Draft of December 30, 1996









               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.








                                 NOTE AGREEMENT


                          Dated as of December 15, 1996










                       Re: $25,000,000 7.33% Senior Notes
                              Due December 31, 2006








<PAGE>


                                TABLE OF CONTENTS

                          (Not a Part of the Agreement)

SECTION                                   HEADING                         PAGE

SECTION 1.                 DESCRIPTION OF NOTES AND COMMITMENT..............1

       Section 1.1.            Description of Notes.........................1
       Section 1.2.            Commitment, Execution Date, Closing Dates....1
       Section 1.3.            Commitment Fee...............................2

SECTION 2.                 PREPAYMENT OF NOTES..............................3

       Section 2.1.            Required Prepayments.........................3
       Section 2.2.            Optional Prepayments.........................3
       Section 2.3.            Prepayment in Certain Extraordinary Events...5
       Section 2.5.            Notice of Prepayments........................7
       Section 2.6.            Allocation of Prepayments....................7
       Section 2.7.            Direct Payment...............................7

SECTION 3.                 REPRESENTATIONS..................................8

       Section 3.1.            Representations of the Company...............8
       Section 3.2.            Representations of the Purchaser.............8

SECTION 4.                 CLOSING CONDITIONS...............................10

       Section 4.1.            Closing Certificate..........................10
       Section 4.2.            Legal Opinions...............................10
       Section 4.3.            Existence and Authority......................10
       Section 4.4.            Private Placement Number.....................10
       Section 4.5.            Insurance Certificate........................10
       Section 4.6.            Payment of Commitment Fee....................10
       Section 4.7.            Funding Instructions.........................11
       Section 4.8.            Satisfactory Proceedings.....................11
       Section 4.9.            Waiver of Conditions.........................11

SECTION 5.                 COMPANY COVENANTS................................11

       Section 5.1.            Existence, Etc...............................11
       Section 5.2.            Insurance....................................11
       Section 5.3.            Taxes, Claims for Labor and Materials, 
                               Compliance with Laws.........................12
       Section 5.4.            Maintenance, Etc.............................12
       Section 5.5.            Nature of Business...........................12
       Section 5.6.            Special Provisions for Marine Vessels and 
                               Aircraft.....................................13
       Section 5.7.            Fixed Charge Coverage........................14
       Section 5.8.            Sale and Leaseback...........................14
       Section 5.9.            Limitations on Indebtedness..................14
       Section 5.10.           Limitation on Liens..........................15
       Section 5.11.           Distributions, Certain Payments..............17
       Section 5.12.           Limitation on Long-Term Leases and Joint 
                               Ownership of Equipment.......................17
       Section 5.13.           Mergers, Consolidations and Sales of Assets..17
       Section 5.14.           Guaranties...................................18
       Section 5.15.           Repurchase of Notes..........................19
       Section 5.16.           Transactions with Affiliates and 
                               Affiliated Entities..........................19
       Section 5.17.           Investments..................................19
       Section 5.18.           Termination of Pension Plans.................20
       Section 5.19.           Reports and Rights of Inspection.............20
       Section 5.20.           Certain Appraisals...........................24

SECTION 6.                 EVENTS OF DEFAULT AND REMEDIES THEREFOR..........25

       Section 6.1.            Events of Default............................25
       Section 6.2.            Notice to Holders............................27
       Section 6.3.            Acceleration of Maturities...................27
       Section 6.4.            Rescission of Acceleration...................27

SECTION 7.                 AMENDMENTS, WAIVERS AND CONSENTS.................28

       Section 7.1.            Consent Required.............................28
       Section 7.2.            Solicitation of Holders......................28
       Section 7.3.            Effect of Amendment or Waiver................29

SECTION 8.                 INTERPRETATION OF AGREEMENT......................29

       Section 8.1.            Definitions..................................29
       Section 8.2.            Accounting Principles........................39
       Section 8.3.            Directly or Indirectly.......................40

SECTION 9.                 MISCELLANEOUS....................................40

       Section 9.1.            Registered Notes.............................40
       Section 9.2.            Exchange of Notes............................40
       Section 9.3.            Loss, Theft, Etc. of Notes...................40
       Section 9.4.            Expenses, Stamp Tax Indemnity................41
       Section 9.5.            Powers and Rights Not Waived.................41
       Section 9.6.            Notices......................................42
       Section 9.7.            Successors and Assigns.......................42
       Section 9.8.            Survival of Covenants and Representations....42
       Section 9.9.            Severability.................................42
       Section 9.10.           Governing Law................................42
       Section 9.11.           Submission to Jurisdiction...................42
       Section 9.12.           Captions.....................................42
       Section 9.13.           Limitation of Liability......................43

Signature...................................................................44


ATTACHMENTS TO NOTE AGREEMENT:

Schedule I --  Name and Address of Purchaser
Schedule II --  Existing Liens
Schedule III -- Names of Appraisers

Exhibit  A -- Form of 7.33%  Senior  Note due  December  31,  2006  Exhibit B --
Closing Certificate of the Company Exhibit C -- Description of Special Counsel's
Closing  Opinion  Exhibit D -- Description of Closing  Opinion of Counsel to the
Company





<PAGE>



               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
                                   One Market
                              Steuart Street Tower
                                    Suite 900
                          San Francisco, CA 94105-1301


                                 NOTE AGREEMENT


         Re:       $25,000,000 7.33% Senior Notes
                   Due December 31, 2006

                                      Dated as of
                                      December 15, 1996
Keyport Life Insurance Company
c/o Stein Roe & Farnham Incorporated
1 South Wacker Drive
Chicago, Illinois  60606

Ladies and Gentlemen:

         The undersigned, PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C., a
Delaware limited liability company (the "Company"), agrees with you as follows:


SECTION 1.               DESCRIPTION OF NOTES AND COMMITMENT.

             Section 1.1.  Description of Notes.  The Company will authorize the
issue and sale of  $25,000,000  aggregate  principal  amount of its 7.33% Senior
Notes (the  "Notes") to be dated the date of issue,  to bear  interest from such
date at the rate of 7.33% per annum, payable semiannually in arrears on the last
day of each June and  December in each year  (commencing  June 30,  1997) and at
maturity  and to bear  interest  on overdue  principal  (including  any  overdue
required or optional  prepayment of principal) and premium,  if any, and (to the
extent legally  enforceable) on any overdue  installment of interest at the rate
of 9.33%  per annum  after  maturity  or the due date  thereof,  as  applicable,
whether by acceleration  or otherwise,  until paid, to be expressed to mature on
December  31,  2006,  and to be  substantially  in the form  attached  hereto as
Exhibit A.  Interest  on the Notes  shall be  computed on the basis of a 360-day
year of twelve  30-day  months.  The  Notes are not  subject  to  prepayment  or
redemption at the option of the Company prior to their expressed  maturity dates
except on the terms and conditions  and in the amounts and with the premium,  if
any, set forth in Section 2 of this  Agreement.  The term "Notes" as used herein
shall  include  each  Note  delivered  pursuant  to  this  Agreement.   You  are
hereinafter sometimes referred to as the "Purchaser".

             Section 1.2. Commitment,  Execution Date, Closing Dates. Subject to
the terms and  conditions  hereof  and on the basis of the  representations  and
warranties  hereinafter  set forth,  the  Company  and you agree to execute  and
deliver this Agreement on the Execution Date  hereafter  mentioned.  The Company
further  agrees to issue and sell to you, and you further agree to purchase from
the Company,  Notes of the Company in the aggregate  principal  amount set forth
opposite  your name in  Schedule I, at a price of 100% of the  principal  amount
thereof  allocated as requested by the Company to the Closing Dates  hereinafter
mentioned.

         Execution and delivery of the Agreement  will be made at the offices of
Chapman and Cutler, 111 West Monroe Street, Chicago,  Illinois 60603 on December
30, 1996, or such later date as shall be mutually agreed upon by the Company and
the Purchaser (the "Execution Date").

         Delivery  of the  Notes  will be made at the  offices  of  Chapman  and
Cutler,  111 West  Monroe  Street,  Chicago,  Illinois  60603,  against  payment
therefor in Federal or other  funds  current and  immediately  available  at the
principal office of First Union National Bank,  Charlotte,  North Carolina,  ABA
Routing No.  053000219,  in the amount of the  purchase  price for credit to the
Company's  account  identified  by  the  Company  in  the  funding  instructions
delivered  pursuant to ss.4.7 at 10:00 A.M., Chicago time, on up to two separate
dates (not later than March 31,  1997) as shall be  mutually  agreed upon by the
Company and the  Purchaser;  provided,  that the Company  shall provide you with
written notice in the manner provided in ss.9.6 of its desire to consummate each
such closing and the  principal  amount of Notes it desires to sell at each such
Closing (in the aggregate,  equaling  $25,000,000)  not less than three Business
Days  prior  to  the  date  of  each  closing   (each,  a  "Closing  Date"  and,
collectively,  the "Closing Dates").  The Notes delivered to you on each Closing
Date will be  delivered to you in the form of a single  registered  Note for the
full amount of your purchase (unless  different  denominations  are specified by
you),  registered in your name or in the name of such nominee as you may specify
and in  substantially  the form  attached  hereto as  Exhibit  A, all as you may
specify at any time prior to the date fixed for delivery.

             Section 1.3.  Commitment Fee. In consideration of your agreement to
enter  into  this  Agreement  on the  Execution  Date and to delay  your  actual
purchase of the Notes until the respective  Closing Dates as set forth in ss.1.2
hereof,  the Company  agrees to pay to you on each Closing Date a commitment fee
(the  "Commitment  Fee") in an amount equal to 0.125% per month of the aggregate
principal amount of the Notes to be purchased by you,  computed monthly based on
actual days elapsed, and payable for each month or portion thereof elapsing from
and after the  Execution  Date to and  including  the final Closing Date. On the
first  Closing  Date,  the  Commitment  Fee shall be payable with respect to the
aggregate  principal  amount of the Notes to be purchased by you on both Closing
Dates, accruing from the Execution Date to and including the first Closing Date.
On the second  Closing Date, the Commitment Fee shall be payable with respect to
the remaining  aggregate principal amount of the Notes to be purchased by you on
the second  Closing Date,  accruing from the first Closing Date to and including
the second  Closing  Date.  Two Business  Days prior to each Closing  Date,  the
Company  shall  telecopy to the  Purchaser at the  telecopy  number set forth in
Schedule I the computation of the Commitment Fee to be paid on such Closing Date
in reasonable detail for approval by the Purchaser.


SECTION 2.               PREPAYMENT OF NOTES.

             Section 2.1. Required Prepayments.  The Company agrees that on each
of the dates set forth in the table  below,  it will  prepay and apply and there
shall  become due and payable on the  principal  indebtedness  evidenced  by the
Notes the lesser of (a) the amount set opposite such date in the table below and
(b) the then outstanding aggregate principal amount of the Notes:

         REQUIRED PREPAYMENT DATES                   PRINCIPAL PREPAYMENT

         December 31, 2000                                 $3,000,000
         December 31, 2001                                 $3,000,000
         December 31, 2002                                 $3,000,000
         December 31, 2003                                 $3,000,000
         December 31, 2004                                 $3,000,000
         December 31, 2005                                 $5,000,000

         The entire  unpaid  principal  amount of the Notes shall become due and
payable on December 31, 2006. No premium shall be payable in connection with any
required  prepayment  made  pursuant to this  ss.2.1.  For the  purposes of this
ss.2.1,  any  prepayment  of less  than  all of the  outstanding  Notes  if made
pursuant to ss.2.2 or ss.2.3 or otherwise shall be deemed to be applied pro rata
to the payment of all remaining  principal  payments required by this ss.2.1, so
that each such remaining  payment of principal shall thereupon be reduced in the
same  proportion  that the  principal  amount of Notes  outstanding  immediately
preceding the payment pursuant to ss.2.3 was reduced by such prepayment.

             Section 2.2. Optional Prepayments.  (a) In addition to the payments
required by ss.2.1,  upon  compliance  with ss.2.4,  the Company  shall have the
privilege at any time and from time to time, of prepaying the outstanding Notes,
either in whole or in part (but if in part, then in units in excess of $100,000)
by  payment of the  principal  amount of the  Notes,  or  portion  thereof to be
prepaid,  and accrued interest thereon to the date of such prepayment,  together
with a premium  equal to the  Make-Whole  Amount,  determined  two Business Days
prior to the date of such prepayment.

                  "Make-Whole   Amount"  shall  mean,  in  connection  with  any
         prepayment,  the excess,  if any, of (a) the aggregate present value as
         of the  date of such  prepayment  of each  dollar  of  principal  being
         prepaid  (taking  into  account  the  application  of  such  prepayment
         required by ss.2.1) and the amount of interest  (exclusive  of interest
         accrued to the date of  prepayment)  that  would  have been  payable in
         respect of such dollar if such prepayment had not been made, determined
         by  discounting  such  amounts  at  the  Reinvestment   Rate  from  the
         respective  dates on which they would have been payable,  over (b) 100%
         of the principal amount of the outstanding Notes being prepaid.  If the
         Reinvestment  Rate is equal to or higher  than  7.33%,  the  Make-Whole
         Amount shall be zero.

                  "Reinvestment  Rate" shall mean the sum of (a) the  Applicable
         Spread plus the yield reported on page "USD" of the Bloomberg Financial
         Markets  Services  Screen (or, if not available,  any other  nationally
         recognized   trading  screen  reporting  on-line  intraday  trading  in
         actively traded  marketable  United States Treasury fixed interest rate
         Securities  selected  by the  Company and  acceptable  to the  Majority
         Holders) at 9:00 a.m.  (Chicago,  Illinois  time) for  actively  traded
         marketable United States Treasury fixed interest rate Securities having
         a  maturity  (rounded  to  the  nearest  month)  corresponding  to  the
         remaining  Weighted  Average  Life to Maturity of the  principal of the
         Notes  being  prepaid  or  paid,  or (b)  in the  event  that  no  such
         nationally recognized trading screen reporting on-line intraday trading
         in United States  Treasury fixed interest rate Securities is available,
         Reinvestment  Rate shall mean the Applicable Spread plus the arithmetic
         mean of the yields for the two columns  under the heading "Week Ending"
         published  in the  Statistical  Release  under  the  caption  "Treasury
         Constant  Maturities"  for the maturity  (rounded to the nearest month)
         corresponding  to  such  Weighted  Average  Life  to  Maturity  of  the
         principal  of the Notes then  being  prepaid  or paid.  If no  maturity
         exactly  corresponds to such Weighted Average Life to Maturity,  yields
         for the two published  maturities  most closely  corresponding  to such
         Weighted  Average  Life to Maturity of the  principal of the Notes then
         being prepaid or paid shall be calculated  pursuant to the  immediately
         preceding  sentence  and the  Reinvestment  Rate for the Notes shall be
         interpolated or extrapolated from such yields on a straight-line basis,
         rounding in each of such relevant periods to the nearest month. For the
         purposes of calculating the Reinvestment  Rate of the Notes pursuant to
         clause (b) above, the most recent  Statistical  Release published prior
         to the date of determination of the Make-Whole Amount shall be used.

                  "Applicable  Spread"  shall  mean (a) 1.00% in the case of any
         computation  of the Make-Whole  Amount for purposes of ss.2.4,  and (b)
         0.50% in the case of any other computation of the Make-Whole Amount for
         purposes of this Agreement.

                  "Statistical  Release"  shall  mean  the  then  most  recently
         published  statistical release designated  "H.15(519)" or any successor
         publication which is published weekly by the Federal Reserve System and
         which establishes yields on actively traded U.S. Government  Securities
         adjusted to constant  maturities or, if such statistical release is not
         published at the time of any determination  hereunder,  then such other
         reasonably  comparable  index which shall be designated by the Majority
         Holders.

                  "Weighted Average Life to Maturity" of the principal amount of
         the Notes  being  prepaid  or paid  shall  mean,  as of the time of any
         determination  thereof,  the number of years  obtained by dividing  the
         then Remaining  Dollar-Years of such principal by the aggregate  amount
         of such principal.  The term "Remaining Dollar-Years" of such principal
         shall mean the amount  obtained by (a) multiplying (x) the remainder of
         (i)  the  amount  of  principal  that  would  have  become  due on each
         scheduled payment date if such prepayment or payment had not been made,
         less (ii) the amount of principal on the Notes  scheduled to become due
         on such date after giving effect to such  prepayment or payment and the
         application thereof in accordance with the provisions of ss.2.1, by (y)
         the number of years  (calculated to the nearest  one-twelfth of a year)
         which will elapse between the date of determination  and such scheduled
         payment date, and (b) totaling the products obtained in (a).

           (b) In addition to the privilege of optionally prepaying the Notes as
set forth in ss.2.2(a),  upon compliance with ss.2.5, the Company shall have the
privilege  at any time and from time to time on or after  January  1,  2005,  of
prepaying  the  outstanding  Notes,  either in whole or in part (but if in part,
then in units in excess of $100,000) by payment of the  principal  amount of the
Notes, or portion  thereof to be prepaid,  and accrued  interest  thereon to the
date of such  prepayment,  but  without  premium;  provided  that such  optional
prepayment is made solely from the proceeds of the sale or other  disposition by
the Company or a Restricted  Subsidiary  of all or any portion of the  Equipment
(other than the Encumbered  Equipment) and not from the refinancing or refunding
of Debt of the Company or a Restricted  Subsidiary  or with funds from any other
source.

             Section 2.3. Prepayment in Certain Extraordinary Events. (a) In the
event that (i) any Material  Agreement  shall be canceled or terminated  for any
reason whatsoever or shall be modified or amended in a manner materially adverse
to the rights of the Company thereunder,  (ii) the Company shall be dissolved or
its existence otherwise  terminated,  or (iii) Class A Members holding more than
50% of the Class A Units in the Company shall vote to dissolve the Company (each
herein a "Change  Event") and the Company has  knowledge of a Change Event or an
impending  Change Event,  the Company will give written  notice (herein called a
"Change Notice") of such fact to all holders of the Notes then outstanding. Such
Change Notice shall be delivered at least 60 days and no more than 90 days prior
to the  occurrence of such Change Event;  provided,  however that if the Company
shall  not then  have  knowledge  of such  fact,  such  Change  Notice  shall be
delivered  within two  Business  Days after  receipt  of such  knowledge  by the
Company.  In addition to notifying the holders of the Notes of a Change Event or
a proposed  Change Event,  the Change Notice shall state that the  occurrence of
such Change  Event  entitles  said  holders to declare the Notes held by them to
become due and  payable  pursuant to this  ss.2.3(a)  and the date by which said
holders must respond to such Change  Notice  pursuant to clause (ii) of the next
succeeding  paragraph if they desire to waive such right.  The Company shall not
be required to prepay any Notes pursuant to this ss.2.3(a) unless and until such
Change Event shall be consummated.

         Upon the  receipt  of such  Change  Notice  or, if no Change  Notice is
given, upon the occurrence of a Change Event, any holder of Notes shall have the
privilege,  upon written notice (the  "Declaration  Notice") to the Company,  of
either (i)  declaring  all Notes held by such holder  serving  such  Declaration
Notice due and  payable or (ii)  waiving the right of such holder to declare the
Notes held by it to be due and  payable.  In the event  that a Change  Notice is
given and a holder of the Notes  fails to waive  such right in  accordance  with
this ss.2.3(a),  the Notes held by such holder shall irrevocably be deemed to be
and the same shall on the Payment Date (as  hereinafter  defined) become due and
payable as a result of such Change  Event.  All Notes  declared  due and payable
shall become due and payable and paid on such date (the  "Payment  Date") as the
Company  shall  specify in a written  notice  delivered to the holder or holders
which have declared their Notes due and payable (which notice shall be delivered
by the  Company to such  holder or  holders  not later than 10 days prior to the
Payment  Date) and the Payment Date shall be prior to the  consummation  of such
Change Event,  in the event that such  Declaration  Notice is served at least 10
days prior to the date of the consummation of such Change Event or 10 days after
the date such Declaration Notice is served, if such Declaration Notice is not at
least 10 days prior to the date of such Change Event. The Company  covenants and
agrees to  prepay in full on the  Payment  Date all  Notes  held by such  holder
serving  such  Declaration  Notice to the Company  declaring  such Notes due and
payable.

         In the event that any holder of the Notes  shall have  declared  all of
the Notes held by it to become due and payable  pursuant to ss.2.3(a),  then the
Company shall  promptly,  but in any event within five days after the receipt of
the  Declaration  Notice,  deliver  written  notice  of  such  declaration  (the
"Notification   of  Declaration")  to  each  other  holder  of  the  Notes  and,
notwithstanding anything to the contrary contained in this Agreement,  each such
other holder which has previously  waived its right to declare the Notes held by
it to be due and payable pursuant to ss.2.3(a)(ii)  shall then have the right to
declare  all of the  Notes  held by it to become  due and  payable  pursuant  to
ss.2.3(a)(i)  until  the  later to occur of (x) 60 days  after  receipt  by such
holders of the Change  Notice or (y) 20 days after  receipt by such holders of a
Notification  of  Declaration,  with  respect to a  Declaration  Notice  made by
holders of Notes.

           (b) In the  event  that PLM  Financial  Services,  Inc.,  a  Delaware
corporation,  or PLM Investment Management,  Inc., a California corporation,  or
any successor to either such entity shall give notice of its intention to resign
or withdraw or transfer its interest as Manager or Fund Manager, as the case may
be or shall receive  notice that it is to be removed as Manager or Fund Manager,
as the  case  may be (such  event  being  herein  referred  to as a  "Withdrawal
Event"), then, in such event, the Company will promptly, but in any event within
three days after the giving or receipt of such notice,  as the case may be, give
written notice thereof (a "Withdrawal Notice") to the holders of all outstanding
Notes,  which  notice shall make  specific  reference to this Section and to the
rights of the holders hereunder. If, within 90 days after the Withdrawal Notice,
the Company  procures a successor entity qualified and experienced in performing
functions  such as those  performed by the Manager or Fund Manager,  as the case
may be, the Company  shall  promptly,  but in any event  within five days,  send
notice thereof to the holders of all  outstanding  Notes.  Should the holders of
50% or more in aggregate  principal amount of the Notes then outstanding  object
to such successor entity within 10 days of the receipt of such notice, or should
the Company not be able to procure  such  successor  within such 90-day  period,
each holder of  outstanding  Notes shall have the right by written notice to the
Company  given not  earlier  than five  days nor  later  than 45 days  after the
expiration of such period (the "Withdrawal Event Prepayment  Election  Period"),
to either (i) demand that the Company  prepay all of the Notes then held by such
holder or (ii) notify the Company  that such holder has waived its right to have
the Notes held by it prepaid. In the event that a Withdrawal Notice is given and
a holder of the Notes fails to provide such written notice within the Withdrawal
Event  Prepayment   Election  Period,  the  Notes  held  by  such  holder  shall
irrevocably be deemed to be and the same shall on a date five days following the
expiration of the Withdrawal  Event  Prepayment  Election  Period become due and
payable. With respect to any prepayment,  the prepayment date shall be specified
in writing to each  holder by the Company and shall be the same date as the date
established  for the  prepayment of Notes held by all holders  exercising  their
rights under this ss.2.3(b) by reason of the occurrence of the Withdrawal Event.

         The Company will also  promptly  notify the holders of the Notes of the
receipt of any demand by any Note holder for the prepayment of its Note pursuant
to this ss.2.3(b).

           (c) All  prepayments  on the Notes  pursuant to this ss.2.3  shall be
made by the payment of the aggregate  principal  amount  remaining unpaid on the
Notes to be prepaid and accrued interest thereon to the date of such prepayment,
together  with  a  Make-Whole  Amount  (computed  in  the  manner  described  in
ss.2.2(a)).

             Section 2.4. Special  Prepayment  Relating to Covenant  Compliance.
(a) In the event that a Default or Event of Default shall occur under  ss.5.9(b)
solely as a result of a decline in the  Equipment  Value of Aggregate  Equipment
(herein a "Covenant  Compliance  Event") or the Company shall have  knowledge of
any impending  Covenant  Compliance  Event, the Company will give written notice
(the "Covenant Compliance Notice") of such fact in the manner provided in ss.9.6
hereof to the holders of the Notes.  The  Covenant  Compliance  Notice  shall be
delivered  promptly  upon  receipt of such  knowledge  by the Company and in any
event no later than two Business Days  following the  occurrence of any Covenant
Compliance  Event. The Covenant  Compliance  Notice shall (1) describe the facts
and circumstances of such Covenant  Compliance Event in reasonable  detail,  (2)
make  reference to this ss.2.4 and the  obligation  of the Company to prepay the
Notes to the extent and on the terms and conditions provided for in this ss.2.4,
(3) set forth in reasonable  detail the  computations  which reflect the minimum
aggregate  principal  amount  of  Notes  necessary  (the  "Permitted  Prepayment
Amount")  to be  prepaid  in order  to  result  in the  Company  again  being in
compliance with the terms of ss.5.9(b),  (4) offer in writing to prepay on a pro
rata  basis the  outstanding  Notes to the  extent of the  Permitted  Prepayment
Amount,  together with accrued  interest to the date of prepayment and a premium
equal to the  applicable  Make-Whole  Amount,  and (5)  specify  a date for such
prepayment (the  "Compliance  Event  Prepayment  Date"),  which Compliance Event
Prepayment  Date shall be not more than 45 days nor less than 15 days  following
the date of such Covenant Compliance Notice. Each holder of the then outstanding
Notes shall have the right to accept such offer and require  prepayment  of such
holder's  pro rata share of the Notes to be  prepaid  by  written  notice to the
Company  given not later than 10 days after  receipt of the Covenant  Compliance
Notice.  The Company shall on the Compliance  Event  Prepayment  Date prepay the
Notes held by holders  which have so accepted  such offer of  prepayment  to the
extent and only to the extent of the Permitted  Prepayment  Amount.  The Company
shall not be  permitted  to prepay  Notes under this  ss.2.4(a) in excess of the
Permitted  Prepayment Amount. The prepayment price of the Notes payable upon the
occurrence of any Covenant  Compliance Event shall be an amount equal to 100% of
the  outstanding  principal  amount of the Notes so to be  prepaid  and  accrued
interest thereon to the date of such  prepayment,  together with a premium equal
to the applicable  Make-Whole Amount determined as of two Business Days prior to
the date of such prepayment pursuant to this ss.2.4(a).

           (b) Compliance  with the provisions of ss.2.4(a)  shall not be deemed
to  constitute a waiver of, or consent to, any Default or Event of Default under
the provisions of ss.5.9(b) unless and until the Company does in fact prepay the
Notes as provided in ss.2.4(a).

             Section 2.5. Notice of Prepayments. The Company will give notice of
any  prepayment  of the Notes  (other than the  prepayments  required by ss.2.1,
ss.2.3 or ss.2.4) to each holder  thereof not less than 30 days nor more than 60
days  before the date fixed for such  optional  prepayment  specifying  (a) such
date,  (b) the section of this  Agreement  under which the  prepayment  is to be
made, (c) the principal amount of the holder's Notes to be prepaid on such date,
and (d) the estimated  premium,  if any, and accrued interest  applicable to the
prepayment.  Such notice of  prepayment  shall also  certify all facts which are
conditions precedent to any such prepayment. Notice of prepayment having been so
given,  the aggregate  principal  amount of the Notes  specified in such notice,
together with the premium, if any, and accrued interest thereon shall become due
and payable on the prepayment date. The Company will also give written notice to
each holder of the Notes,  by telecopy or other same day written  communication,
setting forth the  computation  and amount of any premium  payable in connection
with such prepayment two Business Days prior to the date of such prepayment.

             Section 2.6.  Allocation of  Prepayments.  Except for prepayment of
less than all of the Notes at the time outstanding pursuant to ss.2.3 or ss.2.4,
all partial  prepayments  shall be applied on all  outstanding  Notes ratably in
accordance  with  the  unpaid  principal  amounts  thereof  but only in units of
$1,000,  and to the extent that such ratable  application shall not result in an
even multiple of $1,000,  adjustment  may be made by the Company to the end that
successive applications shall result in substantially ratable payments.

             Section  2.7.  Direct  Payment.  Notwithstanding  anything  to  the
contrary in this Agreement or the Notes, in the case of any Note owned by you or
your  nominee  or owned by any  subsequent  institutional  holder  who has given
written  notice to the Company  requesting  that the  provisions of this Section
shall apply, the Company will promptly and punctually pay when due the principal
thereof and  premium,  if any,  and interest  thereon,  without any  presentment
thereof  directly to you, to your nominee or to such  subsequent  holder at your
address  or your  nominee's  address  set forth in  Schedule  I or at such other
address as you,  your  nominee or such  subsequent  holder may from time to time
designate in writing to the Company or, if a bank account is designated  for you
or your  nominee on  Schedule I hereto or in any  written  notice to the Company
from you, your nominee or any such subsequent holder, the Company will make such
payments in immediately available funds to such bank account no later than 12:00
Noon Chicago,  Illinois time on the date due, marked for attention as indicated,
or in such other  manner or to such other  account of you,  your nominee or such
holder  in any  bank in the  United  States  as you,  your  nominee  or any such
subsequent  holder may from time to time  direct in  writing.  If for any reason
whatsoever  the  Company  does  not make any such  payment  by such  12:00  Noon
Chicago,  Illinois  time on the date due,  such payment  shall be deemed to have
been  made on the next  following  Business  Day and  such  payment  shall  bear
interest at the  overdue  rate as  provided  herein.  The holder of any Notes to
which this  Section  applies  agrees that in the event it shall sell or transfer
any such  Notes it will,  prior to the  delivery  of such  Notes  (unless it has
already done so), make a notation  thereon of all principal,  if any, prepaid on
such Notes and will also note  thereon the date to which  interest has been paid
on such Notes. With respect to Notes to which this Section applies,  the Company
shall be entitled to presume  conclusively  that the original or such subsequent
institutional  holder as shall have requested the provisions  hereof to apply to
its Notes  remains  the holder of such Notes  until (a) the  Company  shall have
received  notice of the  transfer of such Notes,  and of the name and address of
the  transferee,  or (b) such Notes shall have been  presented to the Company as
evidence of the transfer.


SECTION 3.               REPRESENTATIONS.

             Section 3.1. Representations of the Company. The Company represents
and  warrants  that all  representations  set  forth in the form of  certificate
attached  hereto as Exhibit B are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.

             Section 3.2.  Representations of the Purchaser.  (a) You represent,
and in entering into this Agreement the Company understands, that (i) you are an
"accredited  investor"  within the meaning of  Regulation D  promulgated  by the
Securities and Exchange  Commission and (ii) you are acquiring the Notes for the
purpose of investment and not with a view to the distribution  thereof, and that
you have no present intention of selling,  negotiating or otherwise disposing of
the Notes;  provided that the disposition of your Property shall at all times be
and remain within your control.

           (b)  You  further  represent  that  at  least  one of  the  following
statements  concerning  each source of funds to be used by you to  purchase  the
Notes is accurate as of each of the Closing Dates:

                  (i) the source of funds to be used by you to pay the  purchase
         price of the Notes is an "insurance company general account" within the
         meaning of Department of Labor Prohibited  Transaction  Exemption 95-60
         ("PTE")  (issued July 12, 1995) and the purchase of the Notes by you is
         eligible for and satisfies the requirements of PTE 95-60;

                  (ii) all or a part of such funds  constitute  assets of one or
         more separate accounts, trusts or a commingled pension trust maintained
         by you, and you have  disclosed to the Company  names of such  employee
         benefit  plans  whose  assets in such  separate  account or accounts or
         pension trusts exceed 10% of the total assets or are expected to exceed
         10% of the total assets of such account or accounts or trusts as of the
         date of such  purchase  (for  the  purpose  of this  clause  (ii),  all
         employee  benefit  plans  maintained  by the same  employer or employee
         organization are deemed to be a single plan);

                  (iii) all or part of such  funds  constitute  assets of a bank
         collective investment fund maintained by you, and you have disclosed to
         the Company names of such  employee  benefit plans whose assets in such
         collective  investment  fund  exceed  10% of the  total  assets  or are
         expected to exceed 10% of the total  assets of such fund as of the date
         of such purchase  (for the purpose of this clause  (iii),  all employee
         benefit plans maintained by the same employer or employee  organization
         are deemed to be a single plan);

                  (iv) all or part of such  funds  constitute  assets  of one or
         more employee  benefit plans,  each of which has been identified to the
         Company in writing;

                  (v) you are acquiring the Notes for the account of one or more
         pension  funds,  trust  funds or  agency  accounts,  each of which is a
         "governmental plan" as defined in Section 3(32) of ERISA;

                  (vi) the source of funds is an "investment  fund" managed by a
         "qualified  professional asset manager" or "QPAM" (as defined in Part V
         of PTE 84-14,  issued March 13, 1984),  provided that no other party to
         the transactions described in this Agreement and no "affiliate" of such
         other party (as defined in Section V(c) of PTE 84-14) has at this time,
         and  during  the  immediately  preceding  one  year has  exercised  the
         authority to appoint or terminate said QPAM as manager of the assets of
         any plan  identified  in writing  pursuant  to this  clause  (vi) or to
         negotiate  the terms of said QPAM's  management  agreement on behalf of
         any such identified plans; or

                  (vii) if you are other  than an  insurance  company,  all or a
         portion of such funds consists of funds which do not  constitute  "plan
         assets".

         The Company shall  deliver a  certificate  on each of the Closing Dates
which  certificate  shall  either  state  that (A) it is  neither  a  "party  in
interest"  (as defined in Title I, Section  3(14) of ERISA) nor a  "disqualified
person" (as defined in Section  4975(e)(2) of the Internal Revenue Code of 1986,
as amended),  with respect to any plan identified  pursuant to paragraphs  (ii),
(iii) or (iv)  above,  or (B) with  respect to any plan  identified  pursuant to
paragraph (vi) above, neither it nor any "affiliate" (as defined in Section V(c)
of PTE 84-14) is described  in the proviso to said  paragraph  (vi).  As used in
this ss.3.2(b),  the terms "separate  account" and "employee benefit plan" shall
have  the  respective  meanings  assigned  to them in ERISA  and the term  "plan
assets" shall have the meaning  assigned to it in Department of Labor Regulation
29 C.F.R. ss.2510.3-101.


SECTION 4.               CLOSING CONDITIONS.

         Your  obligation to execute and deliver this Agreement on the Execution
Date and to purchase the Notes on each of the Closing  Dates shall be subject to
the  performance by the Company of its agreements  hereunder  which by the terms
hereof are to be performed at or prior to the time of the execution and delivery
of the Agreement or the issuance and delivery of the Notes,  as the case may be,
and to the following further conditions precedent:

             Section 4.1. Closing  Certificate.  Concurrently with the execution
and delivery of this  Agreement on the Execution  Date and the delivery of Notes
to you on each of the Closing Dates, you shall have received a certificate dated
the  Execution  Date or such  Closing  Date,  as the case may be,  signed  by an
authorized  officer of the Manager  substantially in the form attached hereto as
Exhibit  B, the  truth  and  accuracy  of which  shall  be a  condition  to your
obligation  to execute  and deliver  this  Agreement  or to  purchase  the Notes
proposed to be sold to you, as the case may be.

             Section  4.2.  Legal  Opinions.  Concurrently  with the delivery of
Notes to you on each of the Closing Dates,  you shall have received from Chapman
and Cutler, who are acting as your special counsel in this transaction, and from
Stephen Peary,  General Counsel of the Company,  their respective opinions dated
such Closing Date, in form and substance  satisfactory  to you, and covering the
matters set forth in Exhibits C and D, respectively, hereto.

             Section 4.3. Existence and Authority.  On or prior to the Execution
Date, you shall have received, in form and substance reasonably  satisfactory to
you and your special  counsel,  such  documents and evidence with respect to the
Company and the Manager as you may  reasonably  request in order to establish to
the  existence  and  good  standing  of the  Company  and  the  Manager  and the
authorization of the transactions contemplated by this Agreement.

             Section 4.4. Private  Placement  Number. A Private Placement Number
relating to the Notes shall have been duly  ordered  from  Standard & Poor's,  a
division of The McGraw-Hill Companies, Inc. ("Standard & Poor's").

             Section 4.5.  Insurance  Certificate.  On or prior to the Execution
Date,  the  Company  will  furnish to you and to your  special  counsel a report
signed by an independent  insurance  broker  satisfactory to you with respect to
the insurance maintained under this Agreement (including, without limitation, as
to each policy,  its number, the amount,  the insurer,  the named assureds,  the
type of risk, the loss payees and the  expiration  date) and stating the opinion
of said broker that such insurance is in such amounts,  against such risks,  and
with such insurers as to adequately protect the Company.

             Section  4.6.  Payment of  Commitment  Fee.  On each of the Closing
Dates,  the Company shall have paid to the Purchaser the Commitment Fee referred
to in ss.1.3 by bank wire  transfer  of Federal or other  immediately  available
funds to the account specified for such Purchaser in Schedule I.

             Section 4.7.  Funding  Instructions.  At least three  Business Days
prior to each of the Closing Dates, you shall have received written instructions
executed by an authorized officer of the Manager directing the manner of payment
of funds  and  setting  forth  (1) the  name of the  transferee  bank,  (2) such
transferee  bank's ABA number,  (3) the  account  name and number into which the
purchase price for the Notes is to be deposited,  and (4) the name and telephone
number of the account  representative  responsible  for verifying the receipt of
the funds.

             Section 4.8.  Satisfactory  Proceedings.  On each of the  Execution
Date  and the  Closing  Dates,  all  proceedings  taken in  connection  with the
transactions  contemplated by this Agreement, and all documents necessary to the
consummation  thereof,  shall be  satisfactory  in form and substance to you and
your special counsel,  and you shall have received a copy (executed or certified
as may be appropriate) of all legal documents or proceedings taken in connection
with the consummation of said transactions.

             Section 4.9.  Waiver of  Conditions.  If on the Execution  Date the
Company fails to execute and deliver this  Agreement or on either of the Closing
Dates the  Company  fails to tender to you the Notes to be issued to you on such
date, or if on the Execution  Date or either of the Closing Dates the conditions
specified in this ss.4 have not been  fulfilled,  you may thereupon  elect to be
relieved of all further  obligations under this Agreement.  Without limiting the
foregoing, if the conditions specified in this ss.4 have not been fulfilled, you
may waive  compliance  by the Company with any such  condition to such extent as
you may in your sole discretion determine.  Nothing in this ss.4.9 shall operate
to relieve the Company of any of its  obligations  hereunder  or to waive any of
your rights against the Company.


SECTION 5.               COMPANY COVENANTS.

         From and after the Execution  Date and continuing so long as any amount
remains unpaid on any Note:

             Section 5.1. Existence, Etc. (a) The Company will preserve and keep
in force and effect,  and will cause each Restricted  Subsidiary to preserve and
keep in force and effect,  its existence and all licenses and permits  necessary
to the proper  conduct of its business,  provided  that the foregoing  shall not
prevent any transaction permitted by ss.5.13.

           (b) The  Company  will  take,  or will  cause to be  taken,  all such
actions as shall be necessary to preserve its tax treatment as a partnership.

           (c) The  Company  will  cause the  Manager to retain at all times its
status as a Class B Member.

             Section 5.2. Insurance.  The Company will maintain,  or cause to be
maintained,  and will cause each Restricted  Subsidiary to maintain, or cause to
be  maintained,  insurance  coverage on the Equipment by  financially  sound and
reputable  hull and other  underwriters  or protection and indemnity  clubs,  or
Lloyds of London or a foreign insurer certified by a reputable  insurance broker
as a financially  sound insurance carrier or domestic insurers accorded a rating
by A.M. Best Company, Inc. of A+ or better at the time of issuance of any policy
in such forms and amounts and against such risks as are customary for businesses
of established  reputation  engaged in the same or a similar business and owning
and operating similar  Properties.  Without limiting the foregoing,  the Company
will maintain, or cause to be maintained, insurance coverage against third-party
bodily  injury and  property  damage  liability  in  connection  with  equipment
ownership  and  operation  and will  also  maintain  or cause to be  maintained,
insurance  coverage  with a limit of  liability  of not less than  $500,000  per
occurrence,  to insure the Company and its  Subsidiaries  against loss caused by
the fraud or dishonesty of any of its employees and the employees of the Manager
and its Affiliates.

             Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws.  (a) The Company  will  promptly  pay and  discharge,  and will cause each
Restricted  Subsidiary  promptly  to  pay  and  discharge,   all  lawful  taxes,
assessments and governmental  charges or levies imposed upon the Company or such
Restricted Subsidiary, respectively, or upon or in respect of all or any part of
the Property or business of the Company or such Restricted Subsidiary, all trade
accounts payable in accordance with usual and customary  business terms, and all
claims for work,  labor or  materials,  which if unpaid  might  become a Lien or
charge upon any Property of the Company or such Restricted Subsidiary;  provided
the Company or such Restricted  Subsidiary shall not be required to pay any such
tax,  assessment,  charge,  levy,  account payable or claim if (i) the validity,
applicability  or amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or sale of any Property
of the Company or such Restricted  Subsidiary or any material  interference with
the use  thereof by the  Company  or such  Restricted  Subsidiary,  and (ii) the
Company or such  Restricted  Subsidiary  shall set aside on its books,  reserves
deemed by it to be adequate with respect thereto.

           (b) The Company will promptly  comply and will cause each  Subsidiary
to comply with all laws,  ordinances or  governmental  rules and  regulations to
which  it is  subject,  including,  without  limitation,  the  Delaware  Limited
Liability Company Act, the Occupational Safety and Health Act of 1970, ERISA and
any  Environmental  Law, the violation of which would  materially  and adversely
affect the properties,  business, prospects, profits or condition of the Company
and its  Subsidiaries,  taken as a whole,  or would result in any Lien or charge
upon any Property of the Company or any Subsidiary not permitted by ss.5.10.

             Section 5.4. Maintenance,  Etc. The Company will maintain, preserve
and keep, or cause to be maintained,  preserved and kept,  all Properties  which
are used or  useful  in the  conduct  of the  business  of the  Company  and its
Restricted  Subsidiaries  (whether owned in fee or a leasehold interest) in good
repair and working order and from time to time will make all necessary  repairs,
replacements, renewals and additions so that at all times the efficiency thereof
shall be maintained.

             Section  5.5.  Nature of Business.  The Company and its  Restricted
Subsidiaries  taken as a whole  will not engage in any  business  other than the
business  of owning and leasing a  diversified  equipment  portfolio  consisting
primarily of used  transportation  and  transportation-related  equipment all as
more fully described in Section 1.05 of the Operating  Agreement as in effect on
the date hereof.

             Section 5.6.  Special  Provisions  for Marine Vessels and Aircraft.
Without  limiting the  foregoing  provisions  of ss.5.2 and ss.5.4,  the Company
shall cause any Vessels or Aircraft  owned by it or in which it has an ownership
interest to be maintained and insured as provided in this ss.5.6.

           (a)  Maintenance  of Marine  Vessels.  The Company  will at all times
cause any Vessel to be maintained and preserved in good condition, working order
and repair as will entitle her to retain the highest  classification  and rating
for vessels of the same age and type in the  American  Bureau of  Shipping,  Det
Norske  Veritas,   Bureau  Veritas,   Lloyds  Register,   Nippon  Kaiji  Kyokai,
Germanischer Lloyd or classification societies of similar stature.

           (b) Insurance on Marine Vessels.  The Company will at all times cause
the following insurance to be carried and maintained with respect to any Vessel:

                   (i)  Marine  insurance  in an  amount  at least  equal to the
         Equipment  Value of such Vessel covering the hull and all equipment and
         appurtenances of the Vessel, against all usual marine risks;

                  (ii) Insurance covering the customary protection and indemnity
         risks in an  amount  at  least  equal to the  higher  of (1) an  amount
         customary  with  operations  conducted  by any such  Vessel and (2) the
         Equipment Value of such Vessel;

                 (iii)  Insurance  against  liability  arising out of pollution,
         spillage or leakage in  connection  with  operations  conducted  by any
         Vessel in an amount  not less  than the  usual and  customary  coverage
         amounts carried in the  international  shipping industry for comparable
         marine vessels handling or transporting similar cargo; provided that in
         no event shall such insurance be maintained in an amount less than that
         required  by the laws of any  jurisdiction  in which any such Vessel is
         operated for so long as such Vessel is operated  under the laws of such
         jurisdiction; and

                  (iv)  War  risk   insurance,   if  available  at  commercially
         reasonable rates.

           (c) Certificate of Financial Responsibility. When required for access
to  U.S.   ports,   the  Company  shall  obtain  a   Certificate   of  Financial
Responsibility  issued  by the  United  States  pursuant  to the  Federal  Water
Pollution  Control  Act to the extent  that the same may be  required  by law or
regulation.

           (d)  Maintenance  and Servicing of Aircraft.  The Company will at all
times cause:

                   (i) any Aircraft to be serviced, repaired, maintained, tested
         and overhauled so as to keep such Aircraft in such operating  condition
         as may be necessary to enable the  airworthiness  certification  of the
         Aircraft  to be  maintained  in good  standing  at all times  under the
         Federal Aviation Act or the governmental  authority having jurisdiction
         over such Aircraft;

                  (ii) all  records,  logs and other  materials  required  to be
         maintained by the Federal Aviation Administration,  or the governmental
         authority having  jurisdiction  over any Aircraft,  to be maintained in
         respect of each  Aircraft  (including  any item of  Equipment  included
         therein); and

                 (iii) any Aircraft to comply with all airworthiness  directives
         issued  by any  governmental  authority  having  jurisdiction  over any
         Aircraft.

           (e) Public  Liability  and Property  Damage  Liability  Insurance for
Aircraft.  The Company  will at all times cause third party  aircraft  liability
insurance,  passenger legal  liability  insurance,  if applicable,  and property
damage liability insurance to be carried with respect to any Aircraft.

           (f)  Insurance  Against Loss or Damage to the  Aircraft.  The Company
shall at all times cause the  following  to be  maintained  with  respect to any
Aircraft:  (i) all-risk ground and flight  aircraft hull insurance  covering the
airframe  and engines of any such  Aircraft;  (ii) fire,  transit  and  extended
coverage with respect to any engines or parts while removed from such  Aircraft;
and (iii) war risk insurance,  including,  hijacking (air piracy),  governmental
confiscation and expropriation insurance.

             Section  5.7.  Fixed  Charge  Coverage.  The Company  will keep and
maintain as of the end of each fiscal  quarter  the ratio of  Consolidated  Cash
Flow  Available  for Fixed  Charges  for the  Four-Quarter  Period then ended to
Consolidated Fixed Charges for such Four-Quarter Period at not less than 3.00 to
1.00 (it being  understood that any such failure to comply with this covenant at
the end of any fiscal quarter shall be deemed to continue until such time as the
Company  shall  be in  full  compliance  with  this  covenant  at  the  end of a
subsequent fiscal quarter).

             Section 5.8. Sale and Leaseback. The Company will not, and will not
permit any  Restricted  Subsidiary  to, enter into any  arrangement  whereby the
Company or any Restricted  Subsidiary  shall sell or transfer any Property owned
by the Company or any Restricted Subsidiary to any Person other than the Company
or  a  Restricted  Subsidiary  and  thereupon  the  Company  or  any  Restricted
Subsidiary shall lease or intend to lease, as lessee, the same Property,  except
that the  Company  shall be  permitted  to enter into such  arrangements  to the
extent that the related lease would be permitted under ss.5.12.

             Section 5.9. Limitations on Indebtedness. (a) The Company will not,
and will not permit any Restricted  Subsidiary to, create, assume or incur or in
any  manner  be or become  liable in  respect  of any Debt  (including,  without
limitation, any extension, renewal or replacement thereof), except:

                   (i)     the Notes;

                  (ii) unsecured  Debt of the Company in an aggregate  principal
         amount not to exceed  $2,000,000,  incurred in the  ordinary  course of
         business,  having  an  original  maturity  less  than  one year and not
         renewable  at the  option  of the  Company  for a term  of one  year or
         greater beyond the date of original issuance, issued and outstanding in
         compliance  with clause (b) hereof,  provided  that in each case at the
         time of issuance  thereof and after  giving  effect  thereto and to the
         application  of the  proceeds  thereof,  no Default or Event of Default
         would exist, provided, further, that such Debt shall be subordinated to
         the Notes upon terms reasonably acceptable to the Requisite Holders;

                 (iii) Debt of a  Restricted  Subsidiary  to the Company or to a
         Wholly-Owned  Restricted  Subsidiary,  provided  that  at the  time  of
         issuance thereof and after giving effect thereto and to the application
         of the proceeds  thereof,  no Default or Event of Default  would exist;
         and

                  (iv)  Short  Term  Warehouse  Debt in an  aggregate  principal
         amount not to exceed the  lesser of (1)  $10,000,000  or (2) 50% of the
         aggregate  principal  amount  of the Notes  outstanding  at the time of
         issuance thereof;  provided that at the time of such issuance and after
         giving effect thereto and to the  application of the proceeds  thereof,
         no Default or Event of Default would exist under this  Agreement and no
         default or event of default  would exist under the  Warehousing  Credit
         Agreement  (without  giving effect to any consent,  waiver or amendment
         waiving or in effect  waiving  any  default  or event of default  which
         would otherwise  arise from such issuance under the Warehousing  Credit
         Agreement).

           (b) The  Company  will not at any time  permit  Consolidated  Debt to
exceed the lesser of (i)  $25,000,000 or (ii) 33-1/3% of the sum of Consolidated
Assets.

           (c) The Company will not at any time permit any individual  borrowing
by the Company under or pursuant to the Warehousing  Credit  Agreement to remain
outstanding  for more  than 180 days from the  initial  issuance  thereof  or to
permit any extension, renewal or refunding of any such individual borrowing.

           (d) Any corporation,  limited  liability company or partnership which
becomes a Restricted  Subsidiary after the date hereof shall for all purposes of
this  ss.5.9 be deemed  to have  created,  assumed  or  incurred  at the time it
becomes a Restricted  Subsidiary  all Debt of such entity  existing  immediately
after it becomes a Restricted Subsidiary.  Accordingly,  the Company shall cause
each such corporation, limited liability company or partnership to retire all of
such Debt (except Debt permitted by  ss.5.9(a)(iii))  prior to such corporation,
limited liability company or partnership becoming a Restricted Subsidiary.

            Section 5.10.  Limitation  on Liens.  The Company will not, and will
not  permit  any  Restricted  Subsidiary  to,  create or incur,  or suffer to be
incurred or to exist, any mortgage, pledge, security interest, encumbrance, Lien
or charge of any kind on its or their  Property or assets,  whether now owned or
hereafter  acquired,  or assigned,  or upon any income or profits therefrom,  or
transfer any Property for the purpose of  subjecting  the same to the payment of
obligations  in priority to the payment of its or their  general  creditors,  or
acquire or agree to acquire, or permit any Restricted Subsidiary to acquire, any
Property or assets upon  conditional  sales  agreements or other title retention
devices, except:

                   (a) Liens for Property taxes and  assessments or governmental
         charges or levies and Liens securing claims or demands of mechanics and
         materialmen,  provided that payment thereof is not at the time required
         by ss.5.3;

                   (b) Liens of or  resulting  from any  judgment or award,  the
         time for the appeal or petition  for  rehearing of which shall not have
         expired, or in respect of which the Company or a Restricted  Subsidiary
         shall at any time in good faith be  prosecuting an appeal or proceeding
         for a review and in respect of which a stay of  execution  pending such
         appeal or  proceeding  for review  shall have been  secured;  provided,
         however,  that (i) the Company or such Restricted Subsidiary shall have
         made adequate  reserves for said  judgment or award in their  financial
         statements  and (ii) such Liens shall not cause  interference  with the
         use of any Equipment;

                   (c)  Liens  incidental  to the  conduct  of  business  or the
         ownership  of  Properties  and  assets  (including  warehousemen's  and
         attorneys' Liens and statutory landlords' Liens) and deposits,  pledges
         or Liens to secure the performance of bids, tenders or trade contracts,
         or to secure  statutory  obligations,  surety or appeal  bonds or other
         Liens  of like  general  nature  incurred  in the  ordinary  course  of
         business and not in connection with the borrowing of money, provided in
         each case, the obligation secured is not overdue or, if overdue, (i) is
         being  contested in good faith by appropriate  actions or  proceedings,
         (ii)  adequate  reserves  therefor  have  been set up on the  financial
         statements  of the Company or a Restricted  Subsidiary,  and (iii) such
         Liens shall not cause interference with the use of any Equipment;

                   (d) minor survey exceptions or minor encumbrances,  easements
         or reservations,  or rights of others for rights-of-way,  utilities and
         other similar purposes,  or zoning or other  restrictions as to the use
         of  real  Properties,  which  are  necessary  for  the  conduct  of the
         activities  of the Company  and its  Restricted  Subsidiaries  or which
         customarily  exist on  properties  of  corporations  engaged in similar
         activities  and  similarly  situated  and  which  do not  in any  event
         materially  impair  their use in the  operation  of the business of the
         Company and its Restricted Subsidiaries;

                  (e) Liens securing  Indebtedness of a Restricted Subsidiary to
         the Company or to a Wholly-owned Restricted Subsidiary;

                   (f) Liens in favor of  lessees  consisting  of, or granted to
         secure purchase options  contained in or related to leases of Equipment
         owned by the  Company or a  Restricted  Subsidiary;  provided  that the
         consideration  payable pursuant to any such option shall in no event be
         less than the fair market value of the Equipment subject thereto;

                   (g) Liens  securing the Short Term Warehouse  Debt;  provided
         that such  Short  Term  Warehouse  Debt has been  incurred  within  the
         limitations of ss.5.9(a)(iv); and

                  (h) Liens  existing on the  Execution  Date and  described  on
         Schedule II hereto.

            Section 5.11. Distributions,  Certain Payments. The Company will not
directly  or  indirectly,  or through  any  Subsidiary,  make any payment to the
Manager or any Affiliate or Affiliated  Entity on account of Management  Fees in
excess of the amount  provided for in the  Operating  Agreement or the Equipment
Management  Agreement as each such agreement is in effect on the Execution Date,
or make or declare any  Distribution,  if in each such case,  either prior to or
after  giving  effect  thereto,  a Default  or an Event of  Default  shall  have
occurred and be continuing.

            Section 5.12.  Limitation on Long-Term Leases and Joint Ownership of
Equipment.  (a) The  Company  will  not,  and will  not  permit  any  Restricted
Subsidiary to, become obligated,  as lessee, under any Long-Term Lease if at the
time of entering into any such Long-Term  Lease and after giving effect thereto,
the  aggregate  Rentals  payable  by the  Company  and  all  of  its  Restricted
Subsidiaries on a consolidated basis in any one fiscal year thereafter under all
Long-Term  Leases  would  exceed  10% of the  aggregate  amount  of all  capital
accounts of the Members of the Company  determined in accordance  with generally
accepted accounting principles.

           (b) The  Company  will  not,  and  will  not  permit  any  Restricted
Subsidiary to, create or otherwise  permit or suffer to exist on or with respect
to any Equipment  any right of first  refusal or any purchase  option other than
purchase  options in favor of the lessees of such  Equipment  for  consideration
payable  which is not less than the  Current  Fair  Market  Value of the related
Equipment at the time such option is exercised.

            Section 5.13.  Mergers,  Consolidations and Sales of Assets. (a) The
Company  will  not,  and will not  permit  any  Restricted  Subsidiary  to:  (i)
consolidate  with or be a party  to a  merger  with  any  other  Person  or (ii)
license,  transfer, sell or otherwise dispose of (herein a "Disposition") all or
any  substantial   part  of  the  assets  of  the  Company  and  its  Restricted
Subsidiaries, provided, however, that:

                   (1) any Restricted  Subsidiary may merge or consolidate  with
         or into the Company,  any  Wholly-owned  Restricted  Subsidiary  or any
         other Person so long as in any merger or  consolidation  involving  the
         Company, the Company shall be the surviving or continuing entity and in
         the case of any merger or  consolidation  with any other  Person,  such
         Person shall, after giving effect to such merger or consolidation, be a
         Wholly-owned Restricted Subsidiary;

                  (2) any Restricted Subsidiary may sell or otherwise dispose of
         all or any  part  of its  assets  to the  Company  or any  Wholly-owned
         Restricted Subsidiary; and

                   (3) the  Company  or any  Restricted  Subsidiary  may sell or
         otherwise  dispose  of any of its  assets  in the  ordinary  course  of
         business for fair value.

           (b) The Company will not permit any Restricted Subsidiary to issue or
sell any Equity Capital of such  Restricted  Subsidiary to any Person other than
the Company or a Wholly-owned Restricted Subsidiary, except:

                  (1) for the purpose of qualifying  directors or the equivalent
         thereof; or

                   (2) in  satisfaction of the validly  pre-existing  preemptive
         rights of minority shareholders or the equivalent thereof in connection
         with the simultaneous  issuance of Equity Capital to the Company and/or
         a  Restricted  Subsidiary  whereby the Company  and/or such  Restricted
         Subsidiary   maintain  their  same   proportionate   interest  in  such
         Restricted Subsidiary; or

                   (3) to Affiliated  Entities in connection  with the formation
         of a Restricted  Subsidiary which is organized as an investment  entity
         by the Company and such Affiliated Entities and the activities of which
         are limited solely to the ownership of Equipment.

           (c) The Company will not sell,  transfer or otherwise  dispose of any
Equity Capital in any Restricted  Subsidiary (except to qualify directors or the
equivalent thereof) or any Indebtedness of any Restricted  Subsidiary,  and will
not permit any Restricted  Subsidiary to sell,  transfer or otherwise dispose of
(except  to the  Company or a  Wholly-owned  Restricted  Subsidiary)  any Equity
Capital or any Indebtedness of any other Restricted Subsidiary, unless:

                   (1) simultaneously with such sale, transfer,  or disposition,
         all shares of Equity Capital and all  Indebtedness  of such  Restricted
         Subsidiary  at the  time  owned  by the  Company  and  by  every  other
         Subsidiary shall be sold, transferred or disposed of as an entirety;

                   (2) the Manager  shall have  determined,  as  evidenced  by a
         resolution  of the Board of Directors  thereof,  that the  retention of
         such Equity Capital and Indebtedness is no longer in the best interests
         of the Company;

                   (3) such Equity Capital and Indebtedness is sold, transferred
         or otherwise  disposed of to a Person,  for a cash consideration and on
         terms reasonably deemed by the Manager to be adequate and satisfactory;
         and

                   (4) the  Restricted  Subsidiary  being  disposed of shall not
         have any continuing  investment in the Company or any other  Subsidiary
         not being simultaneously disposed of.

            Section 5.14. Guaranties.  The Company will not, and will not permit
any  Restricted  Subsidiary,  to become or be liable in respect of any  Guaranty
except Guaranties by the Company of the obligations of any Restricted Subsidiary
as a lessor of Aircraft or Vessels so long as the  obligation  of the Company as
Guarantor  is not in excess of that  which the  Company  would  have were it the
lessor of such Aircraft or Vessels.

            Section  5.15.  Repurchase  of Notes.  Neither  the  Company nor any
Restricted  Subsidiary or Affiliate,  directly or indirectly,  may repurchase or
make any  offer to  repurchase  any  Notes  unless  the  offer  has been made to
repurchase  Notes,  pro rata, from all holders of the Notes at the same time and
upon the same terms. In case the Company repurchases any Notes, such Notes shall
thereafter be cancelled and no Notes shall be issued in substitution therefor.

            Section 5.16.  Transactions with Affiliates and Affiliated Entities.
The Company will not, and will not permit any  Restricted  Subsidiary  to, enter
into or be a party to any  transaction  or  arrangement  with any  Affiliate  or
Affiliated Entity (including,  without limitation, the purchase from, sale to or
exchange of  Property  with,  or the  rendering  of any  service by or for,  any
Affiliate or Affiliated Entity),  except in the ordinary course of, and pursuant
to the reasonable requirements of the Company's or such Restricted Subsidiary's,
business and upon fair and reasonable  terms no less favorable to the Company or
such  Restricted  Subsidiary  than it would obtain in a comparable  arm's-length
transaction  with a  Person  other  than  an  Affiliate  or  Affiliated  Entity;
provided,  however,  that nothing  contained in this ss.5.16 shall  prohibit any
transaction  or arrangement  otherwise  permitted  under Section  2.02(r) of the
Operating Agreement as in effect on the Execution Date.

            Section 5.17. Investments. The Company will not, and will not permit
any  Restricted  Subsidiary to, make any  investments  in or loans,  advances or
extensions of credit to, any Person, except:

                   (a)  investments,  loans and  advances by the Company and its
         Restricted  Subsidiaries in and to Restricted  Subsidiaries,  including
         any  investment  in  a  Person  which,  after  giving  effect  to  such
         investment, will become a Restricted Subsidiary;

                   (b)  investments in commercial  paper maturing in 270 days or
         less from the date of issuance which, at the time of acquisition by the
         Company or any Restricted Subsidiary, is accorded the highest rating by
         Standard & Poor's,  Moody's Investors Service, Inc. or other nationally
         recognized credit rating agency of similar standing;

                   (c) investments in direct obligations of the United States of
         America, or any agency thereof,  maturing in twelve months or less from
         the date of acquisition  thereof and which are backed by the full faith
         and credit of the United States;

                   (d)   investments  in  direct   obligations  of  the  federal
         government of Canada, or any agency thereof,  maturing in twelve months
         or less from the date of  acquisition  thereof  and which are backed by
         the full faith and credit of the federal government of Canada;

                   (e)  investments in demand  deposits  and/or  certificates of
         deposit  maturing within one year from the date of acquisition  thereof
         issued  by a bank or  trust  company  organized  under  the laws of the
         United  States  or any  state  thereof,  having  capital,  surplus  and
         undivided profits  aggregating at least  $100,000,000 and substantially
         all of whose assets are located in the United States;  provided that at
         the  time  of  acquisition  thereof  by  the  Company  or a  Restricted
         Subsidiary,  the senior  unsecured  long-term  deposits of such bank or
         trust  company or the senior  unsecured  long-term  debt of the holding
         company  of such bank or trust  company  (in the  event no such  rating
         exists  for such  bank or trust  company)  is rated  "A" or  better  by
         Standard & Poor's or "A2" or better by Moody's Investors Service, Inc.;

                  (f) investments by the Company and its Restricted Subsidiaries
         in Property and  Equipment  (including  investments  in  Unconsolidated
         Special  Purpose  Entities)  to be  used  in  the  ordinary  course  of
         business; and

                   (g) short-term receivables arising from the sale of goods and
         services  in the  ordinary  course of  business  of the Company and its
         Restricted Subsidiaries.

         For purposes of this ss.5.17, at any time when a corporation, a limited
liability  company  or  a  partnership  becomes  a  Restricted  Subsidiary,  all
investments of such  corporation,  limited  liability  company or partnership at
such time shall be deemed to have been made by such  corporation,  such  limited
liability company or such partnership, as a Restricted Subsidiary, at such time.

            Section 5.18. Termination of Pension Plans. The Company will not and
will not permit any Subsidiary to permit any employee benefit plan maintained by
it to be terminated  in a manner which could result in the  imposition of a lien
on any  Property of the Company or any  Subsidiary  pursuant to Section  4068 of
ERISA.

            Section  5.19.  Reports and Rights of  Inspection.  The Company will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct  entries will be made of all dealings or  transactions
of or in relation to the business and affairs of the Company or such Subsidiary,
in accordance  with  generally  accepted  principles of accounting  consistently
maintained (except for changes disclosed in the financial  statements  furnished
to you pursuant to this ss.5.19 and  concurred  with by the  independent  public
accountants  referred to in ss.5.19(b) hereof),  and will furnish to you so long
as you are the holder of any Note and to each other institutional  holder of the
then  outstanding  Notes  (in  duplicate  if so  specified  below  or  otherwise
requested):

                   (a)  Quarterly  Statements.  As soon as available  and in any
         event  within 60 days  after the end of each  quarterly  fiscal  period
         (except the last) of each fiscal year, duplicate copies of:

                            (1) a consolidated  balance sheet of the Company and
                  its  Restricted  Subsidiaries  as of the close of such quarter
                  setting forth in comparative form the consolidated figures for
                  the end of the preceding fiscal year,

                            (2)   consolidated   statements  of  operations  and
                  changes in members'  equity of the Company and its  Restricted
                  Subsidiaries  for such quarterly period and for the portion of
                  the fiscal  year ending with such  quarter,  setting  forth in
                  comparative   form   the   consolidated    figures   for   the
                  corresponding period of the preceding fiscal year,

                            (3)  consolidated  statements  of cash  flows of the
                  Company and its  Restricted  Subsidiaries  for such  quarterly
                  period and for the portion of the fiscal year ending with such
                  quarter,  setting forth in comparative  form the  consolidated
                  figures for the  corresponding  period of the preceding fiscal
                  year, and

                            (4) a  list  of  all  Equipment,  all  purchases  of
                  additional Equipment and of any Equipment which has become the
                  subject  of a  total  loss,  in  any  such  case  during  such
                  quarterly  period and the  percentage of all Equipment that is
                  being leased from the Company as at the end of such  quarterly
                  period,

         all in reasonable  detail and certified as complete and correct,  by an
         authorized financial officer of the Company or the Manager;

                   (b) Annual Statements.  As soon as available and in any event
         within  90 days  after the close of each  fiscal  year of the  Company,
         duplicate copies of:

                            (1) a consolidated  balance sheet of the Company and
                  its  Restricted  Subsidiaries  as of the close of such  fiscal
                  year, and

                            (2)   consolidated   statements  of  operations  and
                  changes in  members'  equity and cash flows of the Company and
                  its Restricted Subsidiaries for such fiscal year,

         in each case setting forth in comparative form the consolidated figures
         for the preceding fiscal year, all in reasonable detail and accompanied
         by a report  thereon of a firm of  independent  public  accountants  of
         recognized national standing selected by the Company to the effect that
         the consolidated  financial statements have been prepared in accordance
         with generally  accepted  accounting  principles and present fairly, in
         all material respects,  the financial  condition of the Company and its
         Restricted Subsidiaries and that the examination of such accountants in
         connection  with such financial  statements has been made in accordance
         with generally  accepted  auditing  standards and accordingly  includes
         such tests of the accounting records and such other auditing procedures
         as were  considered  necessary  to provide a  reasonable  basis for the
         opinion expressed in the report;

                   (c) Audit Reports. Promptly upon receipt thereof, one copy of
         each interim or special audit made by  independent  accountants  of the
         books of the Company or any Restricted Subsidiary;

                   (d) SEC and  Other  Reports.  Promptly  upon  their  becoming
         available,  one copy of each  financial  statement,  report,  notice or
         proxy  statement  sent by the Company to members  generally and of each
         regular  or  periodic  report,   and  any  registration   statement  or
         prospectus  filed by the Company or any  Subsidiary or the Manager with
         any securities  exchange or the  Securities and Exchange  Commission or
         any successor  agency,  and copies of any orders in any  proceedings to
         which the Company or any of its Subsidiaries or the Manager is a party,
         issued  by  any   governmental   agency,   Federal  or  state,   having
         jurisdiction  over  the  Company  or  any of  its  Subsidiaries  or the
         Manager;

                   (e) Requested Information.  With reasonable  promptness,  all
         such  information  which  at the time  you or any  successor  qualified
         institutional  buyer (as defined in Rule 144A of the General  Rules and
         Regulations  of the  Securities  and Exchange  Commission)  may need to
         comply  with said Rule 144A upon a sale of Notes  pursuant to said Rule
         as  well  as  such  other  data  and  information  as you  or any  such
         institutional holder may reasonably request;

                   (f) Officer's  Certificates.  Within the periods  provided in
         paragraphs (a) and (b) above, a certificate of an authorized  financial
         officer of the Company or the  Manager  stating  that such  officer has
         reviewed the provisions of this  Agreement and setting  forth:  (i) the
         information and any  computations  (in sufficient  detail)  required in
         order to  establish  whether  the Company  was in  compliance  with the
         requirements of ss.5.7 through  ss.5.18,  inclusive,  at the end of the
         period covered by the financial  statements then being furnished,  (ii)
         whether there existed as of the date of such  financial  statements and
         whether, to the best of such officer's  knowledge,  there exists on the
         date of the  certificate  or  existed  at any time  during  the  period
         covered by such  financial  statements  any Default or Event of Default
         and,  if  any  such  condition  or  event  exists  on the  date  of the
         certificate,  specifying the nature and period of existence thereof and
         the action the  Company is taking  and  proposes  to take with  respect
         thereto, and (iii) the Equipment Value of Aggregate Equipment as of the
         end of such period;

                   (g) Accountants  Certificates.  Within the period provided in
         paragraph (b) above, a report of the  accountants who render an opinion
         with  respect  to such  financial  statements,  stating  that they have
         reviewed ss.ss.5.7,  5.8, 5.9, 5.11, 5.12 and ss.5.17 of this Agreement
         and stating further  whether,  in making their audit,  such accountants
         have become  aware of any Default or Event of Default  under any of the
         terms or provisions of this  Agreement  insofar as any of such terms or
         provisions  pertain to or involve accounting matters or determinations,
         and if any such  condition or event then exists,  specifying the nature
         and period of existence thereof;

                   (h) Unrestricted Subsidiaries.  Within the respective periods
         provided in paragraph (b) above,  financial statements of the character
         and  for the  dates  and  periods  as in said  paragraph  (b)  provided
         covering  each  Unrestricted  Subsidiary  (or  groups  of  Unrestricted
         Subsidiaries on a consolidated basis);

                   (i)  Reports  to  Members.   Promptly  upon  their   becoming
         available copies of all financial statements and reports other than tax
         reports sent by the Company to its Members generally, including without
         limitation,  copies of the annual  comparison  report  prepared  by the
         Manager pursuant to Section 2.06(e) of the Operating Agreement; and

                   (j) Annual Insurance  Certificates.  Within 90 days after the
         end of each  fiscal  year  of the  Company,  a  certificate  signed  by
         Carpenter  Moore  Insurance  Services  Inc.  or any  other  independent
         insurance  broker  satisfactory  to the Majority  Holders  containing a
         statement of the insurance maintained by the Company pursuant to ss.5.6
         (including as to each policy, its number, the amount, the insurer,  the
         named  assureds,  the type of risk,  the loss payees and the expiration
         date) and a statement that such  insurance is in such amounts,  against
         such risks and with such insurers as to adequately protect the Company;
         and

                   (k) Accounting  Controls.  Promptly upon becoming  available,
         and in any event within three  Business Days after  receipt,  copies of
         any  report  outlining  any  material  inadequacies  in the  accounting
         controls of the Company,  the Manager or the Fund Manager  submitted by
         independent  accountants  in connection  with any audit of the Company,
         any Restricted Subsidiary, the Manager or the Fund Manager.

         Without limiting the foregoing, the Company will permit you, so long as
you are the holder of any Note, and each institutional  holder of 10% or more of
the aggregate principal amount of the then outstanding Notes (or such Persons as
either  you or such  holder  may  designate),  to visit and  inspect,  under the
Company's guidance,  any of the properties of the Company or any Subsidiary,  to
examine all their books of account,  records,  reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers,  employees,  and independent public
accountants  (and by this provision the Company  authorizes said  accountants to
discuss with you the  finances and affairs of the Company and its  Subsidiaries)
all at such  reasonable  times  and as  often  as may be  reasonably  requested;
provided,  however, that any inspections of Equipment shall only be permitted to
be  conducted at such times and in such manner as shall not  interfere  with the
normal and customary use of such  Equipment by the lessee  thereof.  The Company
shall not be required to pay or  reimburse  you or any such holder for  expenses
which you or any such holder may incur in connection with any such visitation or
inspection  unless a Default or Event of  Default  shall  have  occurred  and be
continuing,  in which case,  any such  visitation or inspection  shall be at the
sole expense of the Company.

         You agree that all non-public  information furnished to you pursuant to
this Agreement shall be treated as confidential  information by you and that you
will use reasonable  efforts to refrain from disclosing such  information to any
other Person (excluding any of your officers,  employees,  agents,  auditors and
counsel),  provided that (a) you shall not be liable to the Company or any other
Person in damages for any failure to comply with the foregoing  covenant  except
in any  case  involving  gross  negligence,  willful  misconduct  or  fraudulent
misconduct on your part, (b) you may disclose any or all of such  information if
in your  judgment such  disclosure is necessary or advisable in connection  with
the  preservation or protection of your interests as a holder of any Notes or in
connection  with  selling,  or otherwise  realizing  upon your  interest in, the
Notes,  and (c) you may disclose any such  information to, or in response to the
order  or  request  of,  any  governmental  agency,  regulatory  or  supervisory
authority  (including  for this  purpose the National  Association  of Insurance
Commissioners) or court or any nationally recognized rating agency in connection
with its rating of the holder of the Notes.  The  restrictions  contained herein
shall not apply to information  which (i) is or becomes  generally  available to
the  public   other  than  as  a  result  of  a   disclosure   by  you  or  your
representatives,  (ii) becomes available to you on a non-confidential basis from
a source  other than the  Company or one of its agents or (iii) was known to you
on a non-confidential basis prior to its disclosure to you by the Company or one
of its agents.

         The foregoing provisions of this ss.5.19  notwithstanding,  the Company
shall not be  required  to  furnish  any of the above  information  which is not
otherwise  generally available to the public to any holder of the Notes which is
engaged in the transportation equipment leasing or service business.

            Section 5.20.  Certain  Appraisals.  (a) The Requisite Holders shall
have the  right,  exercisable  not more than two times  from and after the first
Closing Date,  to require  that, at the expense of the Company,  an appraisal be
made of the Current Fair Market Value of the Equipment (the "Appraised  Value").
In addition to such required appraisals at the Company's expense,  the Requisite
Holders  shall have the further  right from time to time to cause the  Appraised
Value to be determined (the "Additional  Appraisals");  provided,  that upon any
determination of the Appraised Value pursuant to any Additional  Appraisal,  (1)
if the  Appraised  Value  demonstrates  that the Company is in  compliance  with
ss.5.9(b),  the holders of the Notes  shall bear the expense of such  Additional
Appraisal, or (2) if the Appraised Value demonstrates that the Company is not in
compliance with ss.5.9(b), the Company shall bear the expense of such Additional
Appraisal.

         In any such event, the Company shall promptly notify all of the holders
of the Notes of the  request  to have the  Appraised  Value  determined  and the
Appraised  Value shall  thereupon be determined in accordance with the Appraisal
Procedure set forth below. The Company shall make available to any appraiser who
so requests all information  regarding the Equipment reasonably requested by any
appraiser.  Any  appraisal  made pursuant to this ss.5.20 shall be limited to an
appraisal of only such  Equipment  designated  by the Company as is necessary to
demonstrate compliance with ss.5.6, ss.5.9 or ss.5.12.

         "Appraisal   Procedure"   shall  mean  the   following   procedure  for
determining  the Current Fair Market Value of any  Equipment:  If the  Requisite
Holders shall have given written notice to the Company requesting  determination
of such value by the  Appraisal  Procedure,  the Company shall  designate  which
nationally  recognized  appraiser(s) listed on Schedule III hereto shall conduct
the Appraisal Procedure. The Requisite Holders shall have the right to cause any
appraiser  listed on Schedule III to be removed  from such  Schedule III if such
holders shall indicate their  objection to any such appraiser to the Company and
state a reasonable  basis  therefor.  If the Company shall seek to designate any
appraiser other than one listed on Schedule III, the Company and such requesting
holders  shall  consult for the purpose of  appointing  a qualified  independent
appraiser  skilled in the  valuation of Property such as the Equipment by mutual
agreement. If no such appraiser is so appointed within 15 days after such notice
is  given,  the  Company  and  such  holders  shall  each  appoint  a  qualified
independent  appraiser  within 20 days after such notice is given.  If one party
appoints an appraiser pursuant to the preceding sentence, the appraisal shall be
made by such  appraiser  if the other party fails to appoint a second  appraiser
within the applicable time limit. If both parties  appoint  appraisers,  the two
appraisers so appointed shall within 30 days after such notice is given, appoint
a third independent appraiser. If no such third appraiser is appointed within 30
days  after  such  notice is  given,  either  party  may  apply to the  American
Arbitration  Association  to make such  appointment,  and both parties  shall be
bound by any such  appointment.  If the  parties  shall have  appointed a single
appraiser,  his  determination  of Current Fair Market Value shall be final.  If
three appraisers shall be appointed, the Current Fair Market Value determined by
the three appraisers  shall be averaged,  the  determination  which differs most
from such average shall be excluded,  the remaining two determinations  shall be
averaged  and such average  shall be final and shall  constitute  the  Appraised
Value.


SECTION 6.               EVENTS OF DEFAULT AND REMEDIES THEREFOR.

             Section 6.1.  Events of Default.  Any one or more of the  following
shall constitute an "Event of Default" as the term is used herein:

                   (a)  Default  shall  occur in the  payment of interest on any
         Note  when the same  shall  have  become  due and  such  default  shall
         continue for more than five days; or

                   (b)  Default  shall  occur  in the  making  of  any  required
         prepayment on any of the Notes as provided in ss.2.1; or

                   (c) Default shall occur in the making of any other payment of
         the  principal of any Note or the premium  thereon at the  expressed or
         any accelerated maturity date or at any date fixed for prepayment; or

                   (d) Default  shall be made in the payment of the principal of
         or interest or premium,  if any, on any  Indebtedness of the Company or
         any Restricted  Subsidiary for borrowed money  aggregating in excess of
         $1,000,000,  as and when the same shall  become due and  payable by the
         lapse of time, by declaration, by call for redemption or otherwise, and
         such default shall continue  beyond the grace period,  if any,  allowed
         with respect thereto;  provided however, this ss.6.1(d) shall not apply
         to alleged  defaults under  contracts or leases (other than relating to
         Indebtedness  for  borrowed  money)  that are being  contested  in good
         faith; or

                   (e) Default or the  happening  of any event shall occur under
         any  indenture,   agreement,   or  other  instrument  under  which  any
         Indebtedness  of the Company or any Restricted  Subsidiary for borrowed
         money  aggregating  in excess  of  $1,000,000  may be  issued  and such
         default or event  shall  continue  for a period of time  sufficient  to
         permit the  acceleration  of the  maturity of any  Indebtedness  of the
         Company or any Restricted Subsidiary outstanding  thereunder;  provided
         however,  this  ss.6.1(e)  shall not apply to  alleged  defaults  under
         contracts or leases (other than relating to  Indebtedness  for borrowed
         money) that are being contested in good faith; or

                   (f) Default shall occur in the  observance or  performance of
         any  covenant  or  agreement   contained  in  ss.5.7  through   ss.5.16
         (excluding  ss.5.9(b)),  inclusive,  hereof, or in the Letter Agreement
         dated the Execution Date between the Company and the Purchaser; or

                   (g) Default shall occur in the  observance or  performance of
         the provisions of ss.5.9(b) which is not remedied within the earlier of
         (1) 45 days of the occurrence  thereof or (2) 10 days after any officer
         of the Manager shall have received actual knowledge of such Default; or

                   (h) Default shall occur in the  observance or  performance of
         any other  provision of this Agreement  which is not remedied within 30
         days  after any  officer of the  Manager  shall  have  received  actual
         knowledge of such Default; or

                   (i)  Any  representation  or  warranty  made  by the  Company
         herein,  or  made  by the  Company  in  any  statement  or  certificate
         furnished by the Company in  connection  with the  consummation  of the
         issuance and delivery of the Notes or furnished by the Company pursuant
         hereto,  is  untrue  in any  material  respect  as of the  date  of the
         issuance or making thereof; or

                   (j)  The  Company  or  any  Restricted   Subsidiary   becomes
         insolvent or bankrupt, is generally not paying its debts as they become
         due or makes an assignment for the benefit of creditors, or the Company
         or any Restricted Subsidiary applies for or consents to the appointment
         of a custodian,  trustee or receiver for the Company or such Restricted
         Subsidiary or for the major part of the Property of either; or

                   (k) A  custodian,  trustee or receiver is  appointed  for the
         Company  or any  Restricted  Subsidiary  or for the  major  part of the
         Property  of either  and is not  discharged  within 30 days  after such
         appointment; or

                   (l) Final  judgment  or  judgments  for the  payment of money
         aggregating in excess of $1,000,000 is or are  outstanding  against the
         Company or any Restricted  Subsidiary or against any Property or assets
         of either and any one of such judgments has remained unpaid, unvacated,
         unbonded  or unstayed  by appeal or  otherwise  for a period of 30 days
         from the date of its entry; or

                   (m)  Bankruptcy,  reorganization,  arrangement  or insolvency
         proceedings,  or other  proceedings  for relief under any bankruptcy or
         similar law or laws for the relief of  debtors,  are  instituted  by or
         against the Company or any  Restricted  Subsidiary  and, if  instituted
         against the Company or any Restricted  Subsidiary,  are consented to or
         are not dismissed within 60 days after such institution; or

                   (n) Any of the Events of Dissolution described in clauses (a)
         through (d) and clause (f) of Section 10.01 of the Operating  Agreement
         as in effect on the Execution  Date shall occur or the Company shall be
         terminated.

         Notwithstanding  the  foregoing,  if any  one  or  more  of the  events
described in (j),  (k), (l) or (m) above shall have  occurred and be  continuing
involving  one or more  Restricted  Subsidiaries,  it  shall  not be  deemed  to
constitute an Event of Default unless the Restricted  Subsidiary or Subsidiaries
so involved own, in the aggregate, 5% or more of the Tangible Assets at the time
owned by the Company and its Restricted Subsidiaries.

             Section 6.2. Notice to Holders. When any Event of Default described
in the  foregoing  ss.6.1 has  occurred,  or if the holder of any Note or of any
other  evidence of  Indebtedness  of the  Company  gives any notice or takes any
other  action with  respect to a claimed  default,  the  Company  agrees to give
notice within three Business Days of such event to all holders of the Notes then
outstanding,  such notice to be in writing and sent by  registered  or certified
mail or by telegram.

             Section 6.3. Acceleration of Maturities.  When any Event of Default
described in paragraph (a), (b) or (c) of ss.6.1 has happened and is continuing,
any  holder  of any Note  may,  and  when any  Event  of  Default  described  in
paragraphs  (d)  through  (l),  inclusive,  of said ss.6.1 has  happened  and is
continuing,  the  holder or holders  of 40% or more of the  principal  amount of
Notes at the time  outstanding  may, by notice in writing sent by  registered or
certified  mail to the Company,  declare the entire  principal  and all interest
accrued on all Notes to be, and all Notes shall thereupon become,  forthwith due
and payable,  without any  presentment,  demand,  protest or other notice of any
kind,  all of which are  hereby  expressly  waived.  When any  Event of  Default
described in paragraph (m) or (n) of ss.6.1 has occurred,  then all  outstanding
Notes shall immediately  become due and payable without  presentment,  demand or
notice of any kind.  Upon the Notes  becoming due and payable as a result of any
Event of Default as aforesaid,  the Company will forthwith pay to the holders of
the Notes the entire  principal  and  interest  accrued on the Notes and, to the
extent permitted by law, an amount,  payable as liquidated  damages and not as a
penalty,  equal to the amount  which  would be payable if the  Company  then had
elected  to prepay  the  Notes at a premium  pursuant  to  ss.2.2.  No course of
dealing  on the part of the  holder  or  holders  of any  Note nor any  delay or
failure  on the part of any  holder of the  Notes to  exercise  any right  shall
operate as a waiver of such right or otherwise  prejudice such holder's  rights,
powers and remedies. The Company further agrees, to the extent permitted by law,
to pay to the holder or holders of the Notes all costs and expenses  incurred by
them in the  collection  of any Notes upon any  default  hereunder  or  thereon,
including reasonable compensation to such holder's or holders' attorneys for all
services rendered in connection therewith.

             Section 6.4.  Rescission of  Acceleration  The provisions of ss.6.3
are subject to the condition  that if the  principal of and accrued  interest on
all or any outstanding  Notes have been declared  immediately due and payable by
reason of the  occurrence of any Event of Default  described in  paragraphs  (a)
through  (l),  inclusive,  of  ss.6.1,  the  Majority  Holders  may,  by written
instrument filed with the Company, waive such default and rescind and annul such
declaration  and  the  consequences  thereof,  provided  that at the  time  such
declaration is annulled and rescinded:

                   (a) no judgment or decree has been entered for the payment of
         any monies due pursuant to the Notes or this Agreement;

                   (b) all arrears of interest  upon all the Notes and all other
         sums  payable  under the Notes and under  this  Agreement  (except  any
         principal,  interest  or premium on the Notes  which has become due and
         payable solely by reason of such  declaration  under ss.6.3) shall have
         been duly paid; and

                   (c) each and every  Default  and Event of Default  shall have
         been made good, cured or waived pursuant to ss.7.1;

and provided  further,  that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.


SECTION 7.               AMENDMENTS, WAIVERS AND CONSENTS.

             Section 7.1. Consent  Required.  Any term,  covenant,  agreement or
condition of this Agreement may, with the consent of the Company,  be amended or
compliance therewith may be waived (either generally or in a particular instance
and either  retroactively or prospectively),  if the Company shall have obtained
the  consent in writing of the  Majority  Holders;  provided  that  without  the
written  consent of the  holders of all of the Notes then  outstanding,  no such
waiver, modification,  alteration or amendment shall be effective (a) which will
change the time of payment (including any prepayment  required by ss.2.1) of the
principal of or the interest on any Note or reduce the principal  amount thereof
or change the rate of  interest  thereon,  or (b) which  will  change any of the
provisions  with respect to optional  prepayments,  (c) which will change any of
the  provisions of ss.6,  or (d) which will change the  percentage of holders of
the Notes required to consent to any such amendment,  alteration or modification
or any of the provisions of this ss.7.

             Section 7.2. Solicitation of Holders. The Company will not solicit,
request or negotiate for or with respect to any proposed  waiver or amendment of
any of the  provisions of this  Agreement or the Notes unless each holder of the
Notes  (irrespective  of the amount of Notes then owned by it) shall be informed
thereof by the Company and shall be afforded the  opportunity of considering the
same and shall be supplied by the Company with sufficient  information to enable
it to make an  informed  decision  with  respect  thereto.  Executed or true and
correct copies of any waiver or consent  effected  pursuant to the provisions of
this ss.7.2  shall be  delivered  by the  Company to each holder of  outstanding
Notes  forthwith  following  the date on which the same shall have been executed
and  delivered  by  the  holder  or  holders  of  the  requisite  percentage  of
outstanding Notes. The Company will not, directly or indirectly, pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or  otherwise,  to any  holder  of the Notes in  consideration  for or as an
inducement to any waiver or amendment of any of the terms and provisions of this
Agreement  unless such  remuneration  is  concurrently  paid, on the same terms,
ratably to the holders of all of the Notes then outstanding.

             Section 7.3.  Effect of Amendment or Waiver.  Any such amendment or
waiver  shall  apply  equally  to all of the  holders  of the Notes and shall be
binding  upon them,  upon each future  holder of any Note and upon the  Company,
whether or not such Note shall have been marked to indicate  such  amendment  or
waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.


SECTION 8.               INTERPRETATION OF AGREEMENT; DEFINITIONS.

             Section 8.1.  Definitions.  Unless the context otherwise  requires,
the terms  hereinafter  set forth  when used  herein  shall  have the  following
meanings and the following  definitions shall be equally  applicable to both the
singular and plural forms of any of the terms herein defined:

         "Affiliate" shall mean any Person (other than an Affiliated Partnership
or a  Wholly-owned  Restricted  Subsidiary)  (a) which  directly  or  indirectly
through one or more  intermediaries  controls,  or is controlled by, or is under
common control with, the Company,  (b) which  beneficially  owns or holds 10% or
more of any class of the Equity  Capital of the Company,  (c) 10% or more of the
Voting Equity Capital of which is beneficially owned or held by the Company or a
Subsidiary,  or (d)  Officers  and  members  of the  Board of  Directors  of the
Manager. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the  direction  of the  management  and  policies  of a
Person,  whether through the ownership of Voting Equity Capital,  by contract or
otherwise.

         "Affiliated Entity" shall mean all partnerships of which the Manager is
a controlling  general  partner or with respect to which the general  partner is
controlled  by the  Company  or any  other  Affiliated  Entity  and all  limited
liability  companies  of which the  Manager  is a  controlling  manager  or with
respect  to  which  the  manager  is  controlled  by the  Company  or any  other
Affiliated  Entity and, in any such case,  which are engaged in the  business of
owning and leasing a diversified  equipment  portfolio  consisting  primarily of
used  transportation  and  transportation  related  equipment  with a  secondary
emphasis on new equipment.

         "Agreement"  shall mean this Note  Agreement  dated as of December  15,
1996 between the Company and the Purchaser, as the same may from time to time be
supplemented or amended.

         "Aircraft" shall mean any corporate,  commuter,  or commercial aircraft
or  helicopters,  purchased,  owned  and  leased  or held for lease to others or
otherwise  used by or on behalf of the Company or any  Restricted  Subsidiary as
described  in the  Operating  Agreement,  together  with all  modifications  (as
applicable)  and  replacement  or  spare  parts  used in  connection  therewith,
including, without limitation, engines, rotables or propellers, and any engines,
rotables and propellers used on a stand-alone basis, title to which vests in the
Company or any Restricted  Subsidiary or in a trust or other entity of which the
Company or any Restricted Subsidiary is the sole or a participating  beneficiary
or owner.

         "Appraised Value" shall have the meaning ascribed thereto in ss.5.20.

         "Business  Day"  shall mean any day other  than a  Saturday,  Sunday or
other day on which banks in San Francisco,  California or Chicago, Illinois, are
required by law to close or are customarily closed.

         "Capitalized  Lease"  shall mean any lease the  obligation  for Rentals
with respect to which is required to be  capitalized  on a balance  sheet of the
lessee in accordance with generally accepted accounting principles.

         "Capitalized  Rentals"  shall mean as of the date of any  determination
the  amount  at which the  aggregate  Rentals  due and to  become  due under all
Capitalized  Leases under which the Company or any  Restricted  Subsidiary  is a
lessee would be reflected as a liability on a consolidated  balance sheet of the
Company and its Restricted Subsidiaries.

         "Cash  Equivalents"  shall mean those investments  described in clauses
(b) and (c) of ss.5.17 and those investments  described in clause (e) of ss.5.17
which mature within 90 days from the date of acquisition thereof.

         "Change Event" shall have the meaning ascribed thereto in ss.2.3(a).

         "Change Notice" shall have the meaning ascribed thereto in ss.2.3(a).

         "Class A Member"  shall mean any Person or Persons  who, at the time of
any determination thereof, is a Class A Member of the Company under and pursuant
to the terms of the Operating Agreement.

         "Class B Member"  shall mean any Person or Persons  who, at the time of
any determination thereof, is a Class B Member of the Company under and pursuant
to the terms of the Operating Agreement.

         "Closing  Date" and "Closing  Dates"  shall have the meanings  ascribed
thereto in ss.1.2.

         "Commitment Fee" shall have the meaning ascribed thereto in ss.1.3.

         "Company" shall have the meaning ascribed thereto in the Preamble.

         "Consolidated  Assets" as of any date of  determination  shall mean the
sum of (a) cash,  (b) Cash  Equivalents  and (c)  Equipment  Value of  Aggregate
Equipment.

         "Consolidated  Cash Flow  Available  for Fixed  Charges" for any period
shall mean the sum of (a)  Consolidated  Net Income  during such period plus (to
the extent deducted in determining  Consolidated Net Income), (b) all provisions
for any  Federal,  state or  other  income  taxes  made by the  Company  and its
Restricted  Subsidiaries during such period, (c) all provisions for depreciation
and  amortization  made during such period (other than such provisions made with
respect  to  Encumbered  Equipment),  (d) any  loss  arising  as the  result  of
revaluation of Equipment  (net of  revaluation  gains) during such period (other
than any such loss relating to Encumbered Equipment), (e) cash payments received
from Unconsolidated  Special Purpose Entities (other than Unconsolidated Special
Purpose Entities which constitute  Encumbered Equipment) during such period, and
(f) Consolidated Fixed Charges during such period.

         "Consolidated  Debt"  shall  mean  all  Debt  of the  Company  and  its
Restricted  Subsidiaries (other than Short Term Warehouse Debt), determined on a
consolidated basis eliminating intercompany items.

         "Consolidated   Fixed   Charges"   for  any  period  shall  mean  on  a
consolidated basis the sum of (a) all Rentals (other than Rentals on Capitalized
Leases)   payable   during  such  period  by  the  Company  and  its  Restricted
Subsidiaries,  and (b) all Interest Charges on all  Indebtedness  (including the
imputed  interest  applicable  to  Capitalized  Rentals)  of the Company and its
Restricted  Subsidiaries  (other than  Interest  Charges  relating to Short Term
Warehouse Debt).

         "Consolidated  Net Income" for any period shall mean the gross revenues
of the Company and its Restricted Subsidiaries for such period less all expenses
and  other  proper  charges  (including  taxes  on  income),   determined  on  a
consolidated basis in accordance with generally accepted  accounting  principles
consistently  applied and after eliminating  earnings or losses  attributable to
outstanding Minority Interests, but excluding in any event:

                   (a)     the proceeds of any life insurance policy;

                   (b) net  earnings  and  losses of any  Restricted  Subsidiary
         accrued prior to the date it became a Restricted Subsidiary;

                   (c) net earnings and losses of any corporation  (other than a
         Restricted Subsidiary), substantially all the assets of which have been
         acquired in any manner, realized by such other corporation prior to the
         date of such acquisition;

                   (d) net earnings and losses of any corporation  (other than a
         Restricted   Subsidiary)   with  which  the  Company  or  a  Restricted
         Subsidiary  shall have  consolidated or which shall have merged into or
         with the Company or a Restricted  Subsidiary  prior to the date of such
         consolidation or merger;

                   (e)  net  earnings  of  any  business  entity  (other  than a
         Restricted   Subsidiary)   in  which  the  Company  or  any  Restricted
         Subsidiary  has an ownership  interest  unless such net earnings  shall
         have actually  been  received by the Company or such  Subsidiary in the
         form of cash distributions;

                   (f)  any  portion  of the  net  earnings  of  any  Restricted
         Subsidiary which for any reason is unavailable for payment of dividends
         to the Company or any other Restricted Subsidiary;

                   (g) earnings  resulting from any reappraisal,  revaluation or
         write-up of assets;

                   (h) any deferred or other credit  representing  any excess of
         the equity in any  Subsidiary at the date of  acquisition  thereof over
         the amount invested in such Subsidiary;

                   (i) any gain arising from the  acquisition  of any Securities
         of the Company or any Restricted Subsidiary;

                   (j) any  reversal  of any  contingency  reserve  (other  than
         maintenance  reserves and engine  reserves paid by lessees of Equipment
         into restricted accounts which, upon the occurrence of a default under,
         or  expiration  of, the related  lease,  such  reserves are paid to the
         Company),  except to the extent  that  provision  for such  contingency
         reserve  shall have been made from income  arising  during such period;
         and

                   (k)  earnings  generated  by or  attributable  to  Encumbered
         Equipment.

         "Current Fair Market Value" with respect to any item of Equipment shall
mean the fair  market  value  thereof as  determined  by an equally  willing and
informed buyer and seller,  neither under a short time  constraint or compulsion
to buy or sell,  for a single  unit cash  transaction  with no  hidden  value or
liability,  as adjusted by prevailing  market  conditions  (whether at, above or
below  fair  market  value),  including  without  limitation:  the status of the
economy in which such item of Equipment is used, the status of supply and demand
for items of equipment  which are the same as such item of Equipment,  the value
of recent transactions  involving similar items of equipment and the opinions of
informed buyers and sellers with no immediate constraint or compulsion to buy or
sell.

         "Debt" of any Person shall mean and be limited to  Indebtedness of such
Person for and in respect of money  borrowed,  as well as  Indebtedness  of such
Person of the types  described in clauses (a) through (e) of the  definition  of
Indebtedness set forth below.

         "Declaration  Notice"  shall  have  the  meaning  ascribed  thereto  in
ss.2.3(a).

         "Default"  shall mean any event or condition  the  occurrence  of which
would,  with the lapse of time or the giving of notice,  or both,  constitute an
Event of Default as defined in ss.6.1.

         "Disposition" shall have the meaning ascribed thereto in ss.5.13(a).

         "Distributions"  shall mean and include (a) any payment or distribution
of income or profits of the Company  (other than payments of  Management  Fees),
(b) any other  payment or other  distribution  of Property  (including,  without
limitation,  cash  distributions)  made by or on behalf of the Company to any of
its Members  which  under  generally  accepted  accounting  principles  would be
required to be deducted from the capital account for such Member on the books of
the  Company,  and (c) any  payment  or  other  distribution  to any  Person  to
purchase,  redeem or retire any  warrant,  option or other  right to acquire any
Unit or other interest as a Member of the Company.

         "Encumbered   Equipment"   shall  mean  all  items  of  Equipment   the
acquisition of which are financed with borrowings  under the Warehousing  Credit
Agreement, whether or not secured by any Lien.

         "Environmental   Law"  shall  mean  any   current  or  future   treaty,
convention, statute, law, regulation,  ordinance, permit, governmental approval,
injunction,   judgment,   order,  consent  decree  or  other  legal  requirement
pertaining  to (a) the  protection  of health,  safety and the indoor or outdoor
environment,  (b) the  conservation,  management or use of natural resources and
wildlife,  (c) the protection or use of surface water and  groundwater,  (d) the
management, manufacture, possession, presence, use, generation,  transportation,
treatment,  storage, disposal, release, threatened release, abatement,  removal,
remediation  or handling of, or exposure to, any hazardous  material  (including
asbestos and crude oil or any fraction thereof) or (e) pollution  (including any
release to air,  land,  surface water and  groundwater),  and includes,  without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund  Amendments and  Reauthorization Act of
1986, 42 U.S.C.  ss.ss.9601 et seq., Solid Waste Disposal Act, as amended by the
Resource  Conservation  and Recovery Act of 1976 and  Hazardous  and Solid Waste
Amendments  of 1984,  42 U.S.C.  ss.ss.6901  et seq.,  Federal  Water  Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.  ss.ss.1251 et
seq.,  Clean Air Act of 1966, as amended,  42 U.S.C.  ss.ss.7401 et seq.,  Toxic
Substances  Control  Act of  1976,  15  U.S.C.  ss.ss.2601  et  seq.,  Hazardous
Materials  Transportation Act, 49 U.S.C. App.  ss.ss.1801 et seq.,  Occupational
Safety and Health Act of 1970,  as amended,  29 U.S.C.  ss.ss.651  et seq.,  Oil
Pollution Act of 1990,  33 U.S.C.  ss.ss.2701  et seq.,  Emergency  Planning and
Community  Right-to-Know  Act of 1986, 42 U.S.C.  ss.ss.11001 et seq.,  National
Environmental  Policy Act of 1969, 42 U.S.C.  ss.ss.4321 et seq.,  Safe Drinking
Water Act of 1974,  as amended,  42 U.S.C.  ss.ss.300(f)  et seq.,  any similar,
implementing  or successor law, and any amendment,  rule,  regulation,  order or
directive issued thereunder.

         "Equipment"  shall  mean  each  item of and  all of the  transportation
equipment and other personal Property  purchased,  owned, and leased or held for
lease  to  others  or  otherwise  used by or on  behalf  of the  Company  or any
Restricted Subsidiary as described in the Operating Agreement, together with all
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment included therein  (including any and all engines originally  installed
thereon), and all substitutions, renewals or replacements of, and all additions,
improvements and accessions to, any and all thereof, title to which vests in the
Company or any Restricted  Subsidiary or in a trust or other entity of which the
Company or any Restricted Subsidiary is the sole or a participating  beneficiary
or owner.

         "Equipment  Management  Agreement" shall mean the Equipment  Management
Agreement dated as of January 24, 1995, entered into on behalf of the Company by
the Manager with its Affiliate,  PLM Investment  Management,  Inc.,  pursuant to
Section 2.02(k) of the Operating Agreement.

         "Equipment  Value"  when used with  reference  to an item of  Equipment
shall mean,  as of any date of  determination  thereof,  the Current Fair Market
Value  (determined  in good faith by the Manager or, if an appraisal  shall have
been made within one year of the date of determination  pursuant to ss.5.20, the
Appraised  Value) of such item of Equipment  owned and leased or  available  for
lease (as lessor) by the Company and its Restricted Subsidiaries.

         "Equipment Value of Aggregate  Equipment" shall mean, as of any date of
determination  thereof,  the Current Fair Market Value (determined in good faith
by the Manager or, if an  appraisal  shall have been made within one year of the
date of  determination  pursuant to ss.5.20,  the Appraised Value) of all of the
Equipment owned and leased or available for lease (as lessor) by the Company and
its  Restricted  Subsidiaries,  including the Company's  proportionate  share of
Equipment  owned jointly  through the Company's  investments  in  Unconsolidated
Special Purpose Entities,  it being understood and agreed that nothing contained
in this definition of "Equipment  Value of Aggregate  Equipment" shall be deemed
or  construed  to relieve  the Company of its  obligation  pursuant to ss.5.6 to
maintain the full amount of insurance  required  pursuant  thereto in respect of
Vessels,  Mobile Offshore Drilling Units and Aircraft  notwithstanding  that the
Company  and its  Subsidiaries  may own  less  than  100%  of any  such  item of
Equipment.  For the purposes of all computations of Equipment Value of Aggregate
Equipment  pertaining  to  ss.5.9(b),  there  shall be  excluded  therefrom  the
Equipment  Value  of  (a)  any  item  of  Equipment  which  at the  time  of the
computation of Equipment Value of Aggregate  Equipment has not been subject to a
lease with a Person which is not an Affiliate or an  Affiliated  Entity for more
than 120 days and (b) Encumbered Equipment.

         "Equity  Capital"  shall mean in the case of a  corporation,  shares of
stock of any  class,  including  as stock any  warrants,  rights or  options  to
purchase or otherwise  acquire  stock or other  Securities  exchangeable  for or
convertible  into  stock,  and in the  case of any  limited  liability  company,
partnership  or other entity  shall mean any  membership  interest,  partnership
interest or like interest  constituting  equity,  and in the case of each of the
foregoing, any part or portion thereof.

         "ERISA" is defined in ss.3.2.

         "Event of Default" shall have the meaning ascribed thereto in ss.6.1.

         "Execution Date" shall have the meaning ascribed thereto in ss.1.2.

         "Four-Quarter  Period" shall mean a period of four,  full,  consecutive
quarter-annual fiscal periods, taken together as one accounting period.

         "Fund Manager" shall mean PLM Investment Management, Inc., a California
corporation,  or any Person or Persons  who, at the time of  reference  thereto,
shall have been appointed as successor to PLM Investment Management, Inc.

         "Guaranties"  by any Person  shall  mean all  obligations  (other  than
endorsements  in the ordinary  course of business of negotiable  instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness,  dividend or other  obligation  of any other Person (the  "primary
obligor") in any manner,  whether  directly or  indirectly,  including,  without
limitation,  all  obligations  incurred  through  an  agreement,  contingent  or
otherwise,  by such Person:  (a) to purchase such  Indebtedness or obligation or
any Property or assets constituting security therefor,  (b) to advance or supply
funds (i) for the purchase or payment of such  Indebtedness or obligation,  (ii)
to maintain  working  capital or other balance  sheet  condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or  obligation,  or (iii) to lease  Property or to purchase  Securities or other
Property or  services  primarily  for the purpose of assuring  the owner of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of the  Indebtedness or obligation,  or (c) otherwise to assure the owner of the
Indebtedness  or  obligation  of the  primary  obligor  against  loss in respect
thereof.  For the  purposes of all  computations  made under this  Agreement,  a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness  equal to the principal  amount of such  Indebtedness  for borrowed
money  which  has been  guaranteed,  and a  Guaranty  in  respect  of any  other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.

         "Indebtedness"  of any Person shall mean and include all obligations of
such Person which in accordance with generally  accepted  accounting  principles
shall be classified  upon a balance sheet of such Person as  liabilities of such
Person, and in any event shall include, without duplication, all (a) obligations
of such Person for borrowed money or which has been incurred in connection  with
the acquisition of Property or assets,  (b)  obligations  secured by any lien or
other  charge upon  Property or assets  owned by such  Person,  even though such
Person has not  assumed or become  liable for the  payment of such  obligations,
excluding,  however,  any lien  which is being  contested  in good faith and the
continued  existence thereof shall not cause any material  interference with the
use of the Property,  (c)  obligations  created or arising under any conditional
sale or other title  retention  agreement  with respect to Property  acquired by
such  Person,  notwithstanding  the fact that the  rights  and  remedies  of the
seller,  lender or lessor  under  such  agreement  in the event of  default  are
limited to repossession or sale of Property, excluding, however, any arrangement
for the  acquisition  of Property by such Person  where the risk of loss of such
Property  has not  passed  to such  Person  (d)  Capitalized  Rentals  under any
Capitalized Lease and (e) Guarantees.

         "Interest  Charges"  for any  period  shall mean all  interest  and all
amortization  of debt discount and expense on any particular Debt for which such
calculations  are being made and shall include the imputed  interest  portion of
Capitalized  Rentals.  Computations of Interest Charges on a pro forma basis for
Debt having a variable  interest  rate shall be calculated at the rate in effect
on the date of any determination.

         "Lien" shall mean any interest in Property  securing an obligation owed
to, or a claim by, a Person other than the owner of the  Property,  whether such
interest is based on the common law, statute or contract,  and including but not
limited to the security  interest or lien arising from a mortgage,  encumbrance,
pledge,  conditional  sale or trust receipt or a lease,  consignment or bailment
for security purposes.  The term "Lien" shall include reservations,  exceptions,
encroachments,  easements, rights-of-way,  covenants, conditions,  restrictions,
leases and other title exceptions and encumbrances  (including,  with respect to
stock, stockholder agreements, voting trust agreements,  buy-back agreements and
all similar arrangements) affecting Property but shall not include the interests
of any  Affiliated  Entity,  or any  subsidiary  of the Manager in any Equipment
owned jointly by the Company,  such Affiliated  Entity and any subsidiary of the
Manager through a trust, a limited liability  company or a partnership.  For the
purposes of this  Agreement,  the Company or a  Restricted  Subsidiary  shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, Capitalized Lease or other arrangement pursuant to
which title to the Property has been  retained by or vested in some other Person
for security purposes and such retention or vesting shall constitute a Lien.

         "Long-Term  Lease"  shall mean any lease of real or  personal  Property
(other than a Capitalized  Lease) having an original term,  including any period
for which the lease may be renewed or extended  at the option of the lessor,  of
more than three years.

         "Majority  Holders" shall mean as of any date of determination  thereof
the holders of not less than 50.1% in aggregate  principal amount of outstanding
Notes.

         "Management  Fees" shall mean (a) the  Equipment  Management  Fee,  the
Re-Lease  Fee, the Equipment  Liquidation  Fee (as such terms are defined in the
Operating  Agreement)  and  any  premiums,  commissions  or fees  for  providing
insurance  and  risk  management  services,  all as  provided  in the  Operating
Agreement as in effect on the  Execution  Date,  and (b) all fees payable to the
Fund Manager pursuant to the Equipment  Management Agreement as in effect on the
Execution Date.

         "Manager"  shall  mean  PLM  Financial   Services,   Inc.,  a  Delaware
corporation, or any Person or Persons who, at the time of reference thereto, has
become the Manager of the Company  pursuant to the  Operating  Agreement  and if
there is more than one such Manager,  the terms "Manager" shall mean the Manager
of the Company vested under the  provisions of the Operating  Agreement with the
responsibility  and authority for the  management  and direction of the business
and operations of the Company.

         "Material  Agreement" shall mean the Equipment Management Agreement and
the Operating Agreement.

         "Member" shall mean any member, of any class or kind, of the Company.

         "Minority  Interests"  shall  mean any Equity  Capital of a  Restricted
Subsidiary (other than directors' qualifying shares of stock as required by law)
that  are  not  owned  by the  Company  and/or  one or  more  of its  Restricted
Subsidiaries.  Minority  Interests  shall be  valued  by  valuing  (a)  Minority
Interests   constituting   preferred  stock  at  the  voluntary  or  involuntary
liquidating  value of such preferred stock,  whichever is greater,  (b) Minority
Interests  constituting  common  stock at the book value of capital  and surplus
applicable thereto adjusted, if necessary,  to reflect any changes from the book
value of such common stock required by the foregoing  method of valuing Minority
Interests in preferred stock and (c) Minority Interests constituting  membership
interests or limited or general partnership  interests at the book value thereof
determined in accordance with generally  accepted  accounting  principles in the
United States.

         "Mobile   Offshore   Drilling   Unit"  shall  mean  any  jack-up   rig,
semi-submersible  rig or platform drilling rig,  purchased,  owned and leased or
held for lease to others or otherwise used by or on behalf of the Company or any
Restricted Subsidiary as described in the Operating Agreement, together with all
appliances, parts, instruments, appurtenances, accessories, furnishings or other
equipment included therein and all  substitutions,  renewals or replacements of,
and all additions, improvements and accessions to, any and all thereof, title to
which vests in the Company or any  Restricted  Subsidiary or in a trust or other
entity  of which  the  Company  or any  Restricted  Subsidiary  is the sole or a
participating beneficiary or owner.

         "Notes" shall have the meaning ascribed thereto in ss.1.1(a).

         "Notification  of Declaration"  shall have the meaning ascribed thereto
in ss.2.3(a).

         "Officer"  shall mean any  officer as  provided  in the  by-laws of the
Manager.

         "Operating  Agreement"  shall  mean  the  Fifth  Amended  and  Restated
Operating Agreement of Professional Lease Management Income Fund I, L.L.C. dated
as of January  24,  1995,  by and among PLM  Financial  Services,  Inc.,  as the
manager  and the initial  Class B Member,  Denise M.  Kirchubel,  as the initial
Class A Member,  and the other Class A Members named therein,  as amended by the
First  Amendment  dated as of March  18,  1996,  and as the same may be  further
amended, modified, supplemented or restated from time to time.

         "Payment Date" shall have the meaning ascribed thereto in ss.2.3(a).

         "Person"  shall  mean  an  individual,   limited   liability   company,
partnership,  corporation,  trust, joint venture or unincorporated organization,
and a government or agency or political subdivision thereof.

         "Prohibited  Transferee"  shall mean Bank of America  National  Trust &
Savings Association and its direct subsidiaries.

         "Property"  shall mean any  interest  in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.

         "Rentals" shall mean and include all fixed rents (including as such all
payments  which the lessee is obligated to make to the lessor on  termination of
the lease or surrender of the  Property)  payable by the Company or a Restricted
Subsidiary,  as lessee or sublessee under a lease of real or personal  Property,
but shall be  exclusive  of any amounts  required to be paid by the Company or a
Restricted  Subsidiary  (whether or not designated as rents or additional rents)
on account of maintenance,  repairs, insurance, taxes and similar charges. Fixed
rents under any so-called  "percentage  leases" shall be computed  solely on the
basis of the minimum rents, if any, required to be paid by the lessee regardless
of sales volume or gross revenues.

         "Requisite Holders" shall mean as of any date of determination  thereof
the  holders  of  not  less  than  66-2/3%  in  aggregate  principal  amount  of
outstanding Notes.

         "Restricted Subsidiary" shall mean (a) those Subsidiaries designated as
such on the Execution Date and whose names are set forth on Annex A to Exhibit B
and (b) any Subsidiary  designated as such by the Manager in a written notice to
the  holders  of the  Notes.  Any  Subsidiary  which  has been  designated  as a
Restricted  Subsidiary  may not  thereafter  be  designated  as an  Unrestricted
Subsidiary.  The Company  shall,  notwithstanding  the  foregoing  definition of
"Restricted Subsidiary",  include any profits or losses of any Affiliated Entity
in any  computation  pursuant to ss.5.7 to the extent of, but only to the extent
of, the Equity Capital of such Affiliated Entity owned by the Company,  provided
that any such computation  pursuant to said ss.5.7 shall so include such profits
and  losses to the extent of the Equity  Capital  of such  Affiliated  Entity so
owned  by the  Company  for so  long  as  100%  of the  Equity  Capital  of such
Affiliated Entity is owned by the Company and other Affiliated Entities.

         "Security"  shall  have  the same  meaning  as in  Section  2(1) of the
Securities Act of 1933, as amended.

         "Short Term Warehouse Debt" shall mean and include all  Indebtedness of
the Company due within one year from the date of the issuance  thereof under the
Warehousing Credit Agreement.

         "Standard & Poor's" shall have the meaning ascribed thereto in ss.4.4.

         The term  "subsidiary"  shall mean, as to any particular parent entity,
any corporation, limited liability company, partnership or other entity of which
more than 50% of the  Voting  Equity  Capital,  and more than 50% of the  Equity
Capital shall be owned by such parent  entity and/or one or more entities  which
are themselves  subsidiaries of such parent entity.  The term "Subsidiary" shall
mean a subsidiary of the Company.

         "Tangible  Assets"  shall  mean,  as of the  date of any  determination
thereof,  the total  amount  of all  assets of the  Company  and its  Restricted
Subsidiaries   determined  in  accordance  with  generally  accepted  accounting
principles (less depreciation, depletion and other properly deductible valuation
reserves),  after  deducting  goodwill,   patents,  trade  names,  trade  marks,
copyrights, franchises,  experimental expense, organization expense, unamortized
debt  discount and expense,  deferred  assets other than prepaid  insurance  and
prepaid taxes,  the excess of cost of shares acquired over book value of related
assets and such other assets as are properly  classified as "intangible  assets"
in accordance with generally accepted accounting principles.

         "Unconsolidated  Special Purpose Entity" shall mean any entity which is
organized solely for the purpose of owning and operating or leasing  long-lived,
low obsolescence transportation or oil drilling equipment in a manner consistent
with the purpose of the Company  articulated in the Operating  Agreement with an
aggregate  purchase  price of $5,000,000 or more in which the Company and one or
more Affiliates are  co-investors  and which investment may not, under generally
accepted  accounting  principles,  be  consolidated  in the  preparation  of the
financial statements of the Company.

         "Units" shall have the same meaning as in the Operating Agreement.

         "Unrestricted  Subsidiary"  shall  mean any  Subsidiary  which is not a
Restricted Subsidiary.

         "Vessel"  shall mean any marine  dry or liquid  bulk  carrier or tanker
purchased,  owned and leased or held for lease to others or otherwise used by or
on behalf of the  Company  or any  Restricted  Subsidiary  as  described  in the
Operating  Agreement,   together  with  all  appliances,   parts,   instruments,
appurtenances,  accessories,  furnishings or other  equipment  included  therein
(including  any and  all  engines  installed  thereon),  and all  substitutions,
renewals or replacements of, and all additions,  improvements and accessions to,
any and all  thereof,  title to which  vests in the  Company  or any  Restricted
Subsidiary or in a trust or other entity of which the Company or any  Restricted
Subsidiary is the sole or a participating beneficiary or owner.

         "Voting Equity Capital" shall mean Securities,  membership interests or
partnership  interests  of any class or classes,  the owners or holders of which
are  entitled  to  elect a  majority  of the  corporate  directors  (or  Persons
performing similar functions).

         "Warehousing  Credit  Agreement" shall mean that certain Second Amended
and Restated  Warehousing  Credit  Agreement dated as of May 31, 1996 (including
any extension,  renewal or replacement  thereof),  as amended by Amendment No. 1
dated as of November 5, 1996,  among the Company and certain  Affiliates,  First
Union National Bank of North Carolina,  as Agent, and the Lenders named therein,
established to finance,  on a short term basis,  the Company's and certain other
Affiliates'  purchases  of  transportation  assets,  as the same may be  further
amended or restated or replaced on substantially similar terms.

         "Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and  outstanding  Equity  Capital  (except
shares of stock required as directors'  qualifying  shares) and all Indebtedness
for  borrowed  money  shall be owned by the  Company  and/or  one or more of its
Wholly-owned Subsidiaries.

         "Withdrawal  Event  Prepayment  Election Period" shall have the meaning
ascribed thereto in ss.2.3(b).

             Section 8.2. Accounting  Principles.  Where the character or amount
of any asset or  liability  or item of  income  or  expense  is  required  to be
determined or any  consolidation or other accounting  computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with  generally  accepted  accounting  principles in the United  States,  to the
extent  applicable,  except  where such  principles  are  inconsistent  with the
requirements of this Agreement.

             Section 8.3.  Directly or  Indirectly.  Where any provision in this
Agreement  refers to action to be taken by any  Person,  or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.


SECTION 9.               MISCELLANEOUS.

             Section 9.1.  Registered  Notes. The Company shall cause to be kept
at its  principal  office a register  for the  registration  and transfer of the
Notes,  and the Company will  register or transfer or cause to be  registered or
transferred, as hereinafter provided and under such reasonable regulations as it
may prescribe, any Note issued pursuant to this Agreement.

         At any time and from time to time the holder of any Note which has been
duly  registered  as  hereinabove  provided may transfer such Note to any person
other than a  Prohibited  Transferee  upon  surrender  thereof at the  principal
office of the Company duly endorsed or  accompanied  by a written  instrument of
transfer  duly  executed  by the  holder  of  such  Note  or its  attorney  duly
authorized in writing.

         The Person in whose name any Note shall be  registered  shall be deemed
and treated as the owner and holder thereof for all purposes of this  Agreement.
Payment of or on account of the principal,  premium, if any, and interest on any
Note shall be made to or upon the written order of such holder.

             Section 9.2.  Exchange of Notes. At any time and from time to time,
upon not less than ten days'  notice to that  effect  given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to ss.9.1,
this ss.9.2 or ss.9.3,  and,  upon  surrender  of such Note at its  office,  the
Company will deliver in exchange therefor, without expense to the holder, except
as set forth below, a Note for the same aggregate  principal  amount as the then
unpaid  principal  amount  of the  Note so  surrendered  or  Notes  for the same
aggregate  principal  amount as the then unpaid  principal amount of the Note so
surrendered  in minimum  denominations  of $1,000,000  (or such lesser amount as
shall  constitute  100% of the  Notes of such  holder)  or any  amount in excess
thereof as such holder shall specify, dated as of the date to which interest has
been  paid on the Note so  surrendered  or,  if such  surrender  is prior to the
payment of any interest thereon,  then dated as of the date of issue, payable to
such Person or Persons,  or  registered  assigns,  as may be  designated by such
holder, and otherwise of the same form and tenor as the Notes so surrendered for
exchange.  The Company may require the payment of a sum  sufficient to cover any
stamp tax or governmental charge imposed upon such exchange or transfer.

             Section 9.3. Loss,  Theft,  Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss,  theft or destruction upon delivery of a
bond of indemnity to the Company in such form and amount as shall be  reasonably
satisfactory  to the Company,  or in the event of such mutilation upon surrender
and  cancellation of the Note, the Company will make and deliver without expense
to the holder thereof,  a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated  Note. If the Purchaser or any  subsequent  institutional
holder  is the  owner of any such  lost,  stolen  or  destroyed  Note,  then the
affidavit  of an  authorized  officer of such owner,  setting  forth the fact of
loss,  theft or destruction and of its ownership of the Note at the time of such
loss,  theft or destruction  shall be accepted as satisfactory  evidence thereof
and no further  indemnity  shall be required as a condition to the execution and
delivery  of a new  Note  other  than the  written  agreement  of such  owner to
indemnify the Company.

             Section  9.4.  Expenses,  Stamp Tax  Indemnity.  Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your out-of-pocket  expenses in connection with the preparation,
execution  and  delivery of this  Agreement  and the  transactions  contemplated
hereby, including but not limited to the reasonable charges and disbursements of
Chapman and Cutler,  your special  counsel,  duplicating  and printing costs and
charges for shipping the Notes, adequately insured to you at your home office or
at such  other  place as you may  designate,  any cost or  expense  incurred  in
obtaining the Private  Placement  Number  referred to in ss.4.4 hereof,  and all
such expenses  relating to any  amendment,  waivers or consents  pursuant to the
provisions hereof,  including,  without limitation,  any amendments,  waivers or
consents  resulting  from any  work-out,  restructuring  or similar  proceedings
relating  to the  performance  by the  Company  of its  obligations  under  this
Agreement  and the Notes.  The  Company  agrees that it will pay the charges and
disbursements  of Chapman and Cutler not later than fifteen  Business  Days from
the  date of  presentation  of an  invoice  therefor  subsequent  to each of the
Closing Dates.  Without limiting the foregoing,  the Company also agrees to pay,
within  fifteen  Business Days of receipt  thereof,  supplemental  statements of
Chapman and Cutler for disbursements  unposted or not incurred as of each of the
Closing Dates. The Company further agrees that it will pay and save you harmless
against any and all  liability  with  respect to stamp and other  taxes,  if any
(other  than taxes  measured  by  income),  which may be payable or which may be
determined to be payable in  connection  with the execution and delivery of this
Agreement  or the  Notes,  whether  or not any Notes are then  outstanding.  The
Company  agrees to protect and  indemnify  you against any liability for any and
all  brokerage  fees and  commissions  payable  or  claimed to be payable to any
Person in connection with the transactions contemplated by this Agreement.

             Section 9.5. Powers and Rights Not Waived; Remedies Cumulative.  No
delay or failure on the part of the  holder of any Note in the  exercise  of any
power or right  shall  operate  as a waiver  thereof;  nor shall  any  single or
partial exercise of the same preclude any other or further exercise thereof,  or
the  exercise  of any other power or right,  and the rights and  remedies of the
holder of any Note are  cumulative  to and are not  exclusive  of any  rights or
remedies any such holder would otherwise  have, and no waiver or consent,  given
or extended pursuant to ss.7 hereof, shall extend to or affect any obligation or
right not expressly waived or consented to.

             Section 9.6.  Notices.  All  communications  provided for hereunder
shall be in  writing  and,  if to you,  delivered  or  mailed by  registered  or
certified mail, by overnight air courier, or by facsimile transmission (in which
case, such  communication  shall be concurrently sent by registered or certified
mail or overnight air courier) in each case prepaid and addressed to you at your
address  appearing on Schedule I to this  Agreement or such other address as you
or the subsequent  holder of any Note  initially  issued to you may designate to
the Company in writing, and if to the Company, delivered or mailed by registered
or certified mail, by overnight air courier,  or by facsimile  transmission  (in
which case,  such  communication  shall be  concurrently  sent by  registered or
certified  mail or overnight  air courier) in each case prepaid and addressed to
the Company c/o PLM Financial Services, Inc. at One Market, Steuart Tower, Suite
800, San Francisco, CA 94105-1301,  Telephone No. (415) 974-1399, Telecopier No.
(415) 882-0860,  Attention: Vice President - Chief Financial Officer, or to such
other address as the Company may in writing  designate to you or to a subsequent
holder of the Note initially issued to you.

             Section  9.7.  Successors  and  Assigns.  This  Agreement  shall be
binding upon the Company and its  successors and assigns and shall inure to your
benefit  and to the  benefit of your  successors  and  assigns,  including  each
successive holder or holders of any Notes.

             Section  9.8.  Survival  of  Covenants  and  Representations.   All
covenants,  representations and warranties made by the Company herein and in any
certificates  delivered  pursuant hereto,  whether or not in connection with the
Execution Date or either of the Closing Dates, shall survive the closing and the
delivery of this Agreement and the Notes.

             Section 9.9.  Severability.  Should any part of this  Agreement for
any reason be declared  invalid,  such decision shall not affect the validity of
any remaining portion,  which remaining portion shall remain in force and effect
as if this  Agreement  had  been  executed  with  the  invalid  portion  thereof
eliminated.

            Section 9.10. Governing Law. This Agreement and the Notes issued and
sold  hereunder  shall be  governed  by and  construed  in  accordance  with the
internal laws of the State of Illinois.

            Section  9.11.  Submission  to  Jurisdiction.  Any  legal  action or
proceeding  with respect to this Agreement or the Notes or any document  related
thereto shall be brought in the courts of the State of Illinois or of the United
States of America for the Northern District of Illinois in no other courts, and,
by execution  and delivery of this  Agreement,  the Company  hereby  accepts for
itself  and in  respect  of its  property  generally  and  unconditionally,  the
jurisdiction  of the  aforesaid  courts.  The  Company  hereby  irrevocably  and
unconditionally  waives  any  objection,   including,  without  limitation,  any
objection to the laying of venue or based on the grounds of forum non conveniens
which it may now or hereafter  have to the bringing of any action or  proceeding
in such respective jurisdiction.

            Section  9.12.  Captions.  The  descriptive  headings of the various
Sections  or parts of this  Agreement  are for  convenience  only and  shall not
affect the meaning or construction of any of the provisions hereof.

            Section 9.13. Limitation of Liability.  Except in the event of fraud
on the part of the  Manager  or any of its  Affiliates  in  connection  with the
transactions  contemplated by this  Agreement,  no holder of any Note shall have
any right at any time to seek  recovery  of the  Indebtedness  evidenced  by the
Notes from the assets of the Manager.



<PAGE>



         The execution  hereof by you shall constitute a contract between us for
the uses and purposes  hereinabove set forth, and this Agreement may be executed
in any  number  of  counterparts,  each  executed  counterpart  constituting  an
original but all together only one agreement.

                                           PROFESSIONAL LEASE MANAGEMENT 
                                           INCOME FUND I,
                                           L.L.C.

                                           By: PLM Financial Services, Inc.,
                                               Its Manager



                                           By /s/ J. Michael Allgood
                                              --------------------------
                                              Its Manager
Accepted as of December __, 1996
                                           KEYPORT LIFE INSURANCE COMPANY

                                           By: Stein Roe & Farnham 
                                               Incorporated,
                                               as agent


                                           By /s/ Richard A. Hegwood
                                              --------------------------
                                              Its Senior Vice President





<PAGE>



                                   SCHEDULE I
                               (to Note Agreement)
                                                       PRINCIPAL AMOUNT
          NAME AND ADDRESSES                            OF NOTES TO BE
             OF PURCHASER                                 PURCHASED

KEYPORT LIFE INSURANCE COMPANY                           $25,000,000
c/o Stein Roe & Farnham Incorporated
1 South Wacker Drive
Chicago, Illinois  60606
Attention:  Private Placements
Telecopier Number:  (312) 368-8100

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal  or other  immediately  available  funds  (identifying  each  payment as
"Professional  Lease Management  Income Fund I, L.L.C.,  7.33% Senior Notes, due
2006, PPN 74316@ AA 0, principal or interest") to:


         Bank of Boston/Cust (ABA #011-000-390)
         For further credit to:  A/C 50757004 - Keyport
                                         Clearance Number 009-8527
                   Attention: Amy Hansbury, Mail Stop 45-02-03

Notices

All notices and  communications,  including notices with respect to payments and
written  confirmation  of each such payment,  to be addressed as first  provided
above.

Name of Nominee in which Notes are to be issued:  Hare & Co.

Taxpayer I.D. Number:  05-0302931




<PAGE>


                                   SCHEDULE II
                               (to Note Agreement)


                                 EXISTING LIENS
                              on the Execution Date

                                      NONE






<PAGE>



                                  SCHEDULE III
                               (to Note Agreement)
                               NAMES OF APPRAISERS

List of Approved Appraisal Firms:

                  GENERAL

         1.       American Appraisal Associates
         2.       Marshal & Stevens
         3.       Valuation Research
         4.       Manufacturers Appraisal
         5.       Strategis Asset Valuation & Management
                    (Alexander & Alexander - Appraisal Division)
         6.       Valuation Engineering Associates

                  CONTAINERS

         1.       Independent Equipment Company
                  2471 McMullen Booth Rd.
                  Suite 309
                  Clearwater, Florida 34619
                  (813) 796-7733

         2.       International Equipment Marketing, Inc.
                  Two Lombard Street
                  San Francisco, California 94111
                  (415) 362-0874

         3.       Unicon

                  TRAILERS

         1.  Arrow Truck Sales, Inc.
                  3200 Manchester Traffic Way
                  Kansas City, Missouri 64129
                  (816) 923-5000

         2.       Taylor & Martin, Inc.

                  MARINE VESSELS

         1.       A.L. Burbank - Fort Lee, New Jersey
         2.       American Marine Advisers
         3.       Bassoe - Oslo, Norway
         4.       Fearnleys - Oslo, Norway
         5.       Clarkson - London, England
         6.       Jacques Pierot & Sons - New York, NY
         7.       Victoria Ships Brokers - Hong Kong
         8.       R.S. Platou (USA) Co. - Houston, Texas
         9.       R.S. Platou A/S - Oslo, Norway

                  AIRCRAFT

         1.  AV Solutions
                  7518 B. Diplomat Drive
                  Manassas, VA  22110
                  (703) 330-0461

         2.       Avitas Aviation
                  835 Alexander Bell Drive
                  Reston, Virginia  22091
                  (703) 476-2300

         3.       Aircraft Information Service, Inc.
                  as successor to
                  Airclaims Information Services, Inc.
                  23232 Peralta Drive
                  Suite 115
                  Laguna Hills, California  92653
                  (714) 830-0101

                  ROLLING STOCK

         1.  Mr. Robert E. Krause
                  Railmark, Inc.
                  10661 Bridger Canyon Road
                  Bozeman, Montana  59715
                  (406) 586-3566

         2.  James D. Husband
                  R.L. Banks & Associates, Inc.
                  1717 K. Street, NW
                  Washington, DC  20006
                  (202) 296-6700

                  MOBILE OFFSHORE DRILLING UNITS

         1.  Bassoe Offshore Consultants
                  Jonathan B. Fairbanks & Erland Bassoe
                  2000 West Loop South, Suite 2110
                  Houston, Texas  77027
                  (713) 850-9002

         2.  R.S. Platou (USA) Inc.
                  Mike Smith - President
                  3535 Briarpark Drive, Suite 201
                  Houston, Texas  77042
                  (713) 974-5505

         3.  Normarine Offshore Consultants A.S.
                  Stein Schie
                  Dronningen 1, Postboks A
                  Bygdoy, 0211 Oslo Norway
                  47 22 55 44 55

         4.  Normarine Offshore Consultants, Inc.
                  Andrew Simpson & Steve Lawrence
                  Weslayan Tower, Suite 1620
                  24 Greenway Plaza
                  Houston, Texas  77046





<PAGE>



                                    EXHIBIT A
                               (to Note Agreement)
               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.


                                7.33% Senior Note
                              Due December 31, 2006
No. R-                                                       ___________, 199__

$                                                               PPN 74316@ AA 0

         PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C., a Delaware limited
liability company (the "Company"), for value received, hereby promises to pay to


                             or registered assigns,
                    on the thirty-first day of December, 2006
                             the principal amount of

                               DOLLARS ($________)

and to pay interest  (computed  on the basis of a 360-day year of twelve  30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate  of  7.33%  per  annum  from  the  date  hereof  until  maturity,   payable
semi-annually  on the last day of each June and December in each year commencing
June 30, 1997,  and at maturity.  The Company  agrees to pay interest on overdue
principal  (including any overdue required or optional  prepayment of principal)
and premium,  if any,  and (to the extent  legally  enforceable)  on any overdue
installment  of interest,  at the rate of 9.33% per annum after  maturity or the
due date thereof,  as applicable,  whether by acceleration  or otherwise,  until
paid.

         Both the  principal  hereof  and  interest  hereon  are  payable at the
principal office of the Company in San Francisco, California in coin or currency
of the  United  States of America  which at the time of  payment  shall be legal
tender for the payment of public and private debts.  If any amount of principal,
premium,  if any,  or  interest  on or in respect of this Note  becomes  due and
payable on any day which is not a Business  Day, such amount shall be payable on
the immediately succeeding Business Day, provided that interest shall be due and
payable through and including such succeeding Business Day. "Business Day" shall
mean any day other than a  Saturday,  Sunday or other day on which  banks in San
Francisco,  California or Chicago,  Illinois are required by law to close or are
customarily closed.

         This  Note is one of the  7.33%  Senior  Notes  of the  Company  in the
aggregate  principal  amount of  $25,000,000  issued  or to be issued  under and
pursuant to the terms and provisions of the Note Agreement  dated as of December
15, 1996 (the "Note Agreement",  words and phrases not otherwise defined in this
Note having the meanings  ascribed thereto in said Note Agreement)  entered into
by the Company with the original purchaser therein referred to and this Note and
the holder hereof are entitled equally and ratably with the holders of all other
Notes  outstanding  under the Note  Agreement  to all the  benefits and security
provided for thereby or referred to therein,  to which Note Agreement  reference
is hereby made for the statement thereof.

         This Note and the other Notes  outstanding under the Note Agreement may
be declared due prior to their expressed maturity dates and certain  prepayments
are  required to be made  thereon,  all in the  events,  on the terms and in the
manner and amounts as provided in the Note Agreement.

         Except in the event of fraud on the part of the  Manager  or any of its
Affiliates  in  connection  with  the  transaction   contemplated  by  the  Note
Agreement,  no  holder  of this  Note  shall  have any right at any time to seek
recovery  of the  Indebtedness  evidenced  by this Note  from the  assets of the
Manager.

         The Notes are not subject to  prepayment or redemption at the option of
the Company  prior to their  expressed  maturity  dates  except on the terms and
conditions and in the amounts and with the premium, if any, set forth in Section
2 of the Note Agreement.

         This Note is registered on the books of the Company and is transferable
only by surrender  thereof at the principal  office of the Company duly endorsed
or  accompanied  by a  written  instrument  of  transfer  duly  executed  by the
registered  holder of this Note or its  attorney  duly  authorized  in  writing.
Payment of or on account of  principal,  premium,  if any,  and interest on this
Note  shall be made  only to or upon  the  order in  writing  of the  registered
holder.

         This Note and said Note  Agreement  are  governed by and  construed  in
accordance with the internal laws of the State of Illinois.

                                 PROFESSIONAL LEASE MANAGEMENT INCOME FUND I,
                                 L.L.C.

                                 By: PLM FINANCIAL SERVICES, INC.,
                                     Its Manager



                                 By
                                 Its

         THIS NOTE HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.  THIS  NOTE  MAY NOT BE  SOLD OR  TRANSFERRED  IN THE  ABSENCE  OF SUCH
REGISTRATION OR ANY EXEMPTION THEREFROM UNDER SAID ACT.

         UNDER THE TERMS OF THE NOTE  AGREEMENT,  THE COMPANY IS NOT REQUIRED TO
DELIVER CERTAIN FINANCIAL  INFORMATION TO HOLDERS ENGAGED IN THE  TRANSPORTATION
EQUIPMENT LEASING OR SERVICING BUSINESS.

         UNDER THE TERMS OF THE NOTE AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED
TO CERTAIN PROHIBITED TRANSFEREES.




<PAGE>



                                    EXHIBIT B
                               (to Note Agreement)
               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.


                               CLOSING CERTIFICATE

Keyport Life Insurance Company
c/o Stein Roe & Farnham Incorporated
1 South Wacker Drive
Chicago, Illinois  60606

Ladies and Gentlemen:

         This   certificate   is  delivered  to  you  in  compliance   with  the
requirements  of  the  Note  Agreement  dated  as  of  December  15,  1996  (the
"Agreement"),  entered into by the  undersigned,  Professional  Lease Management
Income Fund I, L.L.C.,  a Delaware  limited  liability  company (the "Company"),
with you,  and as an  inducement  to and as part of the  consideration  for your
purchase on this date of  $25,000,000  aggregate  principal  amount of the 7.33%
Senior Notes due December 31, 2006 (the "Notes") of the Company  pursuant to the
Agreement.  The terms which are capitalized  herein shall have the same meanings
as in the Agreement.

         The Company represents and warrants to you as follows:

                    1. Subsidiaries.  Annex A attached hereto states the name of
         each of the Company's  Restricted  Subsidiaries,  its  jurisdiction  of
         organization  and the  percentage of its Voting Equity Capital or other
         Equity  Capital  owned by the  Company  and/or  its  Subsidiaries.  The
         Company and each Restricted Subsidiary has good and marketable title to
         all of the Voting Equity Capital or other Equity Capital it purports to
         own of each Restricted  Subsidiary,  free and clear in each case of any
         Lien.  All such Voting Equity Capital and other Equity Capital has been
         duly issued and are fully paid and  non-assessable.  The Company has no
         Subsidiary which is not a Restricted Subsidiary.

                    2. Organization and Authority.  (a) The Company is a limited
         liability company duly organized, validly existing and in good standing
         under the laws of the State of Delaware.  The Company's  Manager is PLM
         Financial  Services,   Inc.  The  Manager  and  each  Subsidiary  is  a
         corporation duly organized, validly existing and in good standing under
         the laws of its jurisdiction of incorporation.

                   (b)     The Company, the Manager and each Subsidiary

                                     (i) has all  requisite  power and authority
                           and all  necessary  licenses  and  permits to own and
                           operate its  properties  and to carry on its business
                           as now  conducted  and as  presently  proposed  to be
                           conducted; and

                                    (ii) is duly licensed or qualified and is in
                           good standing in each jurisdiction wherein the nature
                           of the business transacted by it or the nature of the
                           Property  owned or leased by it makes such  licensing
                           or qualification necessary,  except where the failure
                           to be duly  licensed  or  qualified  or to be in good
                           standing  would not have a materially  adverse effect
                           on  the  business  or  financial   condition  of  the
                           Company.

                    3. Business and Property. You have heretofore been furnished
         with a copy of the Private Placement Offering  Memorandum dated October
         1996 (the  "Memorandum")  prepared by First Union Capital Markets Corp.
         which  generally  sets forth the business  conducted and proposed to be
         conducted  by the  Company  and  its  Subsidiaries  and  the  principal
         properties  of the Company and its  Subsidiaries.  As  disclosed in the
         Prospectus of the Company dated  January 24, 1995, as  supplemented  by
         the  Prospectus  Supplement  dated November 6, 1995, it is and has been
         since the  inception  of the  Company the  intention  of the Company to
         incur  Indebtedness  in  order  to  finance  in part  the  purchase  of
         Equipment  to be held for lease by the  Company.  The issue and sale of
         the Notes constitutes an incurrence of Indebtedness which is consistent
         with  the  business  of the  Company  as  described  in  the  Operating
         Agreement and such Prospectus.

                    4. Financial Statements.  (a) The consolidated balance sheet
         of the Company and its  Subsidiaries  as of December 31, 1995,  and the
         statement  of  operations  and  changes  in  members'  capital  and the
         statement  of cash  flows  for  the  fiscal  year  ended  on said  date
         accompanied by a report thereon containing an opinion unqualified as to
         scope  limitations   imposed  by  the  Company  and  otherwise  without
         qualification  except as therein noted,  by KPMG Peat Marwick LLP, have
         been  prepared  in  accordance  with  generally   accepted   accounting
         principles  consistently  applied except as therein noted,  are correct
         and complete and present  fairly the financial  position of the Company
         and  its  Subsidiaries  as of  such  date  and  the  results  of  their
         operations  and  changes in  members'  capital  and cash flows for such
         period.  The unaudited  consolidated  balance sheets of the Company and
         its Subsidiaries as of September 30, 1996, and the unaudited  statement
         of operations and changes in members' capital and the statement of cash
         flows for the  nine-month  period  ended on said date  prepared  by the
         Company  have been  prepared  in  accordance  with  generally  accepted
         accounting  principles  consistently  applied, are correct and complete
         and  present  fairly the  financial  position  of the  Company  and its
         Subsidiaries  as of said date and the results of their  operations  and
         changes in members' capital and cash flows for such period.

                           (b) Since December 31, 1995, there has been no change
         in the  condition,  financial  or  otherwise,  of the  Company  and its
         Subsidiaries as shown on the consolidated balance sheet as of such date
         except  changes  in the  ordinary  course  of  business,  none of which
         individually or in the aggregate has been materially adverse.

                    5.  Indebtedness.  (a)  Annex B  attached  hereto  correctly
         describes all Debt,  including without limitation Debt secured by Liens
         within the  limitations  of ss.5.10,  Capitalized  Leases anD Long-Term
         Leases of the Company and its  Restricted  Subsidiaries  outstanding on
         the Execution Date (the "Scheduled Matters").  Annex C-1 and Annex C-2,
         to be attached hereto on each of the Closing Dates, correctly describes
         the Scheduled Matters outstanding on such respective Closing Dates.

                           (b) On  the  date  hereof,  the  aggregate  principal
         amount of the Notes does not exceed  20% of the  aggregate  cost of all
         Equipment owned by the Company by more than _____%. Within [90] days of
         the date hereof, the aggregate  principal amount of the Notes shall not
         exceed 20% of the  aggregate  cost of all  Equipment  then owned by the
         Company.

                    6. Full Disclosure.  The financial statements referred to in
         paragraph  4 do not,  nor  does the  Memorandum  or any  other  written
         statement  furnished  by the  Company  to you in  connection  with  the
         negotiation  of the  sale  of the  Notes  (including  the  Memorandum),
         contain any untrue statement of a material fact or omit a material fact
         necessary  to make the  statements  contained  therein  or  herein  not
         misleading.   There  is  no  fact   peculiar  to  the  Company  or  its
         Subsidiaries  which the  Company  has not  disclosed  to you in writing
         which materially  affects  adversely nor, so far as the Company can now
         foresee,  will materially  affect  adversely the properties,  business,
         prospects, profits or condition (financial or otherwise) of the Company
         and its Subsidiaries.

                    7. Pending Litigation.  There are no proceedings pending or,
         to the  knowledge of the Company,  threatened  against or affecting the
         Company  or any  Subsidiary  in any  court or before  any  governmental
         authority  or   arbitration   board  or  tribunal   which  involve  the
         possibility  of  materially  and adversely  affecting  the  properties,
         business,  prospects,  profits or condition (financial or otherwise) of
         the  Company  and  its  Subsidiaries.   Neither  the  Company  nor  any
         Subsidiary  is in  default  with  respect  to any order of any court or
         governmental authority or arbitration board or tribunal.

                    8. Title to Properties.  The Company and each Subsidiary has
         good  and  marketable  title in fee  simple  (or its  equivalent  under
         applicable  law) to all the real Property and has good title to all the
         other Property it purports to own, including that reflected in the most
         recent  balance  sheet  referred to in  paragraph  4, except as sold or
         otherwise disposed of in the ordinary course of business and except for
         material liens disclosed in notes to the financial  statements referred
         to in paragraph 4 hereof or otherwise permitted by the Agreement.

                    9. Patents and  Trademarks.  The Company and each Subsidiary
         owns or possesses  all the patents,  trademarks,  trade names,  service
         marks,  copyrights,  licenses and rights with respect to the  foregoing
         necessary for the present and planned  future  conduct of its business,
         without any known conflict with the rights of others.

                   10. Sale is Legal and  Authorized.  The sale of the Notes and
         the execution and delivery of, and  performance  by the Company and the
         Manager of their  respective  obligations  under, the Agreement and the
         Notes have been duly  authorized by all  requisite  action and will not
         violate  any  provision  of law,  any order,  judgment or decree of any
         court or other agency of corporate or other government, the Certificate
         of  Formation  of the  Company,  the  Operating  Agreement  (including,
         without limitation,  Section 2.02(c) thereof), or the corporate charter
         or  by-laws  of the  Manager,  or any  indenture,  agreement  or  other
         instrument to which the Company or the Manager is a party,  or by which
         the Company or the Manager is bound, or be in conflict with,  result in
         a breach of, or constitute (with due notice or lapse of time or both) a
         default  under,  or result in the creation or imposition of any Lien of
         any nature whatsoever upon any of the Property or assets of the Company
         or the Manager pursuant to, any such indenture, agreement or instrument
         except as permitted by the Agreement.

                   11. No Defaults. No Default or Event of Default as defined in
         the  Agreement  has occurred and is  continuing.  The Company is not in
         default in the payment of principal or interest on any Indebtedness for
         borrowed   money  and  is  not  in  default  under  any  instrument  or
         instruments or agreements  under and subject to which any  Indebtedness
         for  borrowed  money has been issued and no event has  occurred  and is
         continuing  under the  provisions  of any such  instrument or agreement
         which with the lapse of time or the giving of  notice,  or both,  would
         constitute an event of default thereunder.

                    12.  Governmental  Consent.  (a)  No  approval,  consent  or
         withholding  of objection on the part of any  regulatory  body,  state,
         Federal or local,  is necessary in  connection  with the  execution and
         delivery by the Company of the  Agreement or the Notes or compliance by
         the Company with any of the provisions of the Agreement or the Notes.

                   (b) The Registration Statement filed with the SEC relating to
         the sale of the Class A Units became effective  January 23 1995, and no
         stop-orders were issued in connection therewith.

                   13.  Taxes.  All tax  returns  required  to be  filed  by the
         Company or any  Subsidiary  in any  jurisdiction  have,  in fact,  been
         filed, and all taxes, assessments,  fees and other governmental charges
         upon the  Company  or any  Subsidiary  or upon any of their  respective
         properties, income or franchises, which are shown to be due and payable
         in such returns have been paid, except any such returns for the failure
         to file would not have a material  adverse  effect on the  business  or
         financial  condition  of the Company and its  Restricted  Subsidiaries,
         taken as a whole. The Company does not know of any proposed  additional
         tax  assessment  against it for which  adequate  provision has not been
         made  in its  accounts,  and no  material  controversy  in  respect  of
         additional Federal or state income taxes is pending or to the knowledge
         to the Company threatened. The provisions for taxes on the books of the
         Company and each  Subsidiary  are adequate for all open years,  and for
         its current fiscal period.

                   14. Use of Proceeds.  The net  proceeds  from the sale of the
         Notes   will  be  used  to   finance   the   purchase   of   additional
         transportation-related   equipment,   the   refinancing   of   existing
         indebtedness of the Company and other corporate  purposes.  None of the
         transactions   contemplated  in  the  Agreement   (including,   without
         limitation thereof, the use of proceeds from the issuance of the Notes)
         will  violate or result in a violation  of Section 7 of the  Securities
         Exchange Act of 1934, as amended,  or any  regulation  issued  pursuant
         thereto, including,  without limitation,  Regulations G, T and X of the
         Board of Governors of the Federal  Reserve System,  12 C.F.R.,  Chapter
         II. Neither the Company nor any Subsidiary  owns or intends to carry or
         purchase any "margin  stock"  within the meaning of said  Regulation G.
         None  of the  proceeds  from  the  sale  of the  Notes  will be used to
         purchase,  or refinance any borrowing,  the proceeds of which were used
         to  purchase  any  "security"  within  the  meaning  of the  Securities
         Exchange Act of 1934, as amended.

                   15.  Private  Offering.  Neither  the  Company,  directly  or
         indirectly,  nor any agent on its behalf has  offered or will offer the
         Notes or any similar Security or has solicited or will solicit an offer
         to acquire  the Notes or any  similar  Security  from or has  otherwise
         approached  or  negotiated  or will approach or negotiate in respect of
         the Notes or any similar  Security  with any Person  other than you and
         not  more  than 20  other  institutional  investors,  each of whom  was
         offered a portion of the Notes at private sale for investment.  Neither
         the Company,  directly or  indirectly,  nor any agent on its behalf has
         offered  or  will  offer  the  Notes  or any  similar  Security  or has
         solicited  or will solicit an offer to acquire the Notes or any similar
         Security  from any Person so as to bring the  issuance  and sale of the
         Notes within the provisions of Section 5 of the Securities Act of 1933,
         as amended.

                   16.  Employee  Retirement  Income  Security Act of 1974.  The
         consummation  of the  transactions  provided for in the  agreement  and
         compliance  by the Company  with the  provisions  thereof and the Notes
         issued  thereunder will not involve any prohibited  transaction  within
         the meaning of the  Employee  Retirement  Income  Security  Act of 1974
         ("ERISA")  or Section 4975 of the  Internal  Revenue  Code of 1986,  as
         amended.  The Company does not maintain any "employee  pension  benefit
         plans", as defined in ERISA.

                   17.   Compliance  with  Law.  Neither  the  Company  nor  any
         Restricted  Subsidiary  (i)  is in  violation  of any  law,  ordinance,
         franchise,  governmental  rule or  regulation  to which  it is  subject
         (including,  without limitation, the filing requirements of Sections 13
         and 15(d) of the Securities Exchange Act of 1934, as amended);  or (ii)
         has  failed  to  obtain  any  license,   permit,   franchise  or  other
         governmental  authorization  necessary to the ownership of its Property
         or to the conduct of its business, which violation or failure to obtain
         could  materially  adversely affect the business,  prospects,  profits,
         properties or condition (financial or otherwise) of the Company and its
         Restricted  Subsidiaries,  taken  as a  whole,  or the  ability  of the
         Company to perform its  obligations  contained in the  Agreement or the
         Notes.

                   18. Compliance with Environmental Laws. The Company is not in
         violation of any applicable  Environmental  Law which  violation  could
         have a material  adverse  effect on the business,  prospects,  profits,
         properties or condition (financial or otherwise) of the Company and its
         Restricted Subsidiaries, taken as a whole. The Company does not know of
         any  liability or class of  liability of the Company or any  Restricted
         Subsidiary under the Comprehensive Environmental Response, Compensation
         and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.),
         or the Resource  Conservation  and Recovery Act of 1976, as amended (42
         U.S.C. Section 6901 et seq.).

                   19.  Fungible   Securities.   When  issued,  the  Notes  will
         constitute  "securities"  within the meaning of the Securities Exchange
         Act of 1934 (the  "Exchange  Act") and will not be of the same class as
         securities  listed on a national  security  exchange  registered  under
         Section  6  of  the  Exchange  Act  or  quoted  in  a  U.S.   automated
         inter-dealer   quotation  system,   and  will  not  be  convertible  or
         exchangeable into any such securities.

                    20.  Investment  Company Act. Neither the Company nor any of
         its  Subsidiaries  is an  "investment  holding  company" or "affiliated
         company" or a company  "controlled  by" an "investment  company" within
         the meaning of the Investment Company Act of 1940, as amended.

         Dated:
                                       PROFESSIONAL LEASE MANAGEMENT 
                                       INCOME FUND I,
                                       L.L.C.

                                       By PLM FINANCIAL SERVICES, INC.,
                                          Its Manager




                                       By
                                       Its



<PAGE>



                                                      ANNEX A
                                             (to Closing Certificate)
                                            SUBSIDIARIES OF THE COMPANY


RESTRICTED SUBSIDIARIES:

               SUBSIDIARY                                  % OWNED BY COMPANY

         Spear Vessel Inc.   50%

         United Marine Vessel Inc.                                 100%




<PAGE>



                                     ANNEX B
                            (to Closing Certificate)

                         DESCRIPTION OF DEBT AND LEASES

                              ON THE EXECUTION DATE


1.       Unsecured Debt as of the Execution Date:

                                    None

2.       Debt Secured by Liens  within the  Limitations  of ss.5.10,  other than
         Capitalized Leases, as of thE Execution Date:

                                    None

3.       Capitalized Leases as of the Execution Date:

                                    None

4.       Long-Term Leases as of the Execution Date:

                                    None





<PAGE>



                                    ANNEX C-1
                            (to Closing Certificate)
                     [TO BE COMPLETED ON FIRST CLOSING DATE]


                         DESCRIPTION OF DEBT AND LEASES


                            ON THE FIRST CLOSING DATE


1.       Unsecured Debt as of the First Closing Date:



2.       Debt Secured by Liens  within the  Limitations  of ss.5.10,  other than
         Capitalized Leases, as of the FirsT Closing Date:



3.       Capitalized Leases as of the First Closing Date:



4.       Long-Term Leases as of the First Closing Date:






<PAGE>



                                    ANNEX C-2
                            (to Closing Certificate)
                    [TO BE COMPLETED ON SECOND CLOSING DATE]


                         DESCRIPTION OF DEBT AND LEASES


                           ON THE SECOND CLOSING DATE


1.       Unsecured Debt as of the Second Closing Date:



2.       Debt Secured by Liens  within the  Limitations  of ss.5.10,  other than
         Capitalized Leases, as of the SeconD Closing Date:



3.       Capitalized Leases as of the Second Closing Date:



4.       Long-Term Leases as of the Second Closing Date:










<PAGE>



                                    EXHIBIT C
                               (to Note Agreement)
                DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION

         The  closing  opinion of Chapman  and  Cutler,  special  counsel to the
Purchaser,  called for by ss.4.2 of thE Note Agreement, shall be dated the first
Closing Date or second  Closing  Date,  as the case may be, and addressed to the
Purchaser,  and shall be satisfactory in form and substance to the Purchaser and
shall be to the effect that:

                   (1)  The  Company  is  a  limited  liability  company,   duly
         organized and validly existing under the laws of the State of Delaware,
         has the  power  and the  authority  to  execute  and  deliver  the Note
         Agreement and to issue the Notes.

                   (2) The  Note  Agreement  has  been  duly  authorized  by all
         necessary action on the part of the Company, has been duly executed and
         delivered by an  authorized  officer of the Manager and  constitutes  a
         legal,  valid  and  binding  contract  of the  Company  enforceable  in
         accordance   with  its  terms,   subject  to  bankruptcy,   insolvency,
         fraudulent  conveyance  or similar  laws  affecting  creditors'  rights
         generally,  and general principles of equity (regardless of whether the
         application of such  principles is considered in a proceeding in equity
         or at law).

                   (3) The  Notes  have been duly  authorized  by all  necessary
         action  on the  part  of the  Company,  have  been  duly  executed  and
         delivered by an authorized officer of the Manager and constitute legal,
         valid and binding  obligations of the Company enforceable in accordance
         with  their  terms,  subject  to  bankruptcy,   insolvency,  fraudulent
         conveyance or similar laws affecting  creditors' rights generally,  and
         general  principles of equity (regardless of whether the application of
         such principles is considered in a proceeding in equity or at law).

                   (4) The  issuance,  sale and  delivery of the Notes under the
         circumstances  contemplated  by the  Note  Agreement  does  not,  under
         existing  law,   require  the  registration  of  the  Notes  under  the
         Securities  Act  of  1933,  as  amended,  or  the  qualification  of an
         indenture under the Trust Indenture Act of 1939, as amended.

         The opinion of Chapman and Cutler  shall also state that the opinion of
Stephen Peary,  Esq. is satisfactory in scope and form to Chapman and Cutler and
that, in their opinion,  the Purchaser is justified in relying thereon and shall
cover such other matters  relating to the sale of the Notes as the Purchaser may
reasonably request.

         In rendering  the opinion set forth in  paragraph 1 above,  Chapman and
Cutler may rely,  as to matters  referred  to in  paragraph  1,  solely  upon an
examination of the Fifth Amended and Restated Operating  Agreement  certified by
an  authorized  officer of the  Manager.  The  opinion of Chapman  and Cutler is
limited to the laws of the State of Illinois  and the Federal laws of the United
States.

         With  respect to  matters  of fact upon  which  such  opinion is based,
Chapman and Cutler may rely on appropriate  certificates of public officials and
officers  of the  Company  and  upon  representatives  of the  Company  and  the
Purchaser delivered in connection with the issuance of the Notes.






<PAGE>



                                    EXHIBIT D
                               (to Note Agreement)
        DESCRIPTION OF CLOSING OPINION OF GENERAL COUNSEL TO THE COMPANY

         The closing  opinion of Stephen  Peary,  Esq.,  general  counsel of the
Manager, which is called for by ss.4.2 of the Note Agreement, shall be dated the
first  Closing  Date or the second  Closing  Date,  as the case may be, shall be
addressed to the  Purchaser and shall be  satisfactory  in form and substance to
the Purchaser to the effect that:

                   (1)  The  Company  is  a  limited  liability  company,   duly
         organized and validly existing under the laws of the State of Delaware,
         has all requisite  power and authority and is duly  authorized to enter
         into and  perform the Note  Agreement  and to issue the Notes and incur
         the  Indebtedness  to be  evidenced  thereby  and has  full  power  and
         authority to conduct the  activities  in which it is now engaged and is
         duly licensed or qualified and is in good standing as a foreign limited
         liability  company in each  jurisdiction  in which the character of the
         properties  owned  or  leased  by it or  the  nature  of  the  business
         transacted  by it makes  such  licensing  or  qualification  necessary,
         except  where the failure to be duly  licensed or qualified or to be in
         good  standing  would  not  have a  materially  adverse  effect  on the
         business or financial condition of the Company.

                   (2)  Each  Restricted  Subsidiary  that is a  corporation,  a
         limited  liability  company or a partnership is a corporation,  limited
         liability  company or partnership,  as the case may be, duly organized,
         legally   existing  and  in  good  standing   under  the  laws  of  its
         jurisdiction of  organization  and is duly licensed or qualified and is
         in good  standing in each  jurisdiction  in which the  character of the
         properties  owned  or  leased  by it or  the  nature  of  the  business
         transacted  by it makes  such  licensing  or  qualification  necessary,
         except  where the failure to be duly  licensed or qualified or to be in
         good  standing  would  not  have a  materially  adverse  effect  on the
         business or financial  condition of the Company;  and all of the issued
         and  outstanding  shares  of  capital  stock  of each  such  Restricted
         Subsidiary that is a corporation have been duly issued,  are fully paid
         and  non-assessable  and  are  owned  by the  Company,  by one or  more
         Restricted  Subsidiaries,  or by the Company and one or more Restricted
         Subsidiaries or an Affiliated Partnership.

                   (3) The  Note  Agreement  has  been  duly  authorized  by all
         necessary action on the part of the Company, has been duly executed and
         delivered by an  authorized  officer of the Manager and  constitutes  a
         legal,  valid,   binding  and  enforceable   contract  of  the  Company
         enforceable  in  accordance  with its  terms,  subject  to  bankruptcy,
         insolvency,  fraudulent conveyance or similar laws affecting creditors'
         rights  generally  and  general  principles  of equity  (regardless  of
         whether  the   application  of  such  principles  is  considered  in  a
         proceeding in equity or at law).

                   (4) The  Notes  have been duly  authorized  by all  necessary
         action  on the  part  of the  Company,  have  been  duly  executed  and
         delivered by an authorized officer of the Manager and constitute legal,
         valid and binding  obligations of the Company enforceable in accordance
         with  their  terms,  subject  to  bankruptcy,   insolvency,  fraudulent
         conveyance or similar laws affecting  creditors'  rights  generally and
         general  principles of equity (regardless of whether the application of
         such principles is considered in a proceeding in equity or at law).

                   (5) The  issuance  and sale of the Notes  and the  execution,
         delivery and  performance  by the Company of the Note  Agreement do not
         (i) conflict with or contravene any law, rule or regulation  applicable
         to the Company or (ii)  conflict with or result in any breach of any of
         the  provisions  of or  constitute  a  default  under or  result in the
         creation  or  imposition  of any  lien or  encumbrance  upon any of the
         property of the Company  pursuant to the  provisions  of the  Operating
         Agreement or any agreement or other instrument known to such counsel to
         which  the  Company  is a party or by which  the  Company  may be bound
         except as permitted by the Note Agreement.

                   (6) The courts of the State of  Delaware  will give effect to
         those  provisions of the Note  Agreement and the Notes which  stipulate
         that such  documents  shall be governed,  and  construed in  accordance
         with, the laws of the State of Illinois.

                   (7) The execution and delivery of the Note  Agreement and the
         issue and sale of the Notes does not  conflict  with or violate  any of
         the provisions of the Operating Agreement.

                   (8) The payment by the Company of all amounts  required to be
         paid  with  respect  to the  Notes in  accordance  with the  terms  and
         conditions of the Note Agreement will not violate the provisions of any
         applicable  state or federal law limiting or regulating  the payment of
         interest on obligations.

                   (9) Neither the  Company  nor any of its  Subsidiaries  is an
         "investment  holding  company"  or  "affiliated  company"  or a company
         "controlled  by" an  "investment  company"  within  the  meaning of the
         Investment Company Act of 1940, as amended.

                  (10)  The  transaction  contemplated  by  the  Note  Agreement
         (including,  without limitation,  the use of the proceeds of the Notes)
         will not violate  Section 7 of the  Securities and Exchange Act of 1934
         or the  provisions  of  Regulation  G,  Regulation  T or  Regulation  U
         promulgated by the Board of Governors of the Federal Reserve System.

                  (11) The  issuance,  sale and  delivery of the Notes under the
         circumstances   contemplated   by  the  Note  Agreement  is  an  exempt
         transaction under the Securities Act of 1933, as amended,  and does not
         under existing law, as at the date of closing, require the registration
         of the Notes  under the  Securities  Act of 1933,  as  amended,  or the
         qualification  of an  indenture  in  respect  thereof  under  the Trust
         Indenture Act of 1939, as amended.

                  (12) To the knowledge of such  counsel,  there are no actions,
         suits or  proceedings  pending or  threatened  against or affecting the
         Company,  the Manager or any Subsidiary,  at law or in equity or before
         or by any federal,  state, municipal or other governmental  department,
         commission,  board,  bureau,  agency or  instrumentality,  domestic  or
         foreign,   which  are  likely  to  result,   either   individually   or
         collectively,   in  any  material   adverse  change  in  the  business,
         Properties,  operations  or condition,  financial or otherwise,  of the
         Company or of the Company and its  Restricted  Subsidiaries  taken as a
         whole,   impair  the  ability  of  the   Company  and  its   Restricted
         Subsidiaries to carry on their business substantially as now conducted,
         impair the ability of the Company to perform its obligations  under the
         Note Agreement or under the Notes.

                  (13) No approval,  consent or  withholding of objection on the
         part  of,  or  filing,   registration   or   qualification   with,  any
         governmental body, Federal,  State or local, is necessary in connection
         with the execution and delivery of the Note Agreement or the Notes.

         The  opinion of Stephen  Peary,  Esq.  shall  cover such other  matters
relating to the sale of the Notes as the Purchaser may reasonably request.  With
respect to matters of fact on which such opinion is based, such counsel shall be
entitled to rely on appropriate certificates of public officials and officers of
the Company.