in accordance with the terms of applicable
      Transaction Documents.




“ Servicer ”
means
      LEAF Financial, in its capacity as Servicer under the Servicing Agreement,
      or
      any Successor Servicer.




“ Servicer
      Default ”
means
      any of the following events:




(a)  any
      failure by the Servicer to deliver to the Lender (x) the Servicer Certification
      as required pursuant to Section 2.05(a) of the Servicing Agreement or (y) any
      other report as required pursuant to Section 2.05(b) of the Servicing Agreement,
      in any case within three (3) Business Days after the earlier of the date upon
      which (i) the Lender provides written notification of such failure to the
      Servicer or (ii) the Servicer or any shareholder thereof becomes aware that
      such
      Servicer Certification or report has not been delivered; or




(b)  any
      failure by the Servicer to remit, or cause to be remitted, any payment,
      transfer, deposit or other delivery after the date upon which such payment,
      transfer, deposit or delivery is required to be made pursuant to the Servicing
      Agreement; provided ,
      that
      the Servicer shall have a one (1) Business Day grace period with respect to
      all
      such remittances on not more than one occasion; or




(c)  an
      Insolvency Event shall occur with respect to the Servicer; or




(d)  any
      representation, warranty or certification made by the Servicer under the
      Servicing Agreement, or in any certificate or information delivered pursuant
      to
      the Servicing Agreement, shall prove to have been incorrect in any respect
      when
      made and which has a material adverse effect on the interests of the or the
      Lender, which, if subject to cure, continues unremedied for a period of
      30 days after the earliest of (i) the date on which written notice of
      that failure, requiring the same to be remedied, shall have been given to the
      Servicer by the Lender and (ii) the date on which the Servicer has actual
      knowledge of such failure; or




(e)  the
      Servicer shall assign or delegate its duties under the Servicing Agreement
      other
      than as specifically permitted by the Servicing Agreement; or




(f)  any
      failure by the Servicer to observe or perform in any material respect any other
      covenant or agreement of the Servicer pursuant to the Servicing Agreement which
      materially and adversely affects the rights of the Lender and which, if subject
      to cure, continues unremedied for a period of 30 days after the earlier of
      (i)
      the Servicer receives written notification from the Lender or (ii) the date
      on
      which the Servicer is required to provide notice of such failure; or







(g)  as
      of the
      last day of any Monthly Period, the Delinquency Rate as of such date shall
      be 4%
      or more, subject to a cure period of one month; or




(h)  the
      Weighted Average Static Pool Loss Ratio as of the last day of any Monthly Period
      shall exceed the Weighted Average Permissible Static Pool Loss Ratio as of
      such
      date ;
      or




(i)  either
      Crit DeMent or Miles Herman is no longer active in the management of LEAF
      Financial, provided that in such event, LEAF Financial shall have ninety (90)
      days to identify and hire a replacement for either, subject to the prior written
      approval of the Lender; or




(j)  Resource
      America Inc. at any time ceases to own and control, directly or indirectly,
      at
      least 80% of all of the capital and voting stock of LEAF Financial;
      or




(k)  any
      event
      or series of events shall occur that, individually or in the aggregate, could,
      in the sole and absolute discretion of the Lender, be deemed to have a material
      adverse effect on the business, operations, properties, assets, condition
      (financial or otherwise) or prospects of LEAF Financial; or




(l)  any
      breach or default by Resource America, Inc. with respect to any term of any
      loan
      agreement, mortgage, note, certificate, indenture or other agreement or
      instrument relating to one or more items of items of indebtedness in an
      aggregate principal amount of $20,000,000 or more, in each case beyond the
      grace
      period, if any, provided therefor, if the effect of such breach or default
      is to
      cause, or to permit the holder or holders of such indebtedness (or a trustee
      on
      behalf of such holder or holders) to cause, such indebtedness to become or
      be
      declared due and payable (or redeemable) prior to its stated maturity;
      or




(m)  LEAF
      II,
      together with LEAF SPE II, shall not have as of the last day of each fiscal
      quarter thereof a tangible net worth (determined on a consolidated basis in
      accordance with GAAP) of at least $40,000,000; or




(n)  LEAF
      II,
      together with LEAF SPE II, shall have as of the last day of each fiscal quarter
      thereof a ratio of total liabilities as of such date to stockholders’ equity as
      of such date (in each case determined on a consolidated basis in accordance
      with
      GAAP) in excess of 8.0 to 1.0.




“ Servicer
      Default Notice ”
means,
      in the event of any Servicer Default, a written notice by the Lender to the
      Servicer terminating the rights and obligations of the Servicer, as Servicer,
      under the Servicing Agreement as to all or any of the Purchased Contracts.





“ Servicing
      Agreement ”
means
      the Servicing Agreement, dated as of April 8, 2003, among the Servicer, LEAF
      Funding, LEAF II, LEAF II B SPE and the Lender, as amended, supplemented or
      otherwise modified from time to time.





“ Servicing
      Fee ”
has
      the
      meaning specified in Section
      2.02(a) of the
      Servicing Agreement.








“ Servicing
      Fee Rate ”
means,
      as of any date of determination, the rate per annum, expressed as a percentage,
      at which the Servicing Fee is calculated as of such date.





“ Servicing
      Standard ”
means
      to service the Purchased Contracts (i) in the same manner in which, and with
      the
      same degree of skill, care prudence and diligence with which, the Servicer
      services and administers similar leases and Contracts for its own account and
      the account of its Affiliates or any third parties, or (ii) in a manner normally
      associated with the prudent and professional servicing of similar leases and
      Contracts, whichever is the highest, and in each case, in material compliance
      with all applicable laws, but without regard to (a) any known relationship
      that
      the Servicer or any of its Affiliates may have with any lessee, any of their
      respective affiliates or any other party to the Transaction Documents; (b)
      the
      Servicer’s obligation to make advances or incur servicing expenses with respect
      to the Purchased Contracts or any similar leases and Contracts; (c) the
      Servicer’s right to receive compensation for its services; (d) the ownership or
      servicing for others by the Servicer of any other leases or Contracts; (e)
      the
      indemnification obligations of the Servicer or (f) the existence of any loans
      made by the Servicer or any of its Affiliates to any lessee.





“ Servicing
      Transfer ”
means
      the termination of all of the rights and obligations of the Servicer under
      the
      Transaction Documents and the appointment of a Successor Servicer.





" Static
      Pool Loss Ratio "
      means,
      with respect to a Quarterly Origination Period, as of any date of determination,
      an amount, expressed as a percentage, equal to (i) the Cumulative Losses with
      respect to Contracts originated during such Quarterly Origination Period divided
      by (ii) the
      original Contract Value of Contracts originated during such Quarterly
      Origination Period.





“ Subject
      Equipment ”
means,
      with respect to any Contract, the Equipment subject to such
      Contract.





“ Subsidiary ”
means,
      with respect to any Person (herein referred to as the “parent”), any
      corporation, partnership, association or other business entity (a) of which
      securities or other ownership interests representing more than 50% of the equity
      or more than 50% of the ordinary voting power or more than 50% of the general
      partnership interests are, at the time any determination is being made, owned,
      controlled or held by the parent or (b) that is, at the time any
      determination is being made, otherwise controlled, by the parent or one or
      more
      subsidiaries of the parent or by the parent and one or more subsidiaries of
      the
      parent.





“ Successor
      Servicer ”
means
      a
      servicer (including the Back-up Servicer) who is appointed as a successor
      servicer pursuant to Section 4.02 of the
      Servicing Agreement.





“ Termination
      Event ”
means
      any of the following events:




(a)  (x)
      any
      failure by LEAF Funding to observe or perform in any material respect any
      covenant or agreement of LEAF Funding pursuant to the Purchase, Sale and
      Contribution Agreement which adversely affects the rights of the Lender, (y)
      any
      failure by LEAF II to observe or perform in any material respect any covenant
      or
      agreement of LEAF II pursuant to the Purchase and Sale Agreement or the
      Assignment, Assumption and Amendment Agreement which adversely affects the
      rights of the Lender or (z) any failure by LEAF II B SPE to observe or perform
      in any material respect any covenant or agreement of LEAF II B SPE pursuant
      to
      the Loan Agreement or the Assignment, Assumption and Amendment Agreement which
      adversely affects the rights of the Lender and, which, if subject to cure,
      continues unremedied for a period of 30 days after the earlier of (i) receipt
      by
      LEAF Funding, LEAF II or LEAF II B SPE, as applicable, of written notification
      there of from the Lender or (ii) the date on which LEAF Funding, LEAF II or
      LEAF
      II B SPE, as applicable, is required to provide notice of such failure pursuant
      to the applicable Transaction Document; or







(b)  (x)
      any
      representation, warranty or certification made by LEAF Funding under the
      Purchase, Sale and Contribution Agreement, or in any certificate or information
      delivered pursuant to the Purchase, Sale and Contribution Agreement, including
      in a Purchase Date Notice, (y) any representation, warranty or certification
      made by LEAF II under the Purchase and Sale Agreement, or in any certificate
      or
      information delivered pursuant to the Purchase and Sale Agreement, including
      in
      a Purchase Date Notice, or in the Assignment, Assumption and Amendment Agreement
      or (z) any representation, warranty or certification made by LEAF II B SPE
      under
      the Loan Agreement, or in any certificate or information delivered pursuant
      to
      the Loan Agreement, including in a Purchase Date Notice, or in the Assignment,
      Assumption and Amendment Agreement, and in any such case, shall prove to have
      been incorrect in any material respect when made, which, if subject to cure,
      continues unremedied for a period of 30 days after the earliest of
      (i) the date on which written notice of that failure, requiring the same to
      be remedied, shall have been given to LEAF Funding, LEAF II or LEAF II B SPE,
      as
      applicable, by the Lender and (ii) the date on which LEAF Funding, LEAF II
      or LEAF II B SPE, as applicable, has actual knowledge of such failure;
      or




(c)  an
      Insolvency Event shall occur with respect to LEAF Funding, LEAF II or LEAF
      II B
      SPE; or




(d)  any
      Purchased Contract shall not be free of all Liens other than Permitted Liens;
      or




(e)  a
      Servicer Default shall have occurred and is continuing.





“ Transaction
      Documents ”
means,
      collectively, the Purchase, Sale and Contribution Agreement, including this
      Appendix A, the Purchase and Sale Agreement, the Loan Agreement, the Note,
      the
      Servicing Agreement, the Back-up Servicing Agreement, the Custodial Agreement,
      the Paying Agent Agreement, the Master DDA Control Agreement, the Master DDA
      Intercreditor Agreement and the Assignment, Assumption and Amendment
      Agreement..





“ Transaction
      Expenses ”
has
      the
      meaning specified in Section
      2.02(b)(i) of the
      Servicing Agreement.





“ Trust
      Receipt ”
means
      a
      Trust Receipt in the form of Annex 2 to the
      Custodial Agreement delivered to the Lender by the Custodian covering all of
      the
      Purchased Contracts subject to the Custodial Agreement from time to time, as
      reflected on the Contract File Schedule and Exception Report attached thereto
      in
      accordance with Section 4(d) of the Custodial Agreement.





“ Unused
      Fee ”
means,
      as of any date of determination, a fee payable by LEAF II B SPE to the Lender
      in
      an amount equal to (x) the Unused Fee Rate, times (y) the
      difference of the (i) the Commitment in effect as of such date and (ii) the
      average daily amount of the Note Balance (determined as of the close of business
      on any date of determination) during the immediately preceding month, which
      fee
      shall be calculated on the basis of a 360-day year and the actual number of
      days
      elapsed and shall be payable for each Monthly Period in arrears on each Payment
      Date.





“ Unused
      Fee Rate ”
means
      0.20%, per annum.








“ UCC ”
means
      the Uniform Commercial Code as in effect from time to time in the State of
      New
      York; provided that if
      by reason of mandatory provisions of law, the perfection or the effect of
      perfection or non-perfection of any security interest in any Collateral is
      governed by the Uniform Commercial Code as in effect in a jurisdiction other
      than New York, “ UCC ”
means
      the Uniform Commercial Code as in effect in such other jurisdiction for purposes
      of the provisions of the Transaction Documents relating to such perfection
      or
      effect of perfection or non-perfection.





“ United
      States ”
or
      “ U.S. ”
means
      the United States of America, its fifty States and the District of
      Columbia.





" Weighted
      Average Static Pool Loss Ratio "
      means,
      as of any date of determination, an amount equal to the weighted average
      (weighted by original Contract Value of Contracts originated in each applicable
      Quarterly Origination Period) of the Static Pool Loss Ratios with respect to
      each Quarterly Origination Period.





" Weighted
      Average Permissible Static Pool Loss Ratio "
      means,
      as of any date of determination, an amount equal to the weighted average
      (weighted by original Contract Value of Contracts originated in each applicable
      Quarterly Origination Period) of the Permissible Static Pool Loss Ratios with
      respect to each Quarterly Origination Period.





“ Withdrawal
      Liability ”
means,
      as of the most recent valuation date for each Multiemployer Plan for which
      the
      actuarial report is available, an amount equal to the sum of (x) the potential
      liability of LEAF Financial, its Subsidiaries and their respective ERISA
      Affiliates as of such date for a complete withdrawal from such Multiemployer
      Plan (within the meaning of Section 4203 of ERISA) plus (y) the
      potential liability of LEAF Financial, its Subsidiaries and their respective
      ERISA Affiliates as of such date for a complete withdrawal from all
      Multiemployer Plans, based on information available pursuant to
      Section 4221(e) of ERISA.





“ written ”
or
      “ in
      writing ”
means
      any form of written communication, including, without limitation, by means
      of
      telex, telecopier device, telegraph, electronic mail or messaging systems,
      the
      Internet or cable.




IV. RULES
      OF
      CONSTRUCTION.




Except
      as
      otherwise expressly provided herein or in any of the Transaction Documents
      or
      unless the context otherwise clearly requires:




(a)  defined
      terms include, as appropriate, all genders and the plural as well as the
      singular;







(b)  references
      to designated articles, Sections and other subdivisions of a Transaction
      Document refer to the designated article, Section, or other subdivision of
      such
      Transaction Document as a whole and to all subdivisions of the designated
      article, Section or other subdivision;




(c)  the
      words
“herein,” “hereof,” “hereto,” “hereunder” and other words of similar import
      refer to the Transaction Document in which such reference is made as a whole
      and
      not to any particular article, Section or other subdivision of such Transaction
      Document;




(d)  any
      term
      that relates to a document, statute, rule or regulation includes any amendments,
      modifications, supplements or any other changes that may have occurred since
      the
      document, statute, rule or regulation came into being, including changes that
      occur after the date of the Transaction Document in which such reference is
      made;




(e)  the
      term
“including” and all its variations mean “including but not limited to.” Except
      when used in conjunction with the word “either,” the word “or” is always used
      inclusively (for example, the phrase “A or B” means “A or B or both,” not
“either A or B but not both”);




(f)  all
      accounting terms used in an accounting context and not otherwise defined shall
      be construed in accordance with GAAP; and




(g)  in
      the
      computation of a period of time from a specified date to a later specified
      date
      or an open-ended period, the word “from” means “from and including” and the
      words “to” or “until” mean “to but excluding, and in setting deadlines or other
      periods, “by” means “on or before,” and “after” means “from and
      after”.







**Schedule
      I**




Permissible
      Static Pool Loss Ratio




**Month
      Elapsed** **%**


1
            4.60%2
            4.65%3
            4.65%4
            4.65%5
            4.70%6+
            4.70%













**Exhibit
      A to Appendix A**




Form
      of Originator Checklist




(As
      Attached)












10133999.3


EXHIBIT
      III





FORM
      OF
      EFFECTIVE DATE NOTICE





This
      Effective Date Notice, dated as of September __, 2006, is delivered pursuant
      to
      Section 3(c)(iii) of the Assignment, Assumption and Amendment Agreement, dated
      as of the date hereof (the Agreement ”),
      by
      and among LEAF FUNDING, INC., a Delaware corporation (“ LEAF
      Funding ”),
      LEAF
      INSTITUTIONAL DIRECT MANAGEMENT, LLC, a Delaware limited liability company
      (“ LEAF
      IDM ”),
      LEAF
      FINANCIAL CORPORATION, a Delaware corporation (" LEAF
      Financial "),
      LEASE
      EQUITY APPRECIATION FUND II, L.P., a Delaware limited partnership (“ LEAF
      II ”),
      LEAF
      II B SPE, LLC, a Delaware limited liability company (“ LEAF
      II B SPE ”), MERRILL
      LYNCH EQUIPMENT FINANCE LLC ,
      a
      Delaware limited liability company (“ MLEF ”),
      MERRILL LYNCH COMMERCIAL FINANCE CORP., a Delaware corporation (" Lender ”),
      and
      U.S. BANK NATIONAL ASSOCIATION, as Custodian and Paying Agent (" U.S.
      Bank ").
      Terms
      used in this Effective Date Notice that are not defined herein have meanings
      assigned to such terms in the Agreement.





The
      undersigned, being an Authorized Officer of LEAF Funding, does hereby certify to
      each of MLEF, the Lender and U.S. Bank that as of the Effective Date, the
      following statements are true and correct as of such date:





(a)  LEAF
      Funding’s representations and warranties contained in Section 4 of the Agreement
      are true and correct on and as of the Effective Date as though made on and
      as of
      such date;





(b)  no
      event
      has occurred and is continuing that constitutes a Potential Termination Event
      or
      a Termination Event;





(c)  LEAF
      Funding has complied with all of its covenants under the Agreement and has
      fulfilled in all respects all of its obligations thereunder; and





(d)  LEAF
      Funding is not insolvent or subject to any Insolvency Event.





The
      undersigned, being an Authorized Officer of LEAF IDM, does hereby certify to
      each of MLEF, the Lender and U.S. Bank that as of the Effective Date, the
      following statements are true and correct as of such date:





(a)  LEAF
      IDM’s representations and warranties contained in Section 4 of the Agreement are
      true and correct on and as of the Effective Date as though made on and as of
      such date;





(b)  no
      event
      has occurred and is continuing that constitutes a Potential Termination Event
      or
      a Termination Event;





(c)  LEAF
      IDM
      has complied with all of its covenants under the Agreement and has fulfilled
      in
      all respects all of its obligations thereunder; and







(d) LEAF
      IDM is not incolvent or subject to any Insolvency Event.




The
      undersigned, being an
      Authorized Officer of LEAF II, does hereby certify to each of MLEF, the Lender
      and U.S. Bank that as of the Effective Date, the following


statements
      are true and correct as of such date:





(a)  LEAF
      II’s
      representations and warranties contained in Section 4 of the Agreement are
      true
      and correct on and as of the Effective Date as though made on and as of such
      date;





(b)  no
      event
      has occurred and is continuing that constitutes a Potential Termination Event
      or
      a Termination Event;





(c)  LEAF
      II
      has complied with all of its covenants under the Agreement and has fulfilled
      in
      all respects all of its obligations thereunder; and





(d)  LEAF
      II
      is not insolvent or subject to any Insolvency Event.





The
      undersigned, being an Authorized Officer of LEAF Financial, does hereby certify
      to each of MLEF, the Lender and U.S. Bank that as of the Effective Date, the
      following statements are true and correct as of such date:





(a)  LEAF
      Financial’s representations and warranties contained in Section 4 of the
      Agreement are true and correct on and as of the Effective Date as though made
      on
      and as of such date;





(b)  no
      event
      has occurred and is continuing that constitutes a Potential Termination Event
      or
      a Termination Event;





(c)  LEAF
      Financial has complied with all of its covenants under the Agreement and has
      fulfilled in all respects all of its obligations thereunder; and





(d)  LEAF
      Financial is not insolvent or subject to any Insolvency Event.




The
      undersigned, being an Authorized Officer of LEAF II B SPE, does hereby certify
      to each of MLEF, the Lender and U.S. Bank that as of the Effective Date, the
      following statements are true and correct as of such date:





(a)  LEAF
      II B
      SPE’s representations and warranties contained in Section 4 of the Agreement are
      true and correct on and as of the Effective Date as though made on and as of
      such date;





(b)  no
      event
      has occurred and is continuing that constitutes a Potential Termination Event
      or
      a Termination Event;








(c)  LEAF
      II B
      SPE has complied with all of its covenants under the Agreement and has fulfilled
      in all respects all of its obligations thereunder;




(d) LEAF II B SPE is not insolvent or subject to any Insolvency Event;
      and




(e)
as
      of the
      Effective Date, (x) the Maximum Advance Amount as of such date does not exceed
      the aggregate amount of the Note Balance as of such date, and (y)


the
      aggregate amount of the Note
      Balance as of such date does not exceed the Commitment in effect as of such
      date.






[remainder
      of page intentionally left blank]





IN
      WITNESS WHEREOF, the each of the undersigned has caused this Effective Date
      Notice to be executed and delivered as of the date first above
      written.




LEAF
      FINANCIAL CORPORATION


By:


Name:


Title:




LEAF
      FUNDING, INC.


By:


Name:


Title:




LEAF
      INSTITUTIONAL DIRECT MANAGEMENT, LLC


By:
      LEAF
      Funding, Inc., its sole member


By:


Name:


Title:




LEASE
      EQUITY APPRECIATION FUND II, L.P.


By:
      LEAF
      Financial Corporation, its general partner


By:


Name:


Title:




LEAF
      II B
      SPE, LLC


By:
      Lease
      Equity Appreciation Fund II, L.P., its sole member


By:
      LEAF
      Financial Corporation, its general partner


By:


Name:


Title:










10139549.3


**NOTE**




$200,000,000
      September 29, 2006


New
      York,
      New York




**FOR
      VALUE RECEIVED** ,
      LEAF II
      B SPE, LLC, a Delaware limited liability company (“LEAF II B SPE”), promises to
      pay MERRILL LYNCH COMMERCIAL FINANCE CORP., a Delaware corporation (“Payee”) or
      its assigns, on each day set forth for a payment hereunder under the Priority
      of
      Payments (as defined in the Loan Agreement referred to below), the lesser of
      (a)
      TWO HUNDRED MILLION DOLLARS ($200,000,000) and (b) the unpaid principal amount
      of all advances made by Payee to LEAF II B SPE as Advances under the Loan
      Agreement referred to below.




LEAF
      II B
      SPE also promises to pay interest on the unpaid principal amount hereof, from
      the date hereof until paid in full, at the rates and at the times which shall
      be
      determined in accordance with the provisions of that certain Loan and Security
      Agreement, dated as of April 8, 2003, and as amended by the Assignment,
      Assumption and amendment Agreement (as defined therein) (as it may be further
      amended, supplemented or otherwise modified, the “Loan Agreement”; the terms
      defined therein and not otherwise defined herein being used herein as therein
      defined), by and between LEAF II B SPE and Payee.




This
      Note
      is the “Note” and is issued pursuant to and entitled to the benefits of the Loan
      Agreement, to which reference is hereby made for a more complete statement
      of
      the terms and conditions under which the Advances evidenced hereby were made
      and
      are to be repaid.




All
      payments of principal and interest in respect of this Note shall be made in
      lawful money of the United States of America in same day funds in accordance
      with the terms of the Loan Agreement. Payee hereby agrees, by its acceptance
      hereof, that before disposing of this Note or any part hereof it will make
      a
      notation hereon of all principal payments previously made hereunder and of
      the
      date to which interest hereon has been paid; provided, the failure to make
      a
      notation of any payment made on this Note shall not limit or otherwise affect
      the obligations of LEAF II B SPE hereunder with respect to payments of principal
      of or interest on this Note.




This
      Note
      is subject to mandatory prepayment and to prepayment at the option of LEAF
      II B
      SPE, each as provided in the Loan Agreement.




THIS
      NOTE
      AND THE RIGHTS AND OBLIGATIONS OF LEAF II B SPE AND PAYEE HEREUNDER SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
      INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
      PRINCIPLES THEREOF.




Upon
      the
      occurrence of a Termination Event, the unpaid balance of the principal amount
      of
      this Note, together with all accrued and unpaid interest thereon, may become,
      or
      may be declared to be, due and payable in the manner, upon the conditions and
      with the effect provided in the Loan Agreement.




The
      terms
      of this Note are subject to amendment only in the manner provided in the Loan
      Agreement.







No
      reference herein to the Loan Agreement and no provision of this Note or the
      Loan
      Agreement shall alter or impair the obligations of LEAF II B SPE, which are
      absolute and unconditional, to pay the principal of and interest on this Note
      at
      the place, at the respective times, and in the currency herein
      prescribed.




LEAF
      II B
      SPE promises to pay all costs and expenses, including reasonable attorneys’
fees, all as provided in the Loan Agreement, incurred in the collection and
      enforcement of this Note. LEAF II B SPE and any endorsers of this Note hereby
      consent to renewals and extensions of time at or after the maturity hereof,
      without notice, and hereby waive diligence, presentment, protest, demand notice
      of every kind and, to the full extent permitted by law, the right to plead
      any
      statute of limitations as a defense to any demand hereunder.




[remainder
      of page intentionally left blank]







**IN
      WITNESS WHEREOF** ,
      LEAF II
      B SPE has caused this Note to be duly executed and delivered by its Authorized
      Officer thereunto duly authorized as of the date and at the place first written
      above.






LEAF
      II B
      SPE, LLC


By:
      Lease
      Equity Appreciation Fund II, L.P., its sole member


By:
      LEAF
      Financial Corporation, its general partner


By:


Name:


Title:





TRANSACTIONS


ON


NOTE




Date
            Advances
                Made This Date
            Amount
                of Principal Paid This Date
            Outstanding
                Principal Balance This Date
            Notation
                Made By












10135637.4


EXHIBIT
      A





FORM
      OF
      PURCHASE DATE NOTICE





This
      Purchase Date Notice, dated as of __________, is delivered pursuant to (x)
      Section 3.02(a) of the Purchase, Sale and Contribution Agreement dated as of
      April 8, 2003, as amended by the Assignment, Assumption and Amendment Agreement
      (as defined therein) (as it may be further amended, supplemented or otherwise
      modified, the “ Purchase
      Sale and Contribution Agreement” )
      between
      LEAF FUNDING, INC , a Delaware corporation, and LEASE EQUITY APPRECIATION FUND
      II, L.P., a Delaware limited partnership (“ LEAF
      II ”),
      and
      (y) Section 3.02(a) of the Purchase and Sale Agreement dated as of April 8,
      2003
      , as amended by the Assignment, Assumption and Amendment Agreement between
      LEAF
      II and LEAF II B SPE, LLC, a Delaware limited liability company (“ LEAF
      II B SPE ”).
      Terms
      used in this Purchase Date Notice that are not defined herein have meanings
      assigned to such terms in the Purchase, Sale and Contribution
      Agreement.





The
      undersigned, being an Authorized Officer of LEAF Funding, does hereby certify
      to
      each of LEAF II, LEAF II B SPE and the Lender:





1.  The
      Purchase Date to which this Purchase Date notice relates is ____________ (the
      “ Subject
      Purchase Date ”),
      which
      is a Business Day.





2.  This
      Purchase Date Notice is being delivered no later than two (2) Business Days
      prior to the such date of a proposed purchase of Purchased
      Contracts.





3.
      This
      Purchase Date Notice is irrevocable.





4.  The
      wire
      instructions pursuant to which the proceeds of the cash portion of the Purchase
      Price are to be sent are as set forth at the end of this Purchase Date
      Notice.





5.
      As of
      the Subject Purchase Date, the following statements are true and correct as
      of
      such date:




(a)    the
      information set forth in this Purchase Date Notice and in the computer file
      accompanying this Purchase Date Notice is true and correct on and as of such
      date as though made on and as of such date;





(b)    LEAF
      Funding’s representations and warranties contained in Section 4.01 of the Purchase,
      Sale and Contribution Agreement are true and correct on and as of the subject Purchase
      Date as though made on and as of such date;





(c)   no
      event
      has occurred and is continuing, or would result from such purchase, that
      constitutes a Potential Termination Event or a Termination Event;





(d)    LEAF
      Funding has complied with all of its covenants under the Purchase, Sale and
      Contribution Agreement and has fulfilled in all respects all of its obligations
      thereunder; and








(e)   LEAF
      Funding is not insolvent or subject to any Insolvency Event.





The
      undersigned, being an Authorized Officer of LEAF II, does hereby certify to
      each
      of LEAF II B SPE and the Lender that as of the Subject Purchase Date, the
      following statements are true and correct as of such date:





(a)  LEAF
      II’s
      representations and warranties contained in Section 4.01 of the Purchase and
      Sale Agreement are true and correct on and as of the Subject Purchase Date
      as
      though made on and as of such date;





(b)  no
      event
      has occurred and is continuing, or would result from such purchase, that
      constitutes a Potential Termination Event or a Termination Event;





(c)  LEAF
      II
      has complied with all of its covenants under the Purchase and Sale Agreement
      and
      has fulfilled in all respects all of its obligations thereunder;
      and





(d)   LEAF
      II
      is not insolvent or subject to any Insolvency Event.





The
      undersigned, being an Authorized Officer of LEAF Financial, does hereby certify
      to each of LEAF II B SPE and the Lender that as of the Subject Purchase Date,
      the following statements are true and correct as of such date:





(a)   LEAF
      Financial’s representations and warranties contained in Section 2.03 of the
      Servicing Agreement are true and correct on and as of the subject Purchase
      Date
      as though made on and as of such date;





(b)   no
      event
      has occurred and is continuing, or would result from such purchase, that
      constitutes a Potential Termination Event or a Termination Event;





(c)   LEAF
      Financial has complied with all of its covenants under the Servicing Agreement
      and has fulfilled in all material respects all of its obligations thereunder;
      and




(d)  LEAF Financial is not insolvent or subject to any Insolvency
      Event.





The
      undersigned,
      being an Authorized Officer of LEAF II B SPE, does hereby certify to the Lender
      that as of the Subject Purchase Date, the following statements are true and
      correct as of such date:





(a)  LEAF
      II B
      SPE’s representations and warranties contained in Section 4.01 of the Loan
      Agreement are true and correct on and as oft he subject Purchase Date as though
      made on and as of such date;





(b)  no
      event
      has occurred and is continuing, or would result from such purchase, that
      constitutes a Potential Termination Event or a Termination Event;








(c)  LEAF
      II B
      SPE has complied with all of its covenants under the Loan Agreement and has
      fulfilled in all respects all of its obligations thereunder;




(d)
      LEAF
      II B
      SPE is not insolvent or subject to any Insolvency Event; and




(e)
immediately
      prior to and after giving effect to the Advances to be made on the Subject
      Purchase Date, (x) the Maximum Advance Amount as of such date does not exceed
      the aggregate amount of the Note Balance as of such date, and (y) the aggregate
      amount of the Note Balance as of such date does not exceed the Commitment in
      effect as of such date.




Please
      transfer the Purchase Price for the Contracts described herein immediately
      available funds by 4:00 New York time today in the amount of
      $___________________ to Seller in accordance with the following wire
      instructions:





Wiring
      Instructions:


Beneficiary:


ABA:


Bank
      Acct. #


$
      Amount:





[remainder
      of page intentionally left blank]





IN
      WITNESS WHEREOF, the each of the undersigned has caused this Purchase Date
      Notice to be executed and delivered as of the date first above
      written.




LEAF
      FINANCIAL CORPORATION




By:


Name:


Title:




LEAF
      FUNDING, INC.




By:


Name:


Title:




LEASE
      EQUITY APPRECIATION FUND II, L.P.


By:
      LEAF
      Financial Corporation, its general partner




By:


Name:


Title:




LEAF
      II B
      SPE, LLC


By:
      Lease
      Equity Appreciation Fund II, L.P., its sole member


By:
      LEAF
      Financial Corporation, its general partner




By:


Name:


Title: