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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, 2009



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

For the transition period from  to

Commission file number 000-53667

LEAF EQUIPMENT FINANCE FUND 4, L.P.

(Exact Name of Registrant as Specified in Its Charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 61-1552209                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

110 South Poplar Street, Suite 101, Wilmington Delaware 19801

(Address of principal executive offices)

(800) 819-5556

(Registrants telephone number, including area code)

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

Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).     ̈  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |                                               |  |                             
|-------------------------- |  | -------------------- |  | --------------------------------------------- |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈ |  | Non-accelerated filer   ̈                      |  | Smaller Reporting Company  þ
|                           |  |                      |  | (Do not check if a smaller reporting
company) |  |                             

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









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LEAF EQUIPMENT FINANCE FUND 4, L.P.

INDEX TO QUARTERLY REPORT

ON FORM 10-Q



|           |  |                                                                                                  |  |     
|---------- |  | ------------------------------------------------------------------------------------------------ |  | ----
|           |  |                                                                                                  |  | PAGE
|PART I     |  | FINANCIAL INFORMATION                                                                            |  |     
|ITEM 1.    |  | Financial Statements                                                                             |  |     
|           |  | Consolidated Balance Sheets  June 30, 2009 (unaudited) and December 31, 2008                    |  | 3   
|           |  | Consolidated Statements of OperationsThree and Six Months Ended June 30, 2009 (unaudited)        |  | 4   
|           |  | Consolidated Statement of Changes in Partners CapitalSix Months Ended June 30, 2009
(unaudited) |  | 5   
|           |  | Consolidated Statement of Cash FlowsSix Months Ended June 30, 2009 (unaudited)                   |  | 6   
|           |  | Notes to Consolidated Financial Statements  June 30, 2009 (unaudited)                           |  | 7   
|ITEM 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations            |  | 21  
|ITEM 3.    |  | Quantitative and Qualitative Disclosures about Market Risk                                       |  | 30  
|ITEM 4.    |  | Controls and Procedures                                                                          |  | 31  
|           |  |                                                                                                 
|PART II    |  | OTHER INFORMATION                                                                                |  |     
|ITEM 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                      |  | 32  
|ITEM 6.    |  | Exhibits                                                                                         |  | 33  
|           | 
|SIGNATURES |  | 34                                                                                              



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)



|                                                         |  |              |         |   |                  |   |        |  
|-------------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------ | -
|                                                         |  | June 30,2009 |         |   | December 31,2008 |  
|                                                         |  | (unaudited)  |         |   |                  |  
|ASSETS                                                   |  |              |         |   |                  |   |        |  
|Cash                                                     |  | $            | 1,508   |   |                  | $ | 6,736  |  
|Restricted cash                                          |  |              | 14,392  |   |                  |   | 16     |  
|Investment in commercial finance assets, net             |  |              | 372,884 |   |                  |   | 14,934 |  
|Investment in affiliated leasing partnership             |  |              | 9,874   |   |                  |   | 10,466 |  
|Derivative assets at fair value                          |  |              | 943     |   |                  |   |       |  
|Deferred financing costs, net                            |  |              | 3,736   |   |                  |   | 125    |  
|Other assets                                             |  |              | 225     |   |                  |   | 10     |  
|                                                         |  |              |         |   |                  |   |        |  
|                                                         |  | $            | 403,562 |   |                  | $ | 32,287 |  
|                                                         |  |              |         |   |                  |   |        |  
|LIABILITIES AND PARTNERS CAPITAL                        |  |              |         |   |                  |   |        |  
|Liabilities:                                             |  |              |         |   |                  |   |        |  
|Bank debt                                                |  | $            | 320,847 |   |                  | $ |       |  
|Accounts payable, accrued expenses and other liabilities |  |              | 1,755   |   |                  |   | 199    |  
|Derivative liabilities at fair value                     |  |              | 9,174   |   |                  |   |       |  
|Due to affiliates                                        |  |              | 3,695   |   |                  |   | 427    |  
|Subordinated notes payable                               |  |              | 9,355   |   |                  |   |       |  
|                                                         |  |              |         |   |                  |   |        |  
|Total liabilities                                        |  |              | 344,826 |   |                  |   | 626    |  
|                                                         |  |              |         |   |                  |   |        |  
|                                                         |  |             
|Commitments and contingencies                            |  |              |         |   |                  |   |        |  
|                                                         |  |             
|Partners Capital:                                       |  |              |         |   |                  |   |        |  
|General partner                                          |  |              | (83     | ) |                  |   | (12    | )
|Limited partners                                         |  |              | 57,914  |   |                  |   | 32,240 |  
|Accumulated other comprehensive income (loss)            |  |              | 551     |   |                  |   | (567   | )
|                                                         |  |              |         |   |                  |   |        |  
|Total LEAF 4 partners capital                           |  |              | 58,382  |   |                  |   | 31,661 |  
|Noncontrolling interest                                  |  |              | 354     |   |                  |   |       |  
|                                                         |  |              |         |   |                  |   |        |  
|Total partners capital                                  |  |              | 58,736  |   |                  |   | 31,661 |  
|                                                         |  |              |         |   |                  |   |        |  
|Total liabilities and partners capital                  |  | $            | 403,562 |   |                  | $ | 32,287 |  
|                                                         |  |              |         |   |                  |   |        |  

The accompanying notes are an integral part of these consolidated financial statements.



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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except unit data)

(unaudited)



|                                                                              |  |                                 |         |   |                               |   |         |  
|----------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ----------------------------- | - | ------- | -
|                                                                              |  | Three Months EndedJune 30, 2009 |         |   | Six Months EndedJune 30, 2009 |  
|Revenues:                                                                     |  |                                 |         |   |                               |   |         |  
|Interest on equipment financings                                              |  | $                               | 5,063   |   |                               | $ | 6,788   |  
|Rental income                                                                 |  |                                 | 340     |   |                               |   | 510     |  
|Gains on sales of equipment and lease dispositions, net                       |  |                                 | 21      |   |                               |   | 23      |  
|Other                                                                         |  |                                 | 149     |   |                               |   | 200     |  
|                                                                              |  |                                 |         |   |                               |   |         |  
|                                                                              |  |                                 | 5,573   |   |                               |   | 7,521   |  
|                                                                              |  |                                 |         |   |                               |   |         |  
|Expenses:                                                                     |  |                                 |         |   |                               |   |         |  
|Interest expense                                                              |  |                                 | 3,197   |   |                               |   | 4,260   |  
|Gains on derivative hedging activities                                        |  |                                 | (1,926  | ) |                               |   | (983    | )
|Depreciation on operating leases                                              |  |                                 | 293     |   |                               |   | 437     |  
|Provision for credit losses                                                   |  |                                 | 2,089   |   |                               |   | 3,032   |  
|General and administrative expenses                                           |  |                                 | 330     |   |                               |   | 612     |  
|Administrative expenses reimbursed to affiliate                               |  |                                 | 660     |   |                               |   | 1,029   |  
|Management fees to affiliate                                                  |  |                                 | 905     |   |                               |   | 1,473   |  
|                                                                              |  |                                 |         |   |                               |   |         |  
|                                                                              |  |                                 | 5,548   |   |                               |   | 9,860   |  
|                                                                              |  |                                 |         |   |                               |   |         |  
|Loss before equity in losses of affiliate                                     |  |                                 | 25      |   |                               |   | (2,339  | )
|Equity in losses of affiliate                                                 |  |                                 | (1,490  | ) |                               |   | (2,690  | )
|                                                                              |  |                                 |         |   |                               |   |         |  
|Net loss                                                                      |  |                                 | (1,465  | ) |                               |   | (5,029  | )
|Less: Net loss attributable to the noncontrolling interest                    |  |                                 | 17      |   |                               |   | 28      |  
|                                                                              |  |                                 |         |   |                               |   |         |  
|Net loss attributable to LEAF 4                                               |  | $                               | (1,448  | ) |                               | $ | (5,001  | )
|                                                                              |  |                                 |         |   |                               |   |         |  
|Weighted average number of limited partner unitsoutstanding during the period |  |                                 | 651,245 |   |                               |   | 560,482 |  
|                                                                              |  |                                 |         |   |                               |   |         |  
|Net loss per weighted average limited partner unit                            |  | $                               | (2.20   | ) |                               | $ | (8.83   | )
|                                                                              |  |                                 |         |   |                               |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Consolidated Statement of Changes in Partners Capital

For the Six Months Ended June 30, 2009

(in thousands, except unit data)

(unaudited)



|                                                            |  |                 |     |   |                  |         |   |                                 |   |        |               |  |   |                |   |  |                 |        |   |               |   |     |               |  |   |        |   |  |   |        |  
|----------------------------------------------------------- |  | --------------- | --- | - | ---------------- | ------- | - | ------------------------------- | - | ------ | ------------- |  | - | -------------- | - |  | --------------- | ------ | - | ------------- | - | --- | ------------- |  | - | ------ | - |  | - | ------ | -
|                                                            |  | General Partner |     |   | Limited Partners |         |   | Accumulated Other Comprehensive |   |        |               |  |   | Noncontrolling |   |  | Total Partners |        |   | Comprehensive |  
|                                                            |  | Amount          |     |   | Units            |         |   | Amount                          |   |        | Income (Loss) |  |   | Total          |   |  | Interest        |        |   | Capital       |   |     | Income (Loss) | 
|Balance, January 1, 2009                                    |  | $               | (12 | ) |                  | 390,925 |   |                                 | $ | 32,240 |               |  | $ | (567           | ) |  | $               | 31,661 |   |               | $ |    |               |  | $ | 31,661 |   |  | $ |       |  
|Sales of limited partnership units                          |  |                 |    |   |                  | 376,524 |   |                                 |   | 37,551 |               |  |   |               |   |  |                 | 37,551 |   |               |   |    |               |  |   | 37,551 |   |  |   |       |  
|Offering costs related to the sale of limited partner units |  |                 |    |   |                  |        |   |                                 |   | (4,815 | )             |  |   |               |   |  |                 | (4,815 | ) |               |   |    |               |  |   | (4,815 | ) |  |   |       |  
|Issuance of membership interest to noncontrolling interest  |  |                 |    |   |                  |        |   |                                 |   |       |               |  |   |               |   |  |                 |       |   |               |   | 382 |               |  |   | 382    |   |  |   |       |  
|Cash distributions                                          |  |                 | (21 | ) |                  |        |   |                                 |   | (2,102 | )             |  |   |               |   |  |                 | (2,123 | ) |               |   |    |               |  |   | (2,123 | ) |  |   |       |  
|Redemption of limited partnership units                     |  |                 |    |   |                  | (104    | ) |                                 |   | (9     | )             |  |   |               |   |  |                 | (9     | ) |               |   |    |               |  |   | (9     | ) |  |   |       |  
|Comprehensive Loss:                                         |  |                 |     |   |                  |         |   |                                 |   |        |               |  |   |                |   |  |                 |        |   |               |   |     |               |  |   |        |   |  |   |        |  
|Net loss                                                    |  |                 | (50 | ) |                  |        |   |                                 |   | (4,951 | )             |  |   |               |   |  |                 | (5,001 | ) |               |   | (28 | )             |  |   | (5,029 | ) |  | $ | (5,029 | )
|Unrealized gains on financial derivatives                   |  |                 |    |   |                  |        |   |                                 |   |       |               |  |   | 1,118          |   |  |                 | 1,118  |   |               |   |    |               |  |   | 1,118  |   |  |   | 1,118  |  
|                                                            |  |                 |     |   |                  |         |   |                                 |   |        |               |  |   |                |   |  |                 |        |   |               |   |     |               |  |   |        |   |  |   |        |  
|Comprehensive loss                                          |  |                 |    |   |                  |        |   |                                 |   |       |               |  |   |               |   |  |                 |       |   |               |   |    |               |  |   |       |   |  |   | (3,911 | )
|Comprehensive loss attributable to noncontrolling interest  |  |                 |    |   |                  |        |   |                                 |   |       |               |  |   |               |   |  |                 |       |   |               |   |    |               |  |   |       |   |  |   | 28     |  
|                                                            |  |                 |     |   |                  |         |   |                                 |   |        |               |  |   |                |   |  |                 |        |   |               |   |     |               |  |   |        |   |  |   |        |  
|Comprehensive loss attributable to LEAF 4                   |  |                 |    |   |                  |        |   |                                 |   |       |               |  |   |               |   |  |                 |       |   |               |   |    |               |  |   |       |   |  | $ | (3,883 | )
|                                                            |  |                 |     |   |                  |         |   |                                 |   |        |               |  |   |                |   |  |                 |        |   |               |   |     |               |  |   |        |   |  |   |        |  
|Balance, June 30, 2009                                      |  | $               | (83 | ) |                  | 767,345 |   |                                 | $ | 57,914 |               |  | $ | 551            |   |  | $               | 58,382 |   |               | $ | 354 |               |  | $ | 58,736 |   |  |   |        |  
|                                                            |  |                 |     |   |                  |         |   |                                 |   |        |               |  |   |                |   |  |                 |        |   |               |   |     |               |  |   |        |   |  |   |        |  

The accompanying notes are an integral part of this consolidated financial statement.



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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Consolidated Statement of Cash Flows

(in thousands)

(unaudited)



|                                                                                |  |                               |          |  
|------------------------------------------------------------------------------- |  | ----------------------------- | -------- | -
|                                                                                |  | Six Months EndedJune 30, 2009 |         
|Cash flows from operating activities:                                           |  |                               |          |  
|Net loss attributable to LEAF 4                                                 |  | $                             | (5,001   | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                               |          |  
|Gains on sales of equipment and lease dispositions, net                         |  |                               | (23      | )
|Amortization of deferred financing costs                                        |  |                               | 1,013    |  
|Depreciation on operating leases                                                |  |                               | 437      |  
|Provision for credit losses                                                     |  |                               | 3,032    |  
|Equity in losses of affiliate                                                   |  |                               | 2,690    |  
|Net loss attributable to the noncontrolling interest                            |  |                               | (28      | )
|Unrealized losses on derivative hedging activities                              |  |                               | (1,081   | )
|Changes in operating assets and liabilities, net of effect of acquisitions:     |  |                               |          |  
|Other assets                                                                    |  |                               | (13      | )
|Accounts payable, accrued expenses and other liabilities and other assets       |  |                               | 291      |  
|Due to affiliates, net                                                          |  |                               | (959     | )
|                                                                                |  |                               |          |  
|Net cash provided by operating activities                                       |  |                               | 358      |  
|                                                                                |  |                               |          |  
|Cash flows from investing activities:                                           |  |                               |          |  
|Purchases of commercial finance assets, net                                     |  |                               | (104,174 | )
|Proceeds from commercial finance assets, net                                    |  |                               | 25,809   |  
|Security deposits returned, net of collected                                    |  |                               | (592     | )
|Investment in LEAF Funds JV1                                                    |  |                               | (980     | )
|Issuance of membership interest in LEAF Funds JV2 to noncontrolling interest    |  |                               | 382      |  
|Investment in LEAF Commercial Finance Fund (see Note 3), net of cash acquired   |  |                               | (7,649   | )
|Investment in RCF (see Note 3)                                                  |  |                               | (4,500   | )
|                                                                                |  |                               |          |  
|Net cash used in investing activities                                           |  |                               | (91,704  | )
|                                                                                |  |                               |          |  
|Cash flows from financing activities:                                           |  |                               |          |  
|Borrowings of bank debt                                                         |  |                               | 82,989   |  
|Repayment of bank debt                                                          |  |                               | (22,673  | )
|Increase in restricted cash                                                     |  |                               | (3,445   | )
|Increase in deferred financing costs                                            |  |                               | (1,561   | )
|Acquisition of financial derivatives                                            |  |                               | (80      | )
|Limited partners capital contributions                                         |  |                               | 37,551   |  
|Offering costs incurred for the sale of partnership units                       |  |                               | (4,531   | )
|Cash distributions to partners                                                  |  |                               | (2,123   | )
|Redemption of limited partnership units                                         |  |                               | (9       | )
|                                                                                |  |                               |          |  
|Net cash provided by financing activities                                       |  |                               | 86,118   |  
|                                                                                |  |                               |          |  
|Decrease in cash                                                                |  |                               | (5,228   | )
|Cash, beginning of period                                                       |  |                               | 6,736    |  
|                                                                                |  |                               |          |  
|Cash, end of period                                                             |  | $                             | 1,508    |  
|                                                                                |  |                               |          |  

The accompanying notes are an integral part of this consolidated financial statement.



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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 1  ORGANIZATION AND NATURE OF BUSINESS

LEAF Equipment Finance Fund 4, L.P. (the Fund) is a Delaware
limited partnership formed on January 25, 2008 by its General Partner, LEAF Asset Management, LLC (the General Partner). The General Partner, a Delaware limited liability company, is a wholly owned subsidiary of Resource America,
Inc. (RAI). RAI is a publicly-traded company (NASDAQ: REXI) that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its commercial finance, real estate and financial fund
management segments. The Fund received its minimum subscription proceeds of $2.0 million (20,000 units) required to begin operations and it broke escrow on September 16, 2008.

The Fund acquires diversified portfolios of equipment to finance to end users throughout the United States as well as the District of Columbia and Puerto
Rico. The Fund also acquires existing portfolios of equipment subject to existing financings from other equipment finance companies, primarily an affiliate of its General Partner. The primary objective of the Fund is to generate regular cash
distributions to its partners from its equipment finance portfolio over the life of the Fund.

The consolidated financial statements and
notes thereto as of June 30, 2009 and for the three and six months ended June 30, 2009 are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. However, in the opinion of management, these interim financial
statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements
included in the Funds Annual Report on Form 10-K for the year ended December 31, 2008. The results of operations for the six months ended June 30, 2009 may not necessarily be indicative of the results of operations for the full year
ending December 31, 2009.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Operations of the Fund
commenced on September 16, 2008.

The consolidated financial statements include the accounts of the Fund and its wholly owned
subsidiary, LEAF 4A SPE, LLC. Effective March 1, 2009, the Consolidated Financial Statements also include LEAF Funds Joint Venture 2, LLC (LEAF Funds JV2), of which the Fund acquired and maintains a 98% interest. Effective
June 30, 2009, the Consolidated Financial Statements also include Resource Capital Funding, LLC (RCF) of which the Fund acquired a 100% interest as discussed in Note 3. All intercompany accounts and transactions have been eliminated
in consolidation.

When the Fund obtains an explicit or implicit interest in an entity, the Fund evaluates the entity to determine if the
entity is a variable interest entity (VIE), and, if so, whether or not the Fund is deemed to be the primary beneficiary of the VIE. Generally, the Fund consolidates VIEs for which the Fund is deemed to be the primary beneficiary or for
non-VIEs which the Fund controls. The primary beneficiary of a VIE is the variable interest holder that absorbs the majority of the variability in the expected losses or the residual returns of the VIE. When determining the primary beneficiary of a
VIE, the Fund considers its aggregate explicit and implicit variable interests as a single variable interest. If the Funds single variable interest absorbs the majority of the variability in the expected losses or the residual returns of the
VIE, the Fund is considered the primary beneficiary of the VIE. The Fund reconsiders its determination of whether an entity is a VIE and whether the Fund is the primary beneficiary of such VIE if certain events occur.



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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

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

Principles of Consolidation  (Continued)

As discussed in Note 3, LEAF Funds JV2 purchased an interest in LEAF Commercial Finance Fund, LLC (LCFF) in March 2009 from
LEAF Financial Corporation (LEAF Financial), an affiliate of our General Partner. While LEAF Financial continues to maintain voting control, the Fund consolidates LCFF because the Fund, through its ownership of LEAF Funds JV2, is deemed
to be the primary beneficiary of LCFF.

The Fund owns a 98% interest in LEAF Funds JV2. LEAF Equipment Leasing Income III, L.P. (LEAF
III), a fund sponsored by our General Partner, owns the remaining 2% interest. The Fund reflects participation of LEAF III in the net assets and in the income or losses of LEAF Funds JV2 as Noncontrolling Interest in the Consolidated Balance Sheets
and Statements of Operations. Noncontrolling Interest adjusts the Funds consolidated operating results to reflect only the Funds share of the earnings or losses of the respective entity.

In November 2008, the Fund acquired a 49% interest in a pool of leases held by LEAF Funding, LLC an affiliate of LEAF III (LEAF Funds JV1).
The Fund accounts for its investment in LEAF Funds JV1 under the equity method of accounting since the Fund has the ability to exercise significant influence over the operating and financial decisions of this entity.

Reclassifications

Certain reclassifications have
been made to the 2008 Consolidated Financial Statements to conform to the 2009 presentation. Deferred Financing Costs, Net, have been reported separately from Other Assets. The reclassification of this item had no impact on net income.

Use of Estimates

Preparation of financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the allowance for credit losses, the estimated unguaranteed residual values of leased equipment, impairment of long-lived assets
and the fair value of interest rate swaps and caps. The Fund bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Fund evaluates the adequacy of the allowance for credit losses (including investments in leases, loans and future payment card receivables) based
upon, among other factors, managements historical experience on the portfolios it manages, an analysis of contractual delinquencies, economic conditions and trends, and equipment finance portfolio characteristics, adjusted for expected
recoveries. In evaluating historic performance, the Fund performs a migration analysis, which estimates the likelihood that an account progresses through delinquency stages to ultimate charge-off. The Funds policy is to charge off to the
allowance those financings which are in default and for which management has determined the probability of collection to be remote.



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LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

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

Use of Estimates  (Continued)

Unguaranteed residual value represents the estimated amount to be received at lease termination from lease extensions or ultimate disposition of the
leased equipment. The estimates of residual values are based upon the General Partners history with regard to the realization of residuals, available industry data and the General Partners senior managements experience with respect
to comparable equipment. The estimated residual values are recorded as a component of investments in leases on a net present value basis. Residual values are reviewed periodically to determine if the current estimate of the equipments fair
market value appears to be below its recorded estimate. If required, residual values are adjusted downward to reflect adjusted estimates of fair market values. In accordance with U.S. GAAP, upward adjustments to residual values are not permitted.

The Fund reviews its long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of such assets
may not be recoverable. If it is determined that estimated undiscounted future cash flows derived from long-lived assets will not be sufficient to recover their carrying amounts, an impairment charge will be recorded if the carrying amount of the
assets exceed their estimated fair values.

Interest rate swaps and caps are recorded at fair value based on a value determined by a
third-party pricing agent using an income approach and utilizing models that use as their primary basis readily observable market parameters. This valuation process considers factors including interest rate yield curves, time value, credit
factors and volatility factors. There can be no assurance that the Funds hedging strategies or techniques will be effective, that profitability will not be adversely affected during any period of change in interest rates or that the costs of
hedging will not exceed the benefits.

Restricted Cash

Restricted cash includes cash being held in reserve by the Funds lenders. Restricted cash also includes approximately $2.3 million of customer payments deposited into a lockbox shared with LEAF Financial and
other entities serviced by LEAF Financial. The lockbox is in the name of U.S. Bank National Association as trustee under an inter-creditor agreement among LEAF Financial, the other entities and their respective lenders. These amounts represent
customer payments received by the lockbox, applied to the respective customers accounts, but not transferred to the Funds bank account.

Revenue Recognition

The Funds investment in commercial finance assets consists of direct financing leases, operating
leases, loans and future payment card receivables held directly or through acquisitions of participations.

Direct Financing Leases.Certain of the Funds lease transactions are accounted for as direct financing leases (as distinguished from operating leases). Such leases transfer substantially all benefits and risks of equipment ownership to the customer. The
Funds investment in direct financing leases consists of the sum of the total future minimum lease payments receivable and the estimated unguaranteed residual value of leased equipment, less unearned finance income. Unearned finance income,
which is recognized as revenue over the term of the financing by the effective interest method, represents the excess of the total future minimum contracted payments plus the estimated unguaranteed residual value expected to be realized at the end
of the lease term over the cost of the related equipment.



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

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

Revenue Recognition  (Continued)

Operating Leases. Leases not meeting any of the criteria to be classified as direct financing leases are deemed to be operating leases. Under the
accounting for operating leases, the cost of the leased equipment, including acquisition fees associated with lease placements, is recorded as an asset and depreciated on a straight-line basis over the equipments estimated useful life,
generally up to seven years. Rental income consists primarily of monthly periodic rental payments due under the terms of the leases. The Fund recognizes rental income on a straight line basis. Generally, during the lease term of existing operating
leases, the Fund will not recover all of the cost and related expenses of its rental equipment and, therefore, it is prepared to remarket the equipment in future years. The Funds policy is to review, on a quarterly basis, the expected economic
life of its rental equipment in order to determine the recoverability of its undepreciated cost. In accordance with U.S. GAAP, the Fund writes down its rental equipment to its estimated net realizable value when it is probable that its carrying
amount exceeds such value and the excess can be reasonably estimated; gains are only recognized upon actual sale of the rental equipment. There were no write-downs of equipment during the three and six months ended June 30, 2009.

Loans. For term loans, the investment in loans consists of the sum of the total future minimum loan payments receivable less unearned finance
income. Unearned finance income, which is recognized as revenue over the term of the financing by the effective interest method, represents the excess of the total future minimum contracted payments over the original cost of the loan. For all other
loans, interest income is recorded at the stated rate on the accrual basis to the extent that such amounts are expected to be collected.

Future Payment Card Receivables.The Fund provides cash advances to small businesses on future payment card receipts. Revenues from this operation are recorded under the effective interest method over the period under which the cash
advance is expected to be repaid.

The Fund discontinues the recognition of revenue for leases and loans for which payments
are more than 90 days past due (non-accrual), or, in the case of future payment card receivables, when no payments have been received in 60 days. As of June 30, 2009 and December 31, 2008, the Fund had $9.5 million and $1.2
million, respectively, of commercial finance assets on non-accrual status. Fees from delinquent payments are recognized when received and are included in other income.

Derivative Instruments

The Funds debt facilities generally require it to enter into derivative
contracts, including interest rate swaps and interest rate caps, to add stability to its financing costs and to manage its exposure to interest rate movements or other identified risks. U.S. GAAP requires recognition of all derivatives at fair value
as either assets or liabilities in the Consolidated Balance Sheets. The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment. The Fund has
elected not to apply hedge accounting, and therefore any changes in the fair value of these derivative instruments is recognized immediately in unrealized gains (losses) on derivatives and hedging activities in the Consolidated Statements of
Operations.



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

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

Transfers of Financial Assets

In connection with establishing its debt facilities with its banks, the Fund has formed bankruptcy remote special purpose entities through which the
financings are arranged. The Funds transfers of assets to these special purpose entities do not qualify for sales accounting treatment due to certain call provisions that the Fund maintains. Accordingly, assets and related debt of the special
purpose entities are included in the Funds consolidated balance sheets. The Funds leases and restricted cash are assigned as collateral for these borrowings and there is no further recourse to the general credit of the Fund. Collateral
in excess of these borrowings represents the Funds maximum loss exposure.

Comprehensive Loss

Comprehensive loss includes net loss and all other changes in the equity of a business during a period from transactions and other events and
circumstances from non-owner sources. These changes, other than net loss are referred to as other comprehensive income (loss) and for the Fund only includes the Funds share of unrealized gains on hedging contracts held by
affiliates that the Fund accounted for under the equity method.

Newly Adopted Accounting Principles

In March 2008, the Fund adopted SFAS 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS
133 (SFAS 161). This new standard requires enhanced disclosures for derivative instruments, including those used in hedging activities, which the Fund has included in Note 7. The adoption of SFAS 161 had no impact on the
Funds consolidated financial statements.

In April 2009, the FASB issued SFAS 165, Subsequent Events,
which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. The Fund adopted SFAS 165 for the quarter ended
June 30, 2009.

In April 2009, the FASB issued FASB Staff Position FAS 107-1 and APB 28-1, Interim Disclosures about
Fair Value of Financial Instruments (FSP FAS 107-1 and APB 28-1), which amend SFAS 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial
instruments in interim as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting to require those disclosures in summarized financial information at interim reporting periods.
The adoption of FSP FAS 107-1 and APB 28-1 had no impact on the Funds financial position or results of operations.

Accounting Standards
Issued But Not Yet Effective

In June 2009, the FASB issued SFAS 167, Amendments to FIN 46-R, which requires a
qualitative approach to identifying a controlling financial interest in a VIE, and an ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. SFAS 167 is effective for
the Fund beginning January 1, 2010.



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 3  ACQUISITION OF INTERESTS IN POOLS OF LEASE ASSETS

In March 2009, the Fund entered into an agreement
with LEAF III to form LEAF Funds JV2, which purchased an interest in LCFF, a variable interest entity, from LEAF Financial.

LCFF
commenced operations in May 2008 and operates on a fiscal year ending September 30. LCFF, an entity that LEAF Financial formed to acquire and finance leases and loans it originates, comprised a portfolio of over 2,700 leases and loans as of
March 1, 2009. Through February 2009, LCFF sold subordinated notes to unrelated parties. The notes offering closed in February 2009 having raised $9.4 million.

In June 2009, the Fund acquired a pool of 900 lease assets structured as an acquisition of RCF from the Funds General Partner, which had acquired RCF in June 2009 from Resource Capital Corporation, an affiliate
of the Funds General Partner, for the purpose of transferring the same to the Fund. RCF is the borrower under a $100 million revolving line of credit which as a result of this transaction is now available to the Fund (see Note 5). RCF
acquires and finances leases and loans originated by LEAF Financial.

The following summarizes the fair value of the assets acquired and
liabilities assumed (in thousands):



|                                                               |  |      |          |   |     |   |         |  
|-------------------------------------------------------------- |  | ---- | -------- | - | --- | - | ------- | -
|                                                               |  | LCFF |          |   | RCF |  
|Cash                                                           |  | $    | 2,024    |   |     | $ |        |  
|Restricted cash                                                |  |      | 6,713    |   |     |   | 4,218   |  
|Investment in leases and loans                                 |  |      | 192,528  |   |     |   | 90,534  |  
|Debt                                                           |  |      | (178,211 | ) |     |   | (82,319 | )
|Derivative assets                                              |  |      | 719      |   |     |   |        |  
|Derivative liability                                           |  |      | (5,566   | ) |     |   | (4,431  | )
|Subordinated notes                                             |  |      | (9,355   | ) |     |   |        |  
|Due to affiliates                                              |  |      | (8,409   | ) |     |   | (90     | )
|Accounts payable and accrued expenses                          |  |      |         |   |     |   | (478    | )
|Other assets                                                   |  |      | 1,730    |   |     |   | 111     |  
|                                                               |  |      |          |   |     |   |         |  
|Total purchase price for equity interest                       |  |      | 2,173    |   |     |   | 7,545   |  
|Cash acquired                                                  |  |      | (2,024   | ) |     |   |        |  
|                                                               |  |      |          |   |     |   |         |  
|Total purchase price for equity interest, net of cash acquired |  |      | 149      |   |     |   | 7,545   |  
|Paydown of due to affiliate balance                            |  |      | 7,500    |   |     |   |        |  
|                                                               |  |      |          |   |     |   |         |  
|Total purchase price, net of cash acquired                     |  |      | 7,649    |   |     |   | 7,545   |  
|Cash paid                                                      |  |      | 7,649    |   |     |   | 4,500   |  
|                                                               |  |      |          |   |     |   |         |  
|Amount due as of June 30, 2009                                 |  | $    |         |   |     | $ | 3,045   |  
|                                                               |  |      |          |   |     |   |         |  

As part of the LCFF transaction, the Fund repaid $7.5 million of the amount due to affiliates.

At June 30, 2009, included in Due to Affiliates is a $3.0 million note payable related to the RCF transaction. The note payable to
the Funds General Partner bears interest at LIBOR plus 3% and matures on September 30, 2009. The balance of the note was repaid in August 2009.



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 4  INVESTMENT IN COMMERCIAL FINANCE ASSETS

The Funds investment in commercial finance assets, net,
consists of the following (in thousands):



|                            |  |              |         |     |                  |   |        |    
|--------------------------- |  | ------------ | ------- | --- | ---------------- | - | ------ | ---
|                            |  | June 30,2009 |         |     | December 31,2008 |  
|Direct financing leases     |  | $            | 128,322 |     |                  | $ | 3,025  |    
|Loans                       |  |              | 241,506 |     |                  |   | 8,700  |    
|Other financings(a)         |  |              | 6,281   |     |                  |   | 3,779  |    
|                            |  |              |         |     |                  |   |        |    
|                            |  |              | 376,109 |     |                  |   | 15,504 |    
|Allowance for credit losses |  |              | (3,225  | )   |                  |   | (570   | )  
|                            |  |              |         |     |                  |   |        |    
|                            |  | $            | 372,884 | (b) |                  | $ | 14,934 | (b)
|                            |  |              |         |     |                  |   |        |    



|(a) | Other equipment financings includes operating leases and future payment card receivables.
|--- | -----------------------------------------------------------------------------------------



|(b) | The above table does not include the Funds share of commercial finance assets held by LEAF Funds JV1, of which the Fund owns a 49% interest. As of June 30, 2009, LEAF
Funds JV1 owns approximately $148 million of direct financing leases, operating leases and loans, of which the Funds pro-rata (49%) share was approximately $73 million.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



|                                           |  |                       |         |   |                   |   |         |                       |  |   |       |   |  |   |       |  
|------------------------------------------ |  | --------------------- | ------- | - | ----------------- | - | ------- | --------------------- |  | - | ----- | - |  | - | ----- | -
|                                           |  | June 30, 2009         |         |   | December 31, 2008 |  
|                                           |  | DirectFinancingLeases |         |   | Loans             |   |         | DirectFinancingLeases |  |   | Loans |  
|Total future minimum payments              |  | $                     | 143,127 |   |                   | $ | 285,649 |                       |  | $ | 3,404 |   |  | $ | 9,312 |  
|Unearned income                            |  |                       | (15,426 | ) |                   |   | (40,033 | )                     |  |   | (458  | ) |  |   | (531  | )
|Residuals, net of unearned residual income |  |                       | 1,299   |   |                   |   |        |                       |  |   | 105   |   |  |   |      |  
|Security deposits                          |  |                       | (678    | ) |                   |   | (4,110  | )                     |  |   | (26   | ) |  |   | (81   | )
|                                           |  |                       |         |   |                   |   |         |                       |  |   |       |   |  |   |       |  
|                                           |  | $                     | 128,322 |   |                   | $ | 241,506 |                       |  | $ | 3,025 |   |  | $ | 8,700 |  
|                                           |  |                       |         |   |                   |   |         |                       |  |   |       |   |  |   |       |  

The following is a summary of the Funds allowance for credit losses (in thousands):



|                                                 |  |                                 |       |   |                               |   |       |  
|------------------------------------------------ |  | ------------------------------- | ----- | - | ----------------------------- | - | ----- | -
|                                                 |  | Three Months EndedJune 30, 2009 |       |   | Six Months EndedJune 30, 2009 |  
|Allowance for credit losses, beginning of period |  | $                               | 1,302 |   |                               | $ | 570   |  
|Provision for credit losses                      |  |                                 | 2,089 |   |                               |   | 3,032 |  
|Charge-offs                                      |  |                                 | (249  | ) |                               |   | (460  | )
|Recoveries                                       |  |                                 | 83    |   |                               |   | 83    |  
|                                                 |  |                                 |       |   |                               |   |       |  
|Allowance for credit losses, end of period       |  | $                               | 3,225 |   |                               | $ | 3,225 |  
|                                                 |  |                                 |       |   |                               |   |       |  



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 5  BANK DEBT

Borrowings outstanding under our debt facilities were as follows (in thousands):



|               |  |           |  |                   |  |                        |         |                     |                                    |                                              |  |   |        |  |     |   |  |   |  
|-------------- |  | --------- |  | ----------------- |  | ---------------------- | ------- | ------------------- | ---------------------------------- | -------------------------------------------- |  | - | ------ |  | --- | - |  | - | -
|               |  | Type      |  | Maturity          |  | As of June 30, 2009    |         |                     | December 31,2008OutstandingBalance
|               |  |           |  | Amount ofFacility |  | OutstandingBalance (1) |         | AmountAvailable (2) |                                    | Interest rate perannum adjustedfor swaps (3) |  |  
|Wells Fargo    |  | Revolving |  | Feb 2012          |  | $                      | 75,000  |                     | $                                  | 60,000                                       |  | $ | 15,000 |  | 4.4 | % |  | $ | 
|Morgan Stanley |  | Term      |  | (4)               |  |                        | 178,528 |                     |                                    | 178,528                                      |  |   |       |  | 5.0 | % |  |   | 
|HVB            |  | Revolving |  | (4)               |  |                        | 100,000 |                     |                                    | 82,319                                       |  |   | 17,681 |  | 5.9 | % |  |   | 
|               |  |           |  |                   |  |                        |         |                     |                                    |                                              |  |   |        |  |     |   |  |   |  
|               |  |           |  |                   |  | $                      | 353,528 |                     | $                                  | 320,847                                      |  | $ | 32,681 |  |     |   |  | $ | 
|               |  |           |  |                   |  |                        |         |                     |                                    |                                              |  |   |        |  |     |   |  |   |  



|(1) | Collateralized by specific leases and loans and related equipment. As of June 30, 2009, $338 million of leases and loans and $12 million of restricted cash were pledged as
collateral under the Funds credit facilities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Availability under these debt facilities is subject to having sufficient eligible leases or loans (as defined in the respective agreements) to pledge as collateral and compliance
with the borrowing base formula.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | To mitigate fluctuations in interest rates, the Fund entered into interest rate swap and cap agreements. The interest rate swap agreements terminate on various dates and fix the
LIBOR-component of the interest rate. This rate reflects the weighted average fixed rate.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | The Morgan Stanley facility matures in November 2009 and the HVB facility matures in March 2010. If these facilities are not extended at the time of maturity, the Fund would not be
required to make full repayment at that time. Rather, the Fund would repay the outstanding debt as payments are received on the underlying leases and loans pledged as collateral.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In February 2009, the Fund entered into a $75 million revolving line of credit with Wells Fargo Foothill, LLC. Interest on this facility is calculated at
LIBOR plus a variable margin (4.1% at June 30, 2009). Interest and principal are due monthly as payments are received on the leases and loans collateralizing the borrowings. The Fund is subject to financial covenants under this facility
including minimum tangible net worth, maximum leverage ratios and portfolio delinquency that are intended to measure the Funds financial viability, limit the amount the Fund can borrow based on measuring its debt to net worth and measure
performance of its portfolio. In addition, the Funds debt facilities include financial covenants covering LEAF Financial, an affiliate of its General Partner and the servicer of its portfolio. These covenants exist to provide the lender with
information about the financial viability of the entity that services its portfolio. These covenants are similar in nature to the covenants discussed above that are applicable to the Fund, and are related to such things as its servicers
minimum tangible net worth, maximum leverage ratios, managed portfolio delinquency and compliance of the debt terms of all of LEAF Financials managed entities. As of June 30, 2009, the Fund is in compliance with the covenants under
this facility.

In March 2009, the Fund acquired an ownership interest in LCFF, who has a credit facility with Morgan Stanley Bank.
Interest and principal payments are due monthly. LCFF is subject to financial covenants under this facility that are similar to those discussed above with respect to the Funds Wells Fargo Foothill facility. In addition, this facility includes
a covenant related to the tangible net worth of RAI, the parent company of the Funds General Partner, which required RAI to maintain a tangible net worth of $125 million. As of March 31, 2009, RAIs tangible net worth was $118
million. The Fund entered into an amendment and waiver agreement with Morgan Stanley dated July 14, 2009. This agreement lowered RAIs minimum tangible net worth threshold and irrevocably waives any covenant failures that would have
resulted from RAIs tangible net worth being below the previous threshold. In exchange, the Fund has agreed not to make any additional borrowings under this agreement



14



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 5  BANK DEBT  (Continued)

and the existing amounts outstanding shall be due monthly as payments are received on the lease
and loan receivables collateralizing the borrowings. In addition, excess cash received from the payment of leases and loans by obligors shall be used to repay the principal amount owing under this line of credit. In consideration for these
modifications, certain covenants were modified or eliminated, including the elimination of all overconcentration limits and borrowing base events of default, the Fund does not owe any additional unused fees all breakage fees and prepayment premiums
have been removed from the agreement, and the interest rate for the remaining balance will be calculated at LIBOR plus 3.00% (previously LIBOR plus 1.15%). As of June 30, 2009, the Fund is in compliance with the other covenants under this
facility.

The Fund acquired RCF in June 2009. RCF has a $100 million secured revolving credit facility with Bayerische Hypo-Und
Vereinsbank AG (HVB) to finance the purchase of equipment leases and loans. Borrowings under this facility bear interest at one of the two rates determined by asset class: Pool A- one month LIBOR plus 1.10 % or Pool B- one month
LIBOR plus 0.80%. The Fund utilizes interest rate swaps on this facility to mitigate fluctuations in interest rates. RCF is subject to financial covenants under this facility that are similar to those discussed above with respect to the Funds
Wells Fargo Foothill facility. RCF is in compliance with the covenants under this facility.

Debt repayments

Annual principal payments on the Funds aggregate borrowings over the next five years ended June 30 and thereafter, are as follows (in
thousands):



|           |  |   |        
|---------- |  | - | -------
|2010       |  | $ | 132,801
|2011       |  |   | 61,890 
|2012       |  |   | 62,978 
|2013       |  |   | 28,852 
|2014       |  |   | 13,737 
|Thereafter |  |   | 20,589 
|           |  |   |        
|           |  | $ | 320,847
|           |  |   |        

NOTE 6  SUBORDINATED NOTES PAYABLE

LCFF offered 8.25% secured recourse promissory notes (the Notes). The Notes have a six-year term, are recourse to LCFF and require interest
only payments until their maturity in February 2015. The Notes are subordinated to the Morgan Stanley bank debt. LCFF may call or redeem the Notes, in whole or in part, at any time during the interest only period. This offering closed in February
2009 having raised $9.4 million.



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 6  SUBORDINATED NOTES PAYABLE  (Continued)

The majority of the Funds assets and liabilities are
financial contracts with fixed and variable rates. Any mismatch between the repricing and maturity characteristics of the Funds assets and liabilities exposes it to interest rate risk when interest rates fluctuate. For example, the Funds
assets are structured on a fixed-rate basis, but since funds borrowed through warehouse facilities are obtained on a floating-rate basis, the Fund is exposed to a certain degree of risk if interest rates rise, which in turn will increase the
Funds borrowing costs. In addition, when the Fund acquires assets, it bases its pricing in part on the spread it expects to achieve between the interest rate it charges its customers and the effective interest cost the Fund will pay when it
funds those loans. Increases in interest rates that increase the Funds permanent funding costs between the time the assets are originated and the time they are funded could narrow, eliminate or even reverse this spread.

To manage interest rate risk, the Fund employs a hedging strategy using derivative financial instruments such as interest rate swaps and caps. The Fund
has elected not to apply hedge accounting; therefore, changes in the fair value of those derivatives are recorded directly to earnings as they occur. The Fund does not use derivative financial instruments for trading or speculative purposes. The
Fund manages the credit risk of possible counterparty default in these derivative transactions by dealing exclusively with counterparties with investment grade ratings. The Fund has agreements with certain of its derivative counterparties that
contain a provision where if the Fund defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Fund could also be declared in default on its derivative
obligations. The Fund has agreements with certain of its derivative counterparties that incorporates the loan covenant provisions of the Funds indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan
covenant provisions would result in the Fund being in default on any derivative instrument obligations covered by the agreement. As of June 30, 2009, the fair value of derivatives in a net liability position, which excludes any adjustment for
nonperformance risk, related to these agreements was $9.4 million. As of June 30, 2009, the Fund has not posted any collateral related to these agreements. If the Fund had breached any of these provisions at June 30, 2009, it could have
been required to settle its obligations under the agreements at their termination value of $9.4 million.

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

At June 30, 2009, the Fund had 34 interest rate swap agreements that terminate on various dates ranging from November 2009 to November 2017, and 11
interest rate cap agreements that terminate on various dates ranging from June 2011 to February 2016. The following tables present the fair value of the Funds derivative financial instruments as well as their classification on the Consolidated
Balance Sheets as of June 30, 2009 and on the Consolidated Statements of Operations for the three and six months ended June 30, 2009 (in thousands):

Fair Value of Derivative Instruments as of June 30, 2009





|                                                                 |  |                |         |                        |                                      |           |   |        |  
|---------------------------------------------------------------- |  | -------------- | ------- | ---------------------- | ------------------------------------ | --------- | - | ------ | -
|                                                                 |  | NotionalAmount |         | Balance Sheet Location |                                      | FairValue |  
|Derivatives not designated as hedging instruments under SFAS 133 |  |                |         |                        |                                      |           |   |        |  
|Interest rate cap contracts                                      |  | $              | 82,789  |                        | Derivative assets at fair value      |           | $ | 943    |  
|Interest rate swap contracts                                     |  |                | 202,705 |                        | Derivative liabilities at fair value |           |   | (9,174 | )
|                                                                 |  |                |         |                        |                                      |           |   |        |  
|                                                                 |  | $              | 285,494 |                        |                                      |           |   |        |  
|                                                                 |  |                |         |                        |                                      |           |   |        |  



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 7  DERIVATIVE INSTRUMENTS

The Effect of Derivative Instruments on the Consolidated Statements of Operations



|                                                                |  |                |         |                                  |                                        |                              |   |                            |  |   |    
|--------------------------------------------------------------- |  | -------------- | ------- | -------------------------------- | -------------------------------------- | ---------------------------- | - | -------------------------- |  | - | ---
|Derivatives not designated as hedginginstruments under SFAS 133 |  | NotionalAmount |         | Statement of Operations Location |                                        | ThreeMonthsEndedJune 30,2009 |   | SixMonthsEndedJune 30,2009
|Interest rate cap contracts                                     |  | $              | 82,789  |                                  | Gains on derivative hedging activities |                              | $ | 1,331                      |  | $ | 727
|Interest rate swap contracts                                    |  |                | 202,705 |                                  | Gains on derivative hedging activities |                              |   | 595                        |  |   | 256
|                                                                |  |                |         |                                  |                                        |                              |   |                            |  |   |    
|                                                                |  | $              | 285,494 |                                  |                                        |                              | $ | 1,926                      |  | $ | 983
|                                                                |  |                |         |                                  |                                        |                              |   |                            |  |   |    

NOTE 8  FAIR VALUE MEASUREMENT

For cash, receivables and payables, the carrying amounts approximate fair values because of the short term maturity of these instruments. The carrying
value of debt approximates fair market value since interest rates approximate current market rates.

It is not practicable for the Fund to
estimate the fair value of the Funds loans. They comprise a large number of transactions with commercial customers in different businesses, and may be secured by liens on various types of equipment and may be guaranteed by third parties and
cross-collateralized. Any difference between the carrying value and fair value of each transaction would be affected by a potential buyers assessment of the transactions credit quality, collateral value, guarantees, payment history,
yield, term, documents and other legal matters, and other subjective considerations. Value received in a fair market sale of a transaction would be based on the terms of the sale, the Funds and the buyers views of economic and industry
conditions, the Funds and the buyers tax considerations, and other factors.

Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability at the measurement date (exit price). U.S. GAAP establishes a fair value
hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets
for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input
that is significant to the measurement in its entirety.



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 8  FAIR VALUE MEASUREMENT  (Continued)



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



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



| |  |  | Level 3  Unobservable inputs that reflect the entitys own assumptions about the assumptions that market participants would use in the pricing of
the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As discussed in Note 7, the Fund employs a hedging strategy to manage exposure to the effects of changes in market interest rates. All derivatives are recorded on the Balance Sheets at their fair value as either assets or liabilities.
Because the Funds derivatives are not listed on an exchange, these instruments are valued by a third-party pricing agent using an income approach and utilizing models that use as their primary basis readily observable market
parameters. This valuation process considers factors including interest rate yield curves, time value, credit factors and volatility factors. Although the Fund has determined that the majority of the inputs used to value its derivatives
fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its
counterparties. However, as of June 30, 2009, the Fund has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation
adjustments are not significant to the overall valuation of its derivatives. As a result, the Fund has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Assets and liabilities measured at fair value on a recurring basis include the following as of June 30, 2009 (in thousands):



|                    |  |                               |   |                                   |   |        |         |  |   |   |  |   |        |  
|------------------- |  | ----------------------------- | - | --------------------------------- | - | ------ | ------- |  | - | - |  | - | ------ | -
|                    |  | Fair Value Measurements Using |   | Assets (Liabilities)At Fair
Value |  
|                    |  | Level 1                       |   | Level 2                           |   |        | Level 3 | 
|Interest rate caps  |  | $                             |  |                                   | $ | 943    |         |  | $ |  |  | $ | 943    |  
|Interest rate swaps |  | $                             |  |                                   | $ | (9,174 | )       |  | $ |  |  | $ | (9,174 | )



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 9  CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH AFFILIATES

The Fund relies on the General Partner and its
affiliates to manage the Funds operations and pays the General Partner or its affiliates fees to manage the Fund. The following is a summary of fees and costs of services and materials charged by the General Partner or its affiliates (in
thousands):



|                                            |  |                                 |       |                               |   |      
|------------------------------------------- |  | ------------------------------- | ----- | ----------------------------- | - | -----
|                                            |  | Three Months EndedJune 30, 2009 |       | Six Months EndedJune 30, 2009
|Acquisition fees                            |  | $                               | 553   |                               | $ | 1,457
|Management fees                             |  |                                 | 905   |                               |   | 1,473
|Administrative expenses                     |  |                                 | 660   |                               |   | 1,029
|Organization and offering expense allowance |  |                                 | 647   |                               |   | 1,131
|Underwriting fees                           |  |                                 | 2,099 |                               |   | 3,684

Acquisition Fees.The Fund pays an affiliate of the General Partner a fee for assisting the
Fund in acquiring equipment subject to existing equipment leases equal to up to 2% of the purchase price the Fund pays for the equipment or portfolio of equipment subject to existing equipment financing.

Management Fees. LCFF pays the General Partner a subordinated annual asset management fee equal to 1% of assets under management for managing
LCFFs assets, or, if less, a management fee that is reasonably competitive, and would customarily be paid to non-affiliated third-parties rendering similar services. For all other leases and loans, the Fund pays the General Partner a
subordinated annual asset management fees equal to 4% or 2% of gross rental payments for operating leases, or full payout leases, respectively, or a competitive fee, whichever is less. During the Funds five-year investment period, management
fees will be subordinated to the payment to the Funds limited partners of a cumulative annual distribution of 8.5% of their capital contributions, as adjusted by distributions deemed to be a return of capital.

Administrative Fees. The Fund reimburses the General Partner and its affiliates for certain costs of services and materials used by or for the
Fund except those items covered by the above-mentioned fees.

Organization and Offering Expense Allowance. The Fund pays the General
Partner and Chadwick Securities, Inc. (Chadwick), a wholly owned subsidiary of RAI, an organization and offering expense allowance based on a sliding scale of the offering proceeds raised. This amount includes reimbursement to Chadwick
to use for the selling dealers bona fide accountable due diligence expenses of up to 0.5% of the proceeds of each unit sold by them. These charges were recorded by the Fund as offering costs related to the sale of partnership units.

Chadwick is paid an underwriting fee of 3% of the offering proceeds for obtaining and managing the group of selling broker-dealers who
sold the units in the offering. Chadwick also receives sales commissions of 7% of the proceeds of each unit that they sold. Chadwick did not sell any units and did not retain sales commissions through June 30, 2009.

Due to Affiliates.Due to affiliates includes amounts due to the General Partner related to acquiring and managing portfolios of equipment from
its General Partner, management fees and reimbursed expenses.



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##### Table of Contents

LEAF EQUIPMENT FINANCE FUND 4, L.P. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

June 30, 2009

(unaudited)

NOTE 10  SUBSEQUENT EVENTS

The Fund has evaluated subsequent events through August 14, 2009, the date which
these financial statements were issued and filed with the SEC, and determined that there have not been any events that have occurred that would require adjustments to or disclosure in the unaudited consolidated financial statements.



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##### Table of Contents

ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

When used in this Form 10-Q, the words believes anticipates, expects and similar
expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties more particularly described in other documents filed with Securities and Exchange Commission. These risks and
uncertainties could cause actual results to differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results
of any revisions to forward-looking statements which we may make to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

Overview

We are a Delaware limited partnership
formed on January 25, 2008 by our General Partner, LEAF Asset Management, LLC (our General Partner). Our General Partner, a Delaware limited liability company, is a wholly owned subsidiary of Resource America, Inc.
(RAI). RAI is a publicly-traded company (NASDAQ: REXI) that uses industry specific expertise to evaluate, originate, service and manage investment opportunities through its commercial finance, real estate and financial fund management
segments. Our offering period began on August 12, 2008. We received our minimum subscription proceeds of $2.0 million (20,000 units) required to begin operations and we broke escrow on September 16, 2008. As of June 30, 2009, we had
subscriptions for 767,345 limited partner units ($76.6 million).

We acquire a diversified portfolio of new, used or reconditioned
equipment that we lease to third parties. We also acquire portfolios of equipment subject to existing leases from other equipment lessors. Our financings are typically acquired from LEAF Financial Corporation (LEAF Financial), an
affiliate of our General Partner and an indirect subsidiary of RAI. In addition, we may make secured loans to end users to finance their purchase of equipment. We attempt to structure our secured loans so that, in an economic sense, there is no
difference to us between a secured loan and a full payout equipment lease. We also invest in equipment, leases and secured loans through joint venture arrangements with our General Partners affiliated investment programs. We finance
business-essential equipment including, but not limited to computers, copiers, office furniture, water filtration systems, machinery used in manufacturing and construction, medical equipment and telecommunications equipment. We focus on the small to
mid-size business market, which generally includes businesses with:



| |  |  | 500 or fewer employees;
| | - |  | -----------------------



| |  |  | $1.0 billion or less in total assets; or
| | - |  | ----------------------------------------



| |  |  | $100.0 million or less in total annual sales.
| | - |  | ---------------------------------------------

Our principal objective is to generate regular cash distributions to our limited partners.

Our leases
consist of direct financing and operating leases as defined by accounting principles generally accepted in the United States of America (U.S. GAAP). Under the direct financing method of accounting, interest income (the excess of the
aggregate future rentals and estimated unguaranteed residuals upon expiration of the lease over the related equipment cost) is recognized over the life of the lease using the interest method. Under the operating method, the cost of the leased
equipment, including acquisition fees associated with lease placements, is recorded as an asset and depreciated on a straight-line basis over its estimated useful life. Rental income on operating leases consists primarily of monthly periodic rentals
due under the terms of the leases. Generally, during the lease terms of existing operating leases, we will not recover all of the cost and related expenses of rental equipment and, therefore, we are prepared to remarket the equipment in future
years. We discontinue the recognition of revenue for leases and loans for which payments are more than 90 days past due, or, in the case of future payment card receivables, when no payments have been received in 60 days. These assets are classified
as non-accrual.



21



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##### Table of Contents

Finance Receivables and Asset Quality

We own commercial finance assets directly which we purchase from our General Partner and are included on our consolidated balance sheets. We also
participate in commercial finance assets indirectly through a joint venture, LEAF Funds JV1, that we have invested in with LEAF III, another fund sponsored by our General Partner. We do not consolidate this joint venture, and therefore the
commercial finance assets owned by this joint venture are not included on our consolidated balance sheets. Because we participate in the returns of the commercial finance assets held, the below shows data for both the assets we hold directly as well
as our pro-rata share of the assets we hold indirectly through LEAF Funds JV1.

In March 2009, we entered into a joint venture agreement
with LEAF III (LEAF Funds JV2). LEAF Funds JV2 purchased an interest in LEAF Commercial Finance Fund (LCFF) from LEAF Financial. As a result of the transaction, through our ownership in LEAF Funds JV2, we consolidate LCFF.
LCFF is an investment fund that LEAF Financial formed to acquire and finance leases and loans it originates, and is comprised of a portfolio of over 2,700 leases and loans as of March 1, 2009. As of March 1, 2009, this entity owned $193
million of leases and loans and had approximately $178 million of debt outstanding on its revolving $250 million line of credit.

In June
2009, we acquired RCF which acquires and finances leases and loans. As of June 30, 2009, their portfolio is comprised of 900 leases and loans. As of June 30, 2009, this entity owned $91 million leases and loans and had approximately $82
million of debt outstanding on its revolving $100 million line of credit.



22



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##### Table of Contents

Information about our portfolio of commercial finance assets is as follows (dollars in thousands):



|                                                                                      |  |                    |         |   |                                           |   |        |                    |  |   |                                           |   |  |   |        |  
|------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ----------------------------------------- | - | ------ | ------------------ |  | - | ----------------------------------------- | - |  | - | ------ | -
|                                                                                      |  | June 30, 2009      |         |   | December 31, 2008                         |  
|                                                                                      |  | Held Directlyby Us |         |   | Held Indirectlyby us throughLEAF FundsJV1 |   |        | Held Directlyby Us |  |   | Held Indirectlyby us throughLEAF FundsJV1 |  
|Investment in commercial finance assets, net                                          |  | $                  | 372,884 |   |                                           | $ | 72,734 |                    |  | $ | 14,934                                    |   |  | $ | 95,016 |  
|Number of contracts                                                                   |  |                    | 6,400   |   |                                           |   | 5,600  |                    |  |   | 1,000                                     |   |  |   | 7,000  |  
|Number of individual end users(a)                                                     |  |                    | 5,700   |   |                                           |   | 5,100  |                    |  |   | 800                                       |   |  |   | 6,200  |  
|Average origination amount                                                            |  | $                  | 85.7    |   |                                           | $ | 47.2   |                    |  | $ | 20.9                                      |   |  | $ | 42.8   |  
|Average initial term (in months)                                                      |  |                    | 60.9    |   |                                           |   | 49.0   |                    |  |   | 45                                        |   |  |   | 51     |  
|States accounting for 10% or more of commercial finance assets portfolio:             |  |                    |         |   |                                           |   |        |                    |  |   |                                           |   |  |   |        |  
|California                                                                            |  |                    | 14      | % |                                           |   | 20     | %                  |  |   | 21                                        | % |  |   | 20     | %
|Texas                                                                                 |  |                    | 10      | % |                                           |   | 7      | %                  |  |   | 3                                         | % |  |   | 7      | %
|Florida                                                                               |  |                    | 8       | % |                                           |   | 11     | %                  |  |   | 6                                         | % |  |   | 10     | %
|Types of equipment accounting for 10% or more of commercial finance assets portfolio: |  |                    |         |   |                                           |   |        |                    |  |   |                                           |   |  |   |        |  
|General business loans                                                                |  |                    | 4       | % |                                           |   | 24     | %                  |  |   |                                          | % |  |   |       | %
|Industrial equipment                                                                  |  |                    | 23      | % |                                           |   | 14     | %                  |  |   | 15                                        | % |  |   | 39     | %
|Medical equipment                                                                     |  |                    | 23      | % |                                           |   | 20     | %                  |  |   | 11                                        | % |  |   | 20     | %
|Communications                                                                        |  |                    | 9       | % |                                           |   |       | %                  |  |   | 1                                         | % |  |   | 1      | %
|Transportation equipment                                                              |  |                    |        | % |                                           |   |       | %                  |  |   | 45                                        | % |  |   |       | %
|Restaurant equipment                                                                  |  |                    | 7       | % |                                           |   | 24     | %                  |  |   | 4                                         | % |  |   | 22     | %
|Types of business accounting for 10% or more of commercial finance assets portfolio:  |  |                    |         |   |                                           |   |        |                    |  |   |                                           |   |  |   |        |  
|Services                                                                              |  |                    | 48      | % |                                           |   | 49     | %                  |  |   | 25                                        | % |  |   | 52     | %
|Retail Trade                                                                          |  |                    | 13      | % |                                           |   | 34     | %                  |  |   | 17                                        | % |  |   | 32     | %
|Finance/Insurance/Real Estate                                                         |  |                    | 10      | % |                                           |   | 2      | %                  |  |   | 37                                        | % |  |   | 2      | %



|(a) | Located in the 50 states as well as the District of Columbia and Puerto Rico. No individual end user or single piece of equipment accounted for more than 1% of our portfolio based
on the origination amount.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

As of June 30, 2009, the average original equipment cost increased as compared to December 31,
2008 as a result of consolidating LCFF and RCF, which had average origination amounts of over $80,000 and $160,000, respectively.

We
utilize debt, in addition to our equity, to fund the acquisitions of lease and loan portfolios. Our leases and loans are generally assigned as collateral for borrowings as discussed in Liquidity and Capital Resources. As of June 30, 2009, our
outstanding debt was $320.8 million. We had no debt outstanding as of December 31, 2008.

The performance of our commercial finance
assets portfolio is a measure of our General Partners underwriting and collection standards, skills, policies and procedures and is an indication of asset quality. The table below provides information about our commercial finance assets,
including non-performing assets, which are those assets that are not accruing income due to non-performance or impairment (dollars in thousands):



|                                                                           |  |                                                 |         |   |                                                 |   |        |                    |  |   |                                           |   |  |   |        |  
|-------------------------------------------------------------------------- |  | ----------------------------------------------- | ------- | - | ----------------------------------------------- | - | ------ | ------------------ |  | - | ----------------------------------------- | - |  | - | ------ | -
|                                                                           |  | As of and For theSix Months Ended June 30, 2009 |         |   | As of and For the PeriodEnded December 31, 2008 |  
|                                                                           |  | Held Directlyby Us                              |         |   | Held Indirectlyby Us ThroughLEAF FundsJV1       |   |        | Held Directlyby Us |  |   | Held Indirectlyby Us ThroughLEAF FundsJV1 |  
|Investment in commercial finance assets before allowance for credit losses |  | $                                               | 376,109 |   |                                                 | $ | 74,316 |                    |  | $ | 15,504                                    |   |  | $ | 96,650 |  
|Weighted average investment before allowance for credit losses             |  |                                                 | 181,509 |   |                                                 |   | 87,284 |                    |  |   | 6,383                                     |   |  |   | 99,988 |  
|Allowance for credit losses                                                |  |                                                 | 3,225   |   |                                                 |   | 1,578  |                    |  |   | 570                                       |   |  |   | 1,634  |  
|Non-performing assets                                                      |  |                                                 | 9,493   |   |                                                 |   | 3,155  |                    |  |   | 1,187                                     |   |  |   | 2,756  |  
|Charge-offs, net of recoveries                                             |  | $                                               | 377     |   |                                                 | $ | 2,116  |                    |  | $ |                                          |   |  | $ | 567    |  
|As a percentage of finance receivables:                                    |  |                                                 |         |   |                                                 |   |        |                    |  |   |                                           |   |  |   |        |  
|Allowance for credit losses                                                |  |                                                 | 0.86    | % |                                                 |   | 2.12   | %                  |  |   | 3.68                                      | % |  |   | 1.69   | %
|Non-performing assets                                                      |  |                                                 | 2.52    | % |                                                 |   | 4.25   | %                  |  |   | 7.66                                      | % |  |   | 2.85   | %
|As a percentage of weighted average finance receivables:                   |  |                                                 |         |   |                                                 |   |        |                    |  |   |                                           |   |  |   |        |  
|Charge-offs, net of recoveries                                             |  |                                                 | 0.21    | % |                                                 |   | 2.42   | %                  |  |   |                                          | % |  |   | 0.57   | %

We manage our credit risk by adhering to strict credit policies and procedures, and closely
monitoring our receivables. Our General Partner and LEAF Financial, the servicer of our commercial finance assets portfolio, has responded to the current economic recession by increasing the number of employees in its collection department and it
has implemented earlier intervention techniques in collection procedures. Our General Partner has also increased its credit standards and limited the amount of business we do with respect to certain industries, geographic locations and equipment
types. Because of the current scarcity of credit available to small and mid-size businesses, we have been able to increase our credit standards without reducing the rates we charge on our leases and loans.

Our allowance for credit losses is our estimate of losses inherent in our commercial finance receivables. The allowance is based on factors which include
our historical loss experience on equipment finance portfolios we manage, an analysis of contractual delinquencies, current economic conditions and trends and equipment finance portfolio characteristics, adjusted for recoveries. In evaluating
historic performance, we perform a migration analysis, which estimates the likelihood that an account progresses through delinquency stages to ultimate charge-off. Our policy is to charge-off to the allowance those financings which are in default
and for which management has determined the probability of collection to be remote. Substantially all of our assets are collateral for our debt and, therefore, significantly greater delinquencies than anticipated will have an adverse impact on our
cash flow and



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##### Table of Contents

distributions to our partners.

We focus on
financing equipment used by small to mid-size businesses, and our General Partner anticipates that the recession will make it more difficult for some of our customers to make payments on their financings with us on a timely basis, which could result
in higher delinquencies than we anticipate.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been
prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenues and costs and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including the allowance for credit losses, the estimated unguaranteed residual values of leased equipment, impairment of long-lived assets and for the fair value of
interest rate swaps and caps. We base our estimates on historical experience, current economic conditions and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a discussion of our critical accounting policies and estimates, see the discussion our annual report on Form 10-K for fiscal 2008 under
Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical Accounting Policies and Estimates.

Fair Value of Interest Rate Swaps and Caps

We account for our derivative instruments and hedging activities in accordance
with Statement of Financial Accounting Standards (SFAS) 149 Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 clarifies and amends SFAS 133, Accounting for Derivative
Financial Instruments and Hedging Activities for implementation issues raised by constituents or includes the conclusions reached by the Financial Accounting Standards Board (FASB) on certain FASB Staff Implementation Issues.

We apply SFAS 157, Fair Value Measurements, which establishes a framework for measuring fair value under U.S. GAAP and
enhances disclosures about fair value measurements. As defined in SFAS 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or
most advantageous market for the asset or liability at the measurement date (exit price). Because our derivatives are not listed on an exchange, these instruments are valued by a third-party pricing agent using an income approach and utilizing
models that use as their primary basis readily observable market parameters. This valuation process considers factors including interest rate yield curves, time value, credit factors and volatility factors. Although we have determined that
the majority of the inputs used to value our derivatives fall within level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize level 3 inputs, such as estimates of current credit spreads
to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, 2009, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions
and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in level 2 of the
fair value hierarchy.

Assets and liabilities measured at fair value on a recurring basis included the following as of June 30, 2009
(in thousands):



|                     |  |                               |   |                                   |   |        |         |  |   |   |  |   |        |  
|-------------------- |  | ----------------------------- | - | --------------------------------- | - | ------ | ------- |  | - | - |  | - | ------ | -
|                     |  | Fair Value Measurements Using |   | Assets (Liabilities)At Fair
Value |  
|                     |  | Level 1                       |   | Level 2                           |   |        | Level 3 | 
|Assets (Liabilities) |  |                               |   |                                   |   |        |         |  |   |  
|Interest Rate Caps   |  | $                             |  |                                   | $ | 943    |         |  | $ |  |  | $ | 943    |  
|Interest Rate Swaps  |  | $                             |  |                                   | $ | (9,174 | )       |  | $ |  |  | $ | (9,174 | )



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##### Table of Contents

Results of Operations

We commenced our operations on September 16, 2008. The following summarizes our result of operations for the three and six months ended June 30, 2009 (dollars in thousands):



|                                                           |  |                                |        |   |                              |   |        |  
|---------------------------------------------------------- |  | ------------------------------ | ------ | - | ---------------------------- | - | ------ | -
|                                                           |  | Three MonthsEnded June 30,2009 |        |   | Six MonthsEnded June 30,2009 |  
|Revenues:                                                  |  |                                |        |   |                              |   |        |  
|Interest on equipment financings                           |  | $                              | 5,063  |   |                              | $ | 6,788  |  
|Rental income                                              |  |                                | 340    |   |                              |   | 510    |  
|Gains on sales of equipment and lease dispositions, net    |  |                                | 21     |   |                              |   | 23     |  
|Other                                                      |  |                                | 149    |   |                              |   | 200    |  
|                                                           |  |                                |        |   |                              |   |        |  
|                                                           |  |                                | 5,573  |   |                              |   | 7,521  |  
|                                                           |  |                                |        |   |                              |   |        |  
|Expenses:                                                  |  |                                |        |   |                              |   |        |  
|Interest expense                                           |  |                                | 3,197  |   |                              |   | 4,260  |  
|Gains on derivative hedging activities                     |  |                                | (1,926 | ) |                              |   | (983   | )
|Depreciation on operating leases                           |  |                                | 293    |   |                              |   | 437    |  
|Provision for credit losses                                |  |                                | 2,089  |   |                              |   | 3,032  |  
|General and administrative expenses                        |  |                                | 330    |   |                              |   | 612    |  
|Administrative expenses reimbursed to affiliate            |  |                                | 660    |   |                              |   | 1,029  |  
|Management fees to affiliate                               |  |                                | 905    |   |                              |   | 1,473  |  
|                                                           |  |                                |        |   |                              |   |        |  
|                                                           |  |                                | 5,548  |   |                              |   | 9,860  |  
|                                                           |  |                                |        |   |                              |   |        |  
|Loss before equity in losses of affiliate                  |  |                                | 25     |   |                              |   | (2,339 | )
|Equity in losses of affiliate                              |  |                                | (1,490 | ) |                              |   | (2,690 | )
|                                                           |  |                                |        |   |                              |   |        |  
|Net loss                                                   |  |                                | (1,465 | ) |                              |   | (5,029 | )
|Less: Net loss attributable to the noncontrolling interest |  |                                | 17     |   |                              |   | 28     |  
|                                                           |  |                                |        |   |                              |   |        |  
|Net loss attributable to LEAF 4                            |  | $                              | (1,448 | ) |                              | $ | (5,001 | )
|                                                           |  |                                |        |   |                              |   |        |  

We expect our revenues to increase as we continue to acquire equipment finance assets from our
General Partner. Our investments in commercial finance assets increased to $372.9 million as of June 30, 2009 compared to $14.9 million as of December 31, 2008, due to the consolidation of LCFFs and RCFs finance assets and
increased purchases of leases and loans from LEAF Financial during the quarter. We expect to acquire additional commercial finance assets as we raise more capital through the sale of partner units and through use of debt facilities. Our General
Partner expects revenue derived from these additional leases and loans to exceed the interest expense incurred by the debt incurred to obtain these financings.

As our portfolio of commercial finance assets increases and because we now consolidate LCFF and RCF, our operating expenses will increase, including:



| |  |  | increased depreciation expense as we continue to purchase operating leases.
| | - |  | ---------------------------------------------------------------------------



| |  |  | increased provision for credit losses as we increase our portfolio.
| | - |  | -------------------------------------------------------------------



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| |  |  | increased interest expense as we entered into a loan and security agreement with Wells Fargo Foothill, LLC in February 2009 and expect to fully utilize the facility
to acquire leases and loans, and we now consolidate the debt facility with Morgan Stanley and HVB as a result of LEAF Funds JV2 acquiring an interest in LCFF and the acquisition of RCF. During the three and six months ended June 30, 2009, our
weighted average interest rate was 5.6% and 5.5%, respectively, on average debt balances of $234.8 million and $216.6 million, respectively.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased management fees to affiliate based on payments of commercial finance assets processed by our General Partner.
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | increased administrative expenses reimbursed to affiliate representing reimbursements made to our General Partner for expenses incurred for managing us.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased general and administrative expenses representing costs we incur to operate on a daily basis.
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | unrealized gains (losses) on derivative hedging activities. The lease assets we originate are almost entirely fixed-rate, while the funds borrowed through our debt
facilities are obtained on a floating-rate basis. Accordingly, we employ a hedging strategy using derivative financial instruments such as interest rate swaps, to fix the rate on our debt and attempt to lock in our interest rate spread between our
interest received on our financings and the interest we pay on our debt. Under U.S. GAAP, we are required to recognize all derivatives on the balance sheet at fair value. We have elected not to apply hedge accounting, and therefore any changes in
the fair value of these derivative instruments is recognized immediately in unrealized gain (loss) on derivatives and hedging activities. These gains will be based on the value of the derivative contracts at the respective balance sheet date
and in a volatile market that is changing daily, may not necessarily reflect the cash amount to be paid at settlement. These gains (losses) will create volatility in our results of operations, as the market value of our derivative financial
instruments changes over time, and this volatility may adversely impact our results of operations and financial condition.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Equity in losses of affiliate was $1.5 and $2.7 million for the three and six months ended June 30, 2009. In November 2008, we entered into a joint venture agreement with LEAF III, a fund sponsored by our General Partner, whereby we
acquired a 49% interest in a pool of leases held by LEAF Funding, LLC, a subsidiary of LEAF III (LEAF Funds JV1). As of and for the three and six months ended June 30, 2009, we accounted for LEAF Funds JV1 under the equity method of
accounting since we had the ability to exercise significant influence over operational and financial decisions of the entity.

The net loss
per limited partner unit, after the net loss allocated to our General Partner, for the three and six months ended June 30, 2009 was $(2.20) and $(8.83), respectively, based on a weighted average number of limited partner units outstanding of
651,245 and 560,482 respectively during each period.

Liquidity and Capital Resources

Our major sources of liquidity have been obtained by the sale of partnership units and bank debt. Our primary cash requirements, in addition to normal
operating expenses, are for debt service, investment in leases and loans and distributions to partners. In addition to cash generated from operations, we plan to meet our cash requirements through use of debt facilities and excess cash derived from
the collection of lease payments after payments of debt principal and interest on debt.

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



|                                          |  |                               |         |  
|----------------------------------------- |  | ----------------------------- | ------- | -
|                                          |  | Six Months EndedJune 30, 2009 |        
|Net cash provided by operating activities |  | $                             | 358     |  
|Net cash used in investing activities     |  |                               | (91,704 | )
|Net cash provided by financing activities |  |                               | 86,118  |  
|                                          |  |                               |         |  
|Decrease in cash                          |  | $                             | (5,228  | )
|                                          |  |                               |         |  



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Partners distributions paid for the six months ended June 30, 2009 were $2.1 million.
Distributions to limited partners were 8.5% of invested capital. However, there can be no assurance we will continue to make distributions at this rate.

Cash decreased by $5.2 million primarily due to net acquisitions of leases and loans of $92.1 million, distributions to partners of $2.1 million and increased restricted cash of $3.4 million, which were partially
offset by net borrowings of $60.3 million, and capital raised of $33.0 million (net of offering costs of $4.5 million).

Through
June 30, 2009, we sold 767,345 units for $76.6 million (before offering costs).

Our borrowing relationships each require the pledging
of eligible leases and loans to secure amounts advanced. Borrowings outstanding under our debt facilities were as follows as of June 30, 2009 (in thousands):



|               |  |           |  |          |  |                        |         |                   |   |                    |  |                        |        |  |   |        
|-------------- |  | --------- |  | -------- |  | ---------------------- | ------- | ----------------- | - | ------------------ |  | ---------------------- | ------ |  | - | -------
|               |  | Type      |  | Maturity |  | MaximumFacility Amount |         | AmountOutstanding |   | AmountAvailable(1) |  | Amount ofCollateral(2)
|Wells Fargo    |  | Revolving |  | Feb 2012 |  | $                      | 75,000  |                   | $ | 60,000             |  | $                      | 15,000 |  | $ | 72,367 
|Morgan Stanley |  | Term      |  | (3)      |  |                        | 178,528 |                   |   | 178,528            |  |                        |       |  |   | 187,601
|HVB            |  | Revolving |  | (3)      |  |                        | 100,000 |                   |   | 82,319             |  |                        | 17,681 |  |   | 90,162 
|               |  |           |  |          |  |                        |         |                   |   |                    |  |                        |        |  |   |        
|               |  |           |  |          |  | $                      | 353,528 |                   | $ | 320,847            |  | $                      | 32,681 |  | $ | 350,130
|               |  |           |  |          |  |                        |         |                   |   |                    |  |                        |        |  |   |        



|(1) | Availability under these debt facilities is subject to having sufficient eligible leases or loans (as defined in the respective agreements) to pledge as collateral and compliance
with the borrowing base formula.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Recourse under these facilities is limited to the amount of collateral pledged.
|--- | -------------------------------------------------------------------------------



|(3) | The Morgan Stanley facility matures in November 2009 and the HVB facility matures in March 2010. If these facilities are not extended at the time of maturity, we would not be
required to make full repayment at that time. Rather, we would repay the outstanding debt as payments are received on the underlying leases and loans pledged as collateral.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In February 2009, we entered into a $75 million revolving line of credit with Wells Fargo Foothill, LLC. Interest on this facility is calculated at LIBOR
plus a variable margin (4.1% at June 30, 2009). Interest and principal are due monthly as payments are received on the leases and loans collateralizing the borrowings. We are subject to financial covenants under this facility including minimum
tangible net worth, maximum leverage ratios and portfolio delinquency that are intended to measure the our financial viability, limit the amount we can borrow based on measuring our debt to net worth and measure performance of our portfolio. In
addition, our debt facilities include financial covenants covering LEAF Financial, an affiliate of our General Partner and the servicer of our portfolio. These covenants exist to provide the lender with information about the financial viability of
the entity that services our portfolio. These covenants are similar in nature to the covenants discussed above that are applicable to us, and are related to such things as our servicers minimum tangible net worth, maximum leverage ratios,
managed portfolio delinquency and compliance of the debt terms of all of LEAF Financials managed entities. As of June 30, 2009, we are in compliance with the covenants under this facility.

In March 2009, we acquired an ownership interest in LCFF, who has a credit facility with Morgan Stanley Bank. Interest and principal payments are due
monthly. LCFF is subject to financial covenants under this facility that are similar to those discussed above with respect to our Wells Fargo Foothill facility. In addition, this facility includes a covenant related to the tangible net worth of RAI,
the parent company of our General Partner, which required RAI to maintain a tangible net worth of $125 million. As of March 31, 2009, RAIs tangible net worth was $118 million. We entered into an amendment and waiver agreement with Morgan
Stanley dated July 14, 2009. This agreement lowered RAIs minimum tangible net worth threshold and irrevocably waives any covenant failures that would have resulted from RAIs tangible net worth being below the previous threshold. In
exchange, we have agreed not to make any additional borrowings under this agreement and the existing amounts outstanding shall be due monthly as payments are received on the lease and loan receivables collateralizing the borrowings. In
addition, excess cash received from the payment of leases and loans by obligors shall be used to repay the principal amount owing under this line of credit. In consideration for these modifications, certain covenants were modified or
eliminated, including the elimination of all overconcentration limits and borrowing base events of default, we do not owe any additional unused fees, and all breakage fees and prepayment premiums have been removed from the agreement. In
addition, the interest rate for the remaining balance will be calculated at LIBOR plus 3.00%.



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##### Table of Contents

We acquired RCF in June 2009. RCF has a $100 million revolving credit facility with Bayerische Hypo-Und
Vereinsbank AG (HVB) to finance the purchase of equipment leases and loans. Borrowings under this facility bear interest at one of the two rates determined by asset class: Pool A- one month LIBOR plus 1.10 % or Pool B- one month
LIBOR plus 0.80%. We utilize interest rate swaps on this facility to mitigate fluctuations in interest rates. RCF is subject to financial covenants under this facility that are similar to those discussed above with respect to our Wells Fargo
Foothill facility. RCF is in compliance with the covenants under this facility.

Our liquidity is affected by our ability to leverage our
portfolio through use of debt facilities. Our ability to obtain debt financing needed to execute our investment strategies has been impacted by the continued tightening of the credit markets. Specifically, we rely on both revolving and term debt
facilities to fund our acquisitions of equipment financings. If we are unable to obtain debt that will allow us to invest the repayments of existing leases and loans into new investments, the volume of our leases and loans will be reduced.

We continue to seek sources of financing, including expanded bank financing and use of joint venture strategies, that will enable us to
originate investments and generate income while preserving capital. We are in discussion with several sources of debt financing to support the growth in our lease and loan portfolio. To the extent the credit markets available to us are or become
adversely affected by the current weaknesses in the national economy, our ability to obtain debt to help build our portfolio on terms we deem acceptable may be reduced or delayed and our costs of borrowings may increase. We anticipate that the lease
and loan rates we charge to our customers will also increase to compensate for our increase in borrowing costs. However, our profitability may be negatively impacted if we are unable to increase our lease and loan rates and our borrowing costs
increase.

Changes in interest rates will affect the market value of our portfolio and our ability to obtain financing. In general, the
market value of an equipment lease will change in inverse relation to an interest rate change where the lease has a fixed rate of return. Accordingly, in a period of rising interest rates, the market value of our equipment leases will decrease. A
decrease in the market value of our portfolio will adversely affect our ability to obtain financing against our portfolio or to liquidate it. The terms of our future debt facilities are expected to include financial covenants. If we do not meet the
requirements of the covenants in the future, a default could occur that would have an adverse effect on our operations and could force us to liquidate our portfolio.

Our liquidity could also be affected by higher than expected defaults on our commercial finance assets, which would result in a loss of anticipated revenues. These losses may adversely affect our ability to make
distributions to partners and, if the level of defaults is sufficiently large, may result in our inability to fully recover our investment in the underlying equipment. In evaluating our allowance for losses on uncollectible leases, we consider our
contractual delinquencies, economic conditions and trends, lease portfolio characteristics and our General Partners managements prior experience with similar lease assets. At June 30, 2009, our credit evaluation indicated a need for
an allowance for credit losses of $3.2 million. As our lease portfolio grows and ages, and if the economy in the United States deteriorates even further or the recession continues for a substantial period of time, we anticipate the need to increase
our allowance for credit losses.

Contractual Obligations and Commercial Commitments

The following table sets forth our obligations and commitments as of June 30, 2009 (in thousands):



|                      |  |       |                 |                        |            |         |            |   |              |  |   |        |  |   |       
|--------------------- |  | ----- | --------------- | ---------------------- | ---------- | ------- | ---------- | - | ------------ |  | - | ------ |  | - | ------
|                      |  | Total |                 | Payments Due by Period
|                      |  |       | Less than1 Year |                        | 1  3Years |         | 4  5Years |   | After 5Years
|Bank debt(1)          |  | $     | 320,847         |                        | $          | 132,801 |            | $ | 124,868      |  | $ | 42,589 |  | $ | 20,589
|Subordinated notes(2) |  |       | 9,355           |                        |            |        |            |   |             |  |   |       |  |   | 9,355 



|1) | To mitigate interest rate risk on the variable rate debt, we employ a hedging strategy using derivative financial instruments such as interest rate swaps and caps
which fix the weighted average interest rates. Not included in the table above are estimated interest payments calculated at rates in effect at June 30, 2009: Less than 1 year: $12.7 million; 1-3 years: $12.2 million; 4-5 years: $3.8 million;
and after 5 years: $511,000.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2) | Not included in the table above are estimated interest payments on the subordinated notes at June 30, 2009; Less than 1 year: $772,000; 1-3
years: $1.5 million; 4-5 years: $1.5 million; and after 5 years: $515,000.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Legal Proceedings

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

ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

Market risk is the risk of losses arising from changes in values of financial instruments. We are exposed to market risks
associated with changes in interest rates and our earnings may fluctuate with changes in interest rates. The lease assets we purchase are almost entirely fixed-rate. Accordingly, we seek to finance these assets with fixed interest rate debt. At
June 30, 2009, our outstanding bank debt totaled $320.8 million which consists of variable rate debt. To mitigate interest rate risk on the variable rate bank debt, we employ a hedging strategy using derivative financial instruments such as
interest rate swaps and caps, which fixes the weighted average interest rates at 4.4%, 4.7%, 6.4%, 5.9%, and 6.2% for the Wells Fargo Foothill LLC., Morgan Stanley  Pool A, Morgan Stanley  Pool B, and HVB debt facilities  Pool A
and Pool B, respectively. At June 30, 2009, the notional amounts of the 45 interest rate swaps were $285.5 million. The interest rate swap agreements terminate on various dates ranging from November 2009 to November 2017.

The following sensitivity analysis table shows, at June 30, 2009, the estimated impact on the fair value of our interest rate-sensitive investments
and liabilities of changes in interest rates, assuming rates instantaneously fall 100 basis points and rise 100 basis points (dollars in thousands):



|                                  |  |                                    |         |    |           |   |        |                                    |  |   |        |  
|--------------------------------- |  | ---------------------------------- | ------- | -- | --------- | - | ------ | ---------------------------------- |  | - | ------ | -
|                                  |  | Interest ratesfall 100 basispoints |         |    | Unchanged |   |        | Interest ratesrise 100 basispoints | 
|Hedging instruments               |  |                                    |         |    |           |   |        |                                    |  |   |        |  
|Fair value                        |  | $                                  | (13,198 | )  |           | $ | (8,231 | )                                  |  | $ | (3,868 | )
|Change in fair value              |  | $                                  | (4,967  | )  |           |   |        |                                    |  | $ | 4,363  |  
|Change as a percent of fair value |  |                                    | (60     | )% |           |   |        |                                    |  |   | 53     | %

It is important to note that the impact of changing interest rates on fair value can change significantly when
interest rates change beyond 100 basis points from current levels. Therefore, the volatility in the fair value of our assets could increase significantly when interest rates change beyond 100 basis points from current levels. In addition, other
factors impact the fair value of our interest rate-sensitive investments and hedging instruments, such as the shape of the yield curve, market expectations as to future interest rate changes and other market conditions. Accordingly, in the event of
changes in actual interest rates, the change in the fair value of our assets would likely differ from that shown above and such difference might be material and adverse to our partners.



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##### Table of Contents

ITEM 4  CONTROLS AND PROCEDURES

Disclosure Controls

We maintain disclosure controls
and procedures that are designed to ensure that information required to be disclosed in our periodic reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate, to allow timely decisions
regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our General Partners chief executive officer and chief financial officer, we have carried out an evaluation of the
effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our General Partners chief executive officer and chief financial officer concluded that our disclosure
controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the three months ended June 30, 2009 that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART II  OTHER INFORMATION



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

Our limited partnership interests are not publicly traded. As of June 30, 2009, we had 1,667 limited partners.

We are
currently offering units of our limited partnership interests pursuant to a registration statement (File No. 333-149881) that was made effective by the Securities and Exchange Commission on August 12, 2008 when the offering commenced. The
dealer manager for the offering is Chadwick Securities, Inc. We registered the sale of 2 million units of limited partnership interests at an aggregate offering price of $200 million.

The following table shows the use of proceeds from the offering since the effective date of the registration statement through June 30, 2009:



|                                                                                   |  |                    |           
|---------------------------------------------------------------------------------- |  | ------------------ | ----------
|                                                                                   |  | As of June 30,2009
|Offering proceeds                                                                  |  | $                  | 76,614,741
|Offering expenses based on the amount of the offering proceeds shown in the table: |  |                    |           
|Sales commissions and related fees (1)                                             |  |                    | 5,277,223 
|Dealer-Manager fees (1)                                                            |  |                    | 2,271,713 
|Reimbursement for accountable due diligence expenses (3)                           |  |                    | 84,465    
|Organization expenses (2)                                                          |  |                    | 2,303,343 
|                                                                                   |  |                    |           
|Total public offering and organization expenses                                    |  |                    | 9,936,744 
|Acquisition fees (3)                                                               |  |                    | 1,637,684 
|Reserves                                                                           |  |                    | 766,147   
|Total proceeds available for investment                                            |  | $                  | 64,274,166



|(1) | Paid to an affiliate of our General Partner which is then remitted to third parties.
|--- | ------------------------------------------------------------------------------------



|(2) | Paid to our General Partner.
|--- | ----------------------------



|(3) | Paid to an affiliate of our General Partner.
|--- | --------------------------------------------



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ITEM 6  EXHIBITS



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|3.1         |  | Certificate of Limited Partnership (1)                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|3.2         |  | Amended and Restated Agreement of Limited Partnership (2)                                                                                                                                                                                                                                                                                                                                                                                                      
|            | 
|4.1         |  | Forms of letters sent to limited partners confirming their investment (1)                                                                                                                                                                                                                                                                                                                                                                                      
|            | 
|10.1        |  | Form of Origination and Servicing Agreement Among LEAF Financial Corporation, LEAF Equipment Finance Fund 4, LP and LEAF Funding, Inc. (1)                                                                                                                                                                                                                                                                                                                     
|            | 
|10.2        |  | Receivables Loan and Security Agreement, dated as of October 31, 2006, among Resource Capital Funding II, LLC, as the Borrower, and LEAF Financial Corporation, as the Servicer, and Morgan
Stanley Bank, as a Lender and Collateral Agent, and U.S. Bank National Association, as the Custodian and the Lenders Bank and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), as the Backup Servicer, as amended through
November 13, 2008 (3)
|            | 
|10.3        |  | Forbearance and Reservation of Rights, dated as of May 14, 2009, by and among Resource Capital Funding II, LLC, LEAF Financial Corporation, Morgan Stanley Bank, NA, and Morgan Stanley Capital
Services Inc. (4)                                                                                                                                                                                                                                              
|            | 
|10.4        |  | Indenture by and between LEAF Commercial Finance Fund, LLC and U.S. Bank National Association (3)                                                                                                                                                                                                                                                                                                                                                              
|            | 
|10.5        |  | Amended and Restated Limited Liability Company Agreement of LEAF Commercial Finance Fund, LLC (3)                                                                                                                                                                                                                                                                                                                                                              
|            | 
|10.6        |  | Limited Liability Company Agreement of LEAF Funds Joint Venture 2, LLC (3)                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|10.7        |  | Membership Interest Purchase Agreement by and between LEAF Financial Corporation and LEAF Funds Joint Venture 2, LLC (3)                                                                                                                                                                                                                                                                                                                                       
|            | 
|10.8        |  | Seventh Amendment to the Receivables Loan and Security Agreement and Waiver, dated as of July 14, 2009, with Morgan Stanley Bank, N.A., as lender and as collateral agent                                                                                                                                                                                                                                                                                      
|            | 
|10.9        |  | Sale and Assignment Agreement between LEAF Asset Management, LLC and LEAF Equipment Finance Fund 4, LP dated June 30, 2009                                                                                                                                                                                                                                                                                                                                     
|            | 
|10.10       |  | Receivables Loan and Security Agreement, dated as of March 31, 2006, among Resource Capital Funding, LLC, LEAF Financial Corporation, Black Forest Funding Corporation, Bayerische Hypo- Und
Vereinsbank AG, U.S. Bank National Association, and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), as amended through the Seventh Amendment (the HVB Agreement)                                                                            
|            | 
|10.11       |  | Eight Amendment Agreement to the HVB Agreement                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.12       |  | Ninth Amendment Agreement to the HVB Agreement                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                             
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                             
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                              
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                              



|(1) | Filed previously as an exhibit to our Registration Statement on Form S-1 filed on March 24, 2008 and by this reference incorporated herein.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Filed previously as an exhibit to Form 8-A on May 8, 2009 and by this reference incorporated herein.
|--- | ----------------------------------------------------------------------------------------------------



|(3) | Filed previously on May 12, 2009 in Post-Effective Amendment No. 1 as an exhibit to our Registration Statement and by this reference incorporated herein.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Filed previously as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and by this reference incorporated herein.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                |  |  |  |                                      |  |                                                
|--------------- |  |  |  | ------------------------------------ |  | -----------------------------------------------
|                |  |  |  | LEAF EQUIPMENT FINANCE FUND 4, L.P. 
|                |  |  | 
|                |  |  |  | By:                                  |  | LEAF Asset Management, LLC, its General Partner
|                |  | 
|August 14, 2009 |  |  |  | /s/ Crit DeMent                     
|                |  |  |  | CRIT DEMENT                         
|                |  |  |  | Chairman and Chief Executive Officer
|                |  | 
|August 14, 2009 |  |  |  | /s/ Robert K. Moskovitz             
|                |  |  |  | ROBERT K. MOSKOVITZ                 
|                |  |  |  | Chief Financial Officer             
|                |  | 
|August 14, 2009 |  |  |  | /s/ Tonya L. Zweier                 
|                |  |  |  | TONYA L. ZWEIER                     
|                |  |  |  | Chief Accounting Officer            



34