(12) Patent Application Publication (10) Pub. No.: US 2003/ A1

Transcription

1 (19) United States (12) Patent Application Publication (10) Pub. No.: US 2003/ A1 Blanz et al. US 2003O A1 (43) Pub. Date: Jul. 17, 2003 (54) (75) (73) (21) (22) (51) (52) MULTI-NOTE METHOD AND SYSTEM FOR LOANS BASED UPON LEASE REVENUE STREAM Inventors: Robert Charles Blanz, Upper Montclair, NJ (US); Robert James Gartner, Hackensack, NJ (US) Correspondence Address: FOLEY AND LARDNER SUTE KSTREET NW WASHINGTON, DC (US) Assignee: Capital Lease Funding, LLC Appl. No.: 10/ Filed: Jan. 11, 2002 Publication Classification Int. Cl.... G06F 17/60 U.S. Cl /38 (57) ABSTRACT A method, System and program product for creating a loan from a revenue Stream from a lessee, the method comprising the Steps of determining a revenue Stream from a lease of a leased tangible asset, calculating a Breakeven TANote Rate, and a TA Note Amount for a TA Note based on a Multi-Note Loan Coupon, a TA Note Debt Service and market deter mined underwriting parameters for the tangible asset, cal culating an CL Note Debt Service after the TA Note debt Service, and other appropriate amounts, if necessary are Subtracted from the revenue, calculating a Breakeven CL Note Rate and a CL Note Amount for a CL Note based on the calculated CL Note Debt Service, the Multi-Note Loan Coupon, a CL Note Debt Service, and market determined underwriting parameters, creating a file Structure of one or more files for the TA Note and the CL Note; and associating the TANote and CL Note to assign priorities for purposes of determining and distributing recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default and allocating the rights and responsibilities of the holders of such notes. In a preferred embodiment, the Multi-Note Loan Coupon is initially an estimated value. Relt ($85,000) Debt Service ($57,390.27) Lockbox M20 Excess Debt Service (S27,609.73) Tangible Asset (TA) Note TA Note Proceeds ($7,500,000) Borrower IM Total Loan $9,785, Credit Leased Backed (CL) Note 23O CL. Note Proceeds ($2.285,576.67)

2 Patent Application Publication Jul. 17, Sheet 1 of 12 US 2003/ A1 Fig. 1 Initial Analysis Price/Structure Discussion Application 40 Underwriting 50 Funding 60 Sale 70

3 Patent Application Publication Jul. 17, 2003 Sheet 2 of 12 US 2003/ A1 Fig. 2 Rent ($85,000) Debt Service Excess Debt Service 57, (S ) ($27,609.73) Tangible Asset (TA) Note Credit Leased Backed (CL) Note CL Note TA Note Proceeds Proceeds /N ($2,285,576.67) ($7,500,000) Total Loan $9,785,

4 Patent Application Publication Jul. 17, 2003 Sheet 3 of 12 US 2003/ A1 Fig Tangible Asset Note File 370 rv360 CPU 310 Credit Lease Backed Note File 380 Display 320 I/O - - Memory Network Interface 340 Communications Network 390

5 Patent Application Publication Jul. 17, Sheet 4 of 12 US 2003/ A1 Fig. 4 Receive number representing Rent Revenue Stream 400 Underwrite lease to identify lessor lease obligations and lessee offset and termination rights and address lease enhancement 401 Determine TA note to tangible asset value ratio 402 Obtain an indication of value of tangible asset and optionally tenant quality 404 Determine the TANote Amortization Term 406 Estimate the the Multi-note Loan Coupon 408 Calculate TA Note Face amount 410 Calculate the TA Note Debt Service 412 To 414

6 Patent Application Publication Jul. 17, Sheet 5 of 12 US 2003/ A1 Fig. 4 (contd) From 412 Obtain the Breakeven TANote spread 414 Obtain a Breakeven TANote Rate 416 Determine the Breakeven TANote value 418 Calculate Excess Cash Flow/ 420 CL Note Debt Service Calculate the Breakeven CL. Note spread and 422 Breakeven CL. Note Rate Calculate CL Note Face Amount 424 Calculate a Breakeven CL Value amount based on predetermined elements, including the CL 426 Note Debt Service, Breakeven CL Note Rate, the CL Note Amortization Term 428

7 Patent Application Publication Jul. 17, 2003 Sheet 6 of 12 US 2003/ A1 Fig. 4 (contd) From 426 Calculate the Breakeven Multi-note Loan Rate 428 Create Multi-Note Loan face amount 430 Calculate Multi-note Loan Coupon and plug calculated value into block 408 and perform operations through 431 block 431 through iterative process Reset the estimated Multi-note Loan Coupon in block 408 and recalculate Multi-note Loan Coupon (Optional 432 loan Gross-up) Sell TA Note and CL Note or create a pool of TA Notes and a pool of CL Notes and securities, or 434 otherwise use or dispose Provide web site with web content to calculate loan amount, and loan rate to borrower based on the composite rate

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14 US 2003/O A1 Jul. 17, 2003 MULTI-NOTE METHOD AND SYSTEM FOR LOANS BASED UPON LEASE REVENUE STREAM BACKGROUND OF THE INVENTION 0001) 1. Field of the Invention 0002 The present invention relates generally to the fields of lending and leases, and more particularly to the creation of a loan based on a plurality of notes from a lease revenue Stream Background 0004 Single tenant properties that are net leased to credit tenants are an important Subset of the overall commercial real estate market. For a variety of Strategic, competitive and accounting reasons, many corporations choose to lease prop erties rather than own the underlying real estate. These types of properties are generally owned by developers who have built the properties, or individuals or corporate owners who purchase them after construction is complete Owners of single tenant properties net leased to investment grade companies have historically been financed by banks and insurance companies. This type of loan is based on the creditworthiness of the underlying lessees/ tenants and thus relies little on the liquidation value of the property Moving down the credit quality curve, the avail able options for borrowers become fewer and fewer. Prior to the establishment of the public capital market based credit tenant lease ( CTL") lending business created by Capital Lease Funding L.P., ( CLF) in 1995, owners of properties net leased to marginal investment grade (as well as Sub investment grade) tenants have traditionally been financed by traditional real estate lenders which base their loans more upon the conventional real estate values of the properties rather than on the underlying credit Strength of the credit tenants, resulting in lower amounts of leverage The underwriting analysis for a conventional real estate loan relies heavily on the liquidation value of the real estate Securing the loan, the ability of the borrower to adequately address property operations and the borrower's ability to adequately address re-leasing and re-tenanting of the property due to tenant rollover, among other things. Due to these uncertainties and fluctuations in operating income of the underlying property, the loan proceeds from a conven tional real estate loan are generally lower than the appraised value of the property (typically no more than 80%) and the debt Service coverage ratio is typically no less than The CTL lending business created by CLF in 1995, was instrumental in establishing a viable credit tenant lend ing program for a variety of types of investment grade tenants and varying qualities of credit tenant leases for which CTL loans were not previously available. The ability of CLF to underwrite and securitize high leverage CTL loans to owners of Single tenant properties for Substantially all categories of investment grade tenants had provided owners and borrowers with an attractive alternative to traditional forms of funding for these properties, particularly for those leased to marginal investment grade credits CLF operates as a specialty lender originating CTL mortgage loans made primarily to all types of investment grade tenants under leases ranging from 10 to 25 years in length. Each credit tenant loan is Secured by a first mortgage on a commercial real property Subject to a long term net lease to a credit tenant and by an assignment of the credit tenant lease and all rents due under the lease. Under a credit tenant lease, the principal parameter underlying the trans action is the credit quality of the applicable tenant rather than the credit quality of the borrower or the liquidation value of the property. The underwriting analysis for a credit tenant loan consists primarily of an analysis of the credit and business profiles of the credit tenant and the credit tenant lease. The typical credit tenant loan made by CLF has a 20 year term and is fully amortized by Scheduled rent payments under the credit tenant lease. As a result, CLF's credit tenant loans (which approach a ratio of Scheduled rent payments to debt service of 1.0) tend to have debt service coverage ratios lower than conventional mortgage loans, as well as higher loan to value ratios, approaching 95% Lease Types Historically, CTL loans, which were characterized by high leverage with debt Service coverage ratios approach ing 1.0, were made to property owners who have net leased their property to tenants having an investment grade debt rating from a nationally recognized Statistical rating agency ("Rating Agency'), but were only available when the appli cable lease was a bond' type lease. In a bond type lease, the credit tenant is responsible for every monetary obligation associated with managing, owning, developing and operat ing the leased premises including, but not limited to, the costs associated with the utilities, taxes, insurance, mainte nance, ordinary and capital repairs and replacements and losses due to a casualty and/or a condemnation. The credit tenant has no ability to terminate or abate rent under a bond' lease. Consequently, loans secured by bond' leases are analyzed as if they were direct obligations of the applicable tenant Double and triple net leases are generally long term leases to tenants who are responsible for paying most of the costs of owning, operating, and maintaining the leased property during the term of the lease, in addition to the payment of a monthly net rent to the lessor for the use and occupancy of the premises. Under double and triple net leases, in contrast to bond' leases, a tenant has the right to terminate the applicable lease or abate rent thereunder upon the occurrence of a significant casualty or condemnation. Under a double net lease, the tenant may terminate the lease or abate rent thereunder, upon the failure by the lessor to maintain or repair the property, provide adequate parking, maintain common areas or comply with other affirmative covenants of the lease, or if the lessor leases property to a competitor of the credit tenant within a Specified radius of the property or otherwise Violates other negative covenants in the lease The financing of double net and triple net leases to investment grade tenants as CTL loans was pioneered by CLF in Previously, double net and triple net leases had been traditionally financed as conventional real estate loans. CLF's Specialized lease enhancement mechanisms Substan tially mitigate the risk of potential interruption in the rental Stream So that Such double and triple net leases can be evaluated as if they were bond' leases. CLF's lease enhancement mechanisms comprise primarily an integrated Set of Specialized insurance policies, Servicer advancing

15 US 2003/O A1 Jul. 17, 2003 mechanisms, and various borrower reserve funds. These mechanisms Support the lessor's maintenance and other obligations under a credit lease in order to mitigate the risk of rent abatement or lease termination by the credit tenant due to the failure of a lessor to perform its obligations Commercial Mortgage Backed Securities Market The commercial mortgage backed securities ( CMBS) market was established initially as a vehicle to liquidate the commercial mortgage loans held by the RTC resulting from the S&L financial crisis. The CMBS market has now grown into an approximately $80 billion annual market, with Strong liquidity, Strong research and a wide following by many institutions. With the maturity of the CMBS market, CMBS pools have now become homogenous in terms of the collateral type and underlying commercial mortgage loan terms. The current CMBS Securities market is Structured Such that the majority of the Securities created from the underlying mortgage loans have 10 year final maturities, whereas the Securities created from CLF's long term CTL loans have final maturities ranging from 15 to 25 years The CMBS 10-year AAA security has also become a very liquid benchmark Security and investors will generally pay a premium for this liquidity while, on the other hand, they will punish other types of off the run (i.e. non-conforming) CMBS Securities, which are not per ceived as being as liquid. Thus, as the CMBS market has matured, it has become more difficult to sell off-the-run CTL securities, which often have final maturities beyond 10 years, in the public CMBS capital markets. In addition, from time to time as prevailing economic conditions worsen and Saturation in the marketplace of certain credits develops, there may be limited demand and diminished liquidity for CTL Securities backed by many types of investment grade tenants in both the CMBS market and the private whole loan market at any given time Thus, a current problem is the need for more liquidity in the public and private capital markets for Secu rities created from high leverage CTL real estate loans based upon lease revenue Streams from long-term credit tenant leases. SUMMARY OF THE INVENTION Briefly, one embodiment of the present invention comprises a method of creating a loan from a revenue Stream from a lessee, comprising the Steps of determining a rev enue Stream from a lease of a leased tangible asset, calcu lating a Breakeven TANote Rate, and a TA Note Amount for a TA Note based on a Multi-Note Loan Coupon, a TA Note Debt Service and market determined underwriting param eters for the tangible asset; calculating an CL Note Debt Service after the TA Note debt service, and other appropriate amounts, if necessary are Subtracted from the revenue; calculating a Breakeven CL Note Rate and a CL Note Amount for a CLNote based on the calculated CLNote Debt Service, the Multi-Note Loan Coupon, a CL Note Debt Service, and market determined underwriting parameters, creating a file structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distrib uting recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default and allocating the rights and responsibilities of the holders of Such notes In a further aspect of the present invention, the Multi-Note Loan Coupon is initially an estimated value, wherein the Breakeven TANote Rate and the CL Note Debt Service and the Breakeven CL Note Rate are calculated or determined using the estimated Multi-Note Loan Coupon, and further comprising calculating the Multi-Note Loan Coupon based on the Breakeven TA Note Rate and the Breakeven CL Note Rate In a further aspect of the present invention, the step is provided of recalculating the Breakeven TANote Rate, the Breakeven CL Note Rate and the Multi-Note Loan Coupon based on the original calculated Multi-Note Loan Coupon In a further aspect of the present invention, the step is provided of performing the recalculating Step for the Breakeven TANote Rate, the Breakeven CL Note Rate and the Multi-Note Loan Coupon multiple times until a criteria is met In a further aspect of the present invention, the criteria is that a margin from the Multi-Note Loan Coupon equals or exceeds and predetermined amount In a further aspect of the present invention, the CL Note Rate is determined in part from a corporate credit rate Spread applicable to the lessee or its industry In a further aspect of the present invention, the step is provided of calculating a Breakeven Multi-Note Loan Rate using the Breakeven TA Note Rate and the Breakeven CL Note Rate as elements in an algorithm In a further aspect of the present invention, the associating Step comprises assigning priority of distribution of tangible asset recovery proceeds first to the TA Note, and any excess to the CL Note and assigning priority of the distribution of the proceeds of a Defaulted Lease claim first to the CL Note and any excess to the TA Note In a further aspect of the present invention, the determining and distributing Step comprises on the occur rence of a Sale of the tangible asset after a default under the Multi-Note Loan, calculating an excess of Sale proceeds over amounts due for a payoff of the TANote and, on receipt of the proceeds from the Defaulted Lease claim, calculating an excess of proceeds from the Defaulted Lease claim over amounts due for a payoff of the CL Note; and electronically associating the excess of Sale proceeds over the amounts due under the TA Note with the file for the CL Note and/or electronically associating the excess of proceeds from the Defaulted Lease claim over amounts due under the CL Note with the file for the TA Note In a further aspect of the present invention, the step is provided of transferring the calculated excess amount from the Sale proceeds of the tangible assets to a holder of the CL Note or its designee In a further aspect of the present invention, the step is provided of transferring the calculated excess amount from the Defaulted Lease claim to a holder of the TA Note or its designee In a further aspect of the present invention, the step is provided of electronically associating the one or more files

16 US 2003/O A1 Jul. 17, 2003 for the TA Note and the CL Note, wherein the one or more files comprise electronic files In a further aspect of the present invention, the step is provided of transferring the TA Note and CL Note to different parties In a further aspect of the present invention, the step is provided of Subtracting from the lease revenues loan reserve amounts to Support lessor maintenance and other obligations to mitigate risk of potential termination of or interruption in the lease payments due to the failure of the lessor or others to perform their obligations In a further aspect of the present invention, the step is provided of subtracting from the Multi-Note Loan pro ceeds amounts to pay premiums for Specialized insurance policies to mitigate the risk of potential termination of or interruption in the lease payments due to various potential contingencies In a further aspect of the present invention, the step is provided of obtaining a Breakeven TA Note Rate com prises obtaining a benchmark rate and a Breakeven TA Note Spread In a further aspect of the present invention, the step of obtaining the Breakeven CL Note Rate comprises deter mining a discount rate based on an algorithm that uses a benchmark rate and a lessee corporate bond Spread as elements. 0035) In a further aspect of the present invention, the step is provided of obtaining the Breakeven CL Note Rate comprises determining a discount rate based on an algorithm that uses a benchmark rate and a generic corporate bond Spread based on a debt rating. 0036). In a further embodiment of the present invention, a method is provided of creating a loan from a revenue Stream from a lessee, comprising the Steps of determining a rev enue Stream from a lease of a leased tangible asset, calcu lating and determining parameters of a TA Note and a CL Note based in part on the revenue Stream; creating a file structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distributing recov eries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default In a further aspect of the present invention, the associating Step further comprises allocating rights and responsibilities of the holders of Such notes and associating those rights and responsibilities with the TA Note and CL Note file structure In a further aspect of the present invention, the step of calculating an CL Note Debt Service after a TA Note debt Service is Subtracted from the revenue Stream; and wherein at least one parameter for the CL Note is determined based on the CL Note Debt Service In a further aspect of the present invention, the calculating and determining parameters of a TA Note and a CL Note step is also based in part on a Multi-Note Loan Coupon In a further aspect of the present invention, the Multi-Note Loan Coupon is initially an estimated value, and wherein the TANote parameters and CLNote parameters are calculated or determined using the estimated Multi-Note Loan Coupon; and further comprising recalculating the Multi-Note Loan Coupon based on the resulting TA Note parameters and the CL Note parameters In a further aspect of the present invention, the step is provided of recalculating at least one parameter for the TA Note and the CLNote and recalculating the Multi-Note Loan Coupon based on the calculated Multi-Note Loan Coupon In a further aspect of the present invention, the step of calculating and determining parameters for the CL Note comprises determining a discount rate based on an algorithm that uses a benchmark rate and a lessee corporate bond Spread as elements and then determining a Breakeven CL Note Rate In a further aspect of the present invention, the step of calculating and determining parameters for the CL Note comprises determining a discount rate based on an algorithm that uses a benchmark rate and a generic corporate bond Spread based on a debt rating and then determining a Breakeven CL Note Rate. 0044) In a further aspect of the present invention, the step is provided of aggregating a plurality of the TA Notes or the CL Notes to obtain a pool value In a further aspect of the present invention, the pool value is sent electronically to a potential buyer In a further aspect of the present invention, the StepS are provided of providing a web page with web content that performs the calculating and determining Step In a further aspect of the present invention, the step is provided of calculating a Multi-Note Loan Coupon using the web content; and displaying the Multi-Note Loan Cou pon to a potential borrower In a further aspect of the present invention, a web page is provided that includes web content that displaysta Notes and CL Notes and that facilitates a potential buyer forming a customized pool of TA Notes or CL Notes In a further aspect of the present invention, steps are provided of providing a web page with web content that performs the calculating and determining Step, the calculat ing of the Multi-Note Loan Coupon, and the recalculating of at least one parameter for the TA Note and the CL Note and recalculating the Multi-Note Loan Coupon Step In a further embodiment of the present invention, a computer-implemented method is provided of creating a loan from a revenue Stream from a lessee, comprising the following Steps: determining rents from a lease of an asset; obtaining an indication of a value of the asset, obtaining a TANote to tangible asset value ratio, obtaining an estimated Multi-Note Loan Coupon; calculating a Breakeven TA Note Rate; calculating a Breakeven TA Note Value for a TA Note using an algorithm that includes as factors the indication of value of the tangible asset, the Breakeven TANote Rate, and the TANote to tangible asset value ratio and appropriate debt Service coverage ratio for the asset, calculating a CL Note Debt Service; obtaining a Breakeven CL Note Rate based in part on the market determined corporate bond spread for the lessee or its industry; calculating a Breakeven CL Note Value based on predetermined elements including the CL Note Debt Service, the Breakeven CL Note Rate and a term

17 US 2003/O A1 Jul. 17, 2003 for the CL Note; calculating a Breakeven Multi-Note Loan Rate using the Breakeven TA Note Rate, the Breakeven CL Note Rate, TA Note Debt Service and the CL Note Debt Service as elements in the calculation; and calculating a Multi-Note Loan Coupon by adding a lender profit margin to the Breakeven Multi-Note Loan Rate In a further aspect of the present invention, a computer-implemented System of creating a loan from a revenue Stream from a lessee is provided, comprising a processor programmed to perform the following method Steps: determining a revenue Stream from a lease of a leased tangible asset, calculating a Breakeven TA Note Rate, and a TANote Amount for a TA Note based on a Multi-Note Loan Coupon, a TA Note Debt Service and market determined underwriting parameters for the tangible asset, calculating an CL. Note Debt Service after the TANote debt service, and other appropriate amounts, if necessary are Subtracted from the revenue; calculating a Breakeven CL Note Rate and a CL Note Amount for a CLNote based on the calculated CL Note Debt Service, the Multi-Note Loan Coupon, a CL Note Debt Service, and market determined underwriting parameters, creating a file structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distrib uting recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default and allocating the rights and responsibilities of the holders of Such notes In a further embodiment of the present invention, a program product is provided for creating a loan from a revenue Stream from a lessee, comprising machine-readable program code for causing a machine to perform the follow ing Steps of determining a revenue Stream from a lease of a leased tangible asset, calculating a Breakeven TA Note Rate, and a TA Note Amount for a TA Note based on a Multi-Note Loan Coupon, a TA Note Debt Service and market determined underwriting parameters for the tangible asset; calculating an CL Note Debt Service after the TANote debt Service, and other appropriate amounts, if necessary are Subtracted from the revenue, calculating a Breakeven CL Note Rate and a CL Note Amount for a CL Note based on the calculated CL Note Debt Service, the Multi-Note Loan Coupon, a CL Note Debt Service, and market determined underwriting parameters, creating a file Structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distributing recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default and allocating the rights and responsibilities of the holders of such notes In a further embodiment of the present invention, a program product is provided for creating a loan from a revenue Stream from a lessee, comprising machine-readable program code for causing a machine to perform the follow ing method steps: determining a revenue Stream from a lease of a leased tangible asset, calculating and determining parameters of a TA Note and a CL Note based in part on the revenue Stream; creating a file Structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distributing recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default In a further embodiment of the present invention, a program product is provided for creating a loan from a revenue Stream from a lessee, comprising machine-readable program code for causing a machine to perform the follow ing method steps: determining rents from a lease of an asset; obtaining an indication of a value of the asset, obtaining a TANote to tangible asset value ratio, obtaining an estimated Multi-Note Loan Coupon; calculating a Breakeven TA Note Rate; calculating a Breakeven TA Note Value for a TA Note using an algorithm that includes as factors the indication of value of the tangible asset, the Breakeven TANote Rate, and the TANote to tangible asset value ratio and appropriate debt Service coverage ratio for the asset, calculating a CL Note Debt Service; obtaining a Breakeven CL Note Rate based in part on the market determined corporate bond spread for the lessee or its industry; calculating a Breakeven CL Note Value based on predetermined elements including the CL Note Debt Service, the Breakeven CL Note Rate and a term for the CL Note; calculating a Breakeven Multi-Note Loan Rate using the Breakeven TA Note Rate, the Breakeven CL Note Rate, TA Note Debt Service and the CL Note Debt Service as elements in the calculation; and calculating a Multi-Note Loan Coupon by adding a lender profit margin to the Breakeven Multi-Note Loan Rate. BRIEF DESCRIPTION OF THE DRAWINGS 0055 FIG. 1 is a schematic block diagram of a concep tualized operation of the present invention FIG. 2 is a schematic block diagram of a preferred embodiment of the present invention FIG. 3 is a block diagram of a computer system that may be utilized to implement the present invention FIG. 4 is a flowchart of a preferred embodiment of the method of the present invention FIG. 5 is a diagram of a screen shot display of a user interface for a computer program consistent with the teachings of the present invention FIG. 6 is a diagram of a screen shot display of a user interface for a computer program consistent with the teachings of the present invention for a 15 year lease. DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS 0061 The present invention provides a method, program product and System that provides a loan Structure that meets one or more of the following goals: Creates securities which can be sold into deep and liquid markets, Improves the certainty of execution in either the public or private capital markets, Captures more efficiently the inherent value of loans which are backed by both highly rated credits and high quality real estate Offers substantially the same level of proceeds to a borrower as a 20 year fully amortizing CTL loan For lease terms less than 20 years, offers Significantly more proceeds to a borrower than a fully amortizing CTL loan of the same or Similar term as the lease.

18 US 2003/O A1 Jul. 17, In a preferred embodiment, the present invention creates a loan with a new multi-note Structure with a shorter term final maturity than traditional CTL loans, Such as, for example, 10 years, and the following characteristics: A Tangible Asset Note ( TA Note ) supported by lease payments which may have typical fundamentals for that particular asset type (e.g., for real estate, for example, no more than 75%-80% loan to value ratio with an approxi mate 1.20 debt Service coverage ratio or greater, a loan term for example of 10 years ( TA Note Maturity Term ), an amortization term for example of 25 years and a balloon payment at the end of the TA Note Maturity Term in the amount of the Outstanding loan balance at the end of the TA Note Maturity Term which may be for example a loan to value ratio of approximately 60%) which may be placed into generic public (or private) capital market Securitization transactions, Such as generic real estate CMBS Securitiza tions A credit lease backed note ( CL Note ) sup ported by rent payments whose credit rating would be commensurate with the credit rating of the underlying tenant of the credit lease. The CL Note is a self-amortizing loan with a loan term no greater than the TA Note Maturity Term ( CL Note Amortization Term'). This note is created by monetizing the excess cash flow that would otherwise go to the borrower after debt service payments on the TA Note. These CL Notes may be issued, by way of example but not by way of limitation, into a generic Collateralized Bond Obligation ( CBO ) securitization A clearly defined legal and electronic file struc ture that delineates asset recovery priority, asset disposition authority and priority of lease Stream payments while main taining the credit quality of each note and the associated cash flows. This legal and associated electronic structure may be provided, in a preferred embodiment, through an inter creditor agreement. Such an agreement is instrumental in assuring that the nationally recognized Rating Agencies ascribe a credit rating to the CL Notes commensurate with that of the credit rating of the underlying credit tenant The Loan Product/Structure Economics Typically, a full term, fully leveraged 20 year CTL loan will be priced at an interest rate spread premium to that of the underlying interest rate spread of the Senior unsecured debt of the corporation. For example, Company X may have a debt rating of BBB+ (S&P) while the senior unsecured bonds of the company may trade on the Secondary market at a spread of 240 basis points over the average life U.S. treasury. The spread at which the CTL loan would trade in the CTL whole loan market would be approximately 50 basis points greater than that figure, or 290 basis points over the average life U.S. treasury. Consequently, the interest rate Spread that might be charged to the borrower would most likely range from 300 to 315 basis points including a lender profit of 10 to 25 basis points. (The average life treasury for a 20 year Self-amortizing loan would be approximately 13 years). If the 10 year on-the-run Treasury Note was yielding 5.20% and the 30 year on-the-run Treasury Bond was yielding 5.61% at the time the loan was made then the 13 year average life treasury would equal approximately 5.26% (based upon a 20 year Straight line interpolation between 5.20% and 5.61%) and, based on a 300 basis point spread and the average life treasury, the coupon would equal approximately 8.26% The spread premium for the CTL loan over the Senior unsecured bonds of the company is due primarily to the following reasons: Lack of liquiditv C y for the CTL loan as com pared to the Senior unsecured debt, Lack of bond covenants for CTL loans, and Constraints of the bankruptcy laws regarding leases Reference is made to the rents that are shown in FIG. 5 in the middle column. The rents could be fixed, as shown in the figure, or varying. Typically, with a full term, fully leveraged 20 year CTL loan, the entire rental payment from the tenant (except for double net leases where gener ally only 90-95% of the rental payments are monetized) would be monetized into a 20 year fully leveraged loan of approximately $9.9 million Using the example from above, utilizing a new Multi-Note Loan structure (the Invention ), the loan pro ceeds are Summarized in FIG. 5. Note that FIG. 5 is a screen shot that has been broken up into three figures in order to comply with the Office font requirements for drawings. By using the Multi-Note Loan Structure, a loan that is compa rable in terms of total loan proceeds to a traditional long term CTL loan can be obtained at better pricing to the borrower, determined as follows: 0079) 1. ATA Note is sized, by way of example but not by way of limitation, based upon a typical 75% LTV ratio with 1.25 DSCR at a 230 basis point loan spread ( Breakeven TA Note Spread ) to the 10 year on-the-run Treasury (a typical real estate loan spread) and a typical 300 month amortization term ( TA Note Amortization Term ) See FIG. 5b under the Lender column A second note, referred to as the CL Note, is created by monetizing the excess cash flow (the "Excess Cash Flow ), defined as the cash flow remaining after subtracting the cash flow needed to service the TA Note, deducting for any reserves, and deducting for any monthly cash to go directly to the borrower, and any other appropriate necessary amounts. This CL Note is created by discounting this Excess Cash Flow at a discount rate ( The Breakeven CL Note Rate ) over the 120 month term of the CL Note. As this CL Note is a pure credit note, its price or spread is based on a premium to the interest rate spread ( Breakeven CL Note Spread ) on the senior unsecured debt obligations of Company X. As this CL Note is even less liquid and Somewhat more complicated than a regular CTL loan, the spread premium is approximately 100 basis points (rather than 50 basis points) greater than the Senior unsecured debt of Company X. See FIG. 5a, the Corporate Spread line item of 2.400%, as compared to the Spread/Cost of Funds line item in the Credit Lease column of 3.400%, i.e., a 100 basis point difference The quoted loan spread to the borrower ( Borrower Multi-Note Loan Spread ) under the Multi-Note Loan struc ture will be based upon, among other things, the Breakeven TANote Spread and the Breakeven CL Note Spread. Assum ing the same Treasury Curve as listed in FIG. 5 the cost of funds to CLF in the capital markets ( the Breakeven Multi Note Loan Spread ) resulting from these placements would be 242 basis points. This lower cost (compared to a typical

19 US 2003/O A1 Jul. 17, year CTL loan) can be passed on to the borrower resulting (after addition of a lender profit of 28 basis points) in a lower Borrower Multi-Note Loan Spread to the borrower of only 270 basis points which would generate a note coupon of 7.90%. The resulting loan proceeds of approximately $9.79 million are comparable to the loan proceeds under a 20 year CTL loan Referring now to FIG. 1, there is shown a sche matic block diagram of the present invention at a high level of abstraction. Block 10 comprises a request from a bor rower or mortgage correspondent broker for financing. The inquiry may be by telephone call, by mail, in person, or may occur automatically via the receipt of a lease electronically, or via the Internet. 0083) In block 20, the lease (if not already obtained in block 10) and other pertinent information about the bor rower, the property, the lease and the lessee are received from the borrower/correspondent. A determination is made based on appropriate criteria whether CTL or other financing is Suitable for this property. Such criteria may include a minimum credit rating for the tenant/lessee to Support credit tenant financing, for example BB+ or higher; the lease type and term, for example, a 15 year or longer lease term and NN, NNN or bond type lease; and objectives of the bor rower, for example, does the borrower desire full leverage In block 30, a loan proposal is developed based on factors, Such as the tenant/lessee credit rating, lease term and lease type. For example, Stronger credits (A+ or higher) allow greater leverage and tighter loan Spreads, a longer lease allows for a longer amortization Schedule and greater proceeds, a NNN or bond type lease allows for a lower debt service coverage ratio. A term sheet for the Multi-Note Loan is then issued, the terms of which are based upon the combination of the TA Note and the CL Note In block 40, if the borrower/correspondent finds the loan proposal acceptable, then a loan application is issued, the borrower Signs the application and, preferably, provides a deposit. In block 50, due diligence requirements are communicated, the loan undergoes an underwriting process and the borrower pays expenses related to the loan under Writing In block 60, upon completion of underwriting, the loan is subject to review by a credit committee. If the loan is approved, the loan is then funded and the borrower receives funds, net of the underwriting expenses and fees. In block 70, the TA Note and CL note(s) are sold individually or a plurality of the TA Notes are pooled and sold, and/or a plurality of the CL Notes are pooled and sold. The pooling and Sale operation may be automated and/or performed using telecommunication with note buyers, including via the Internet The basic operation of the method, program prod uct and System of the present invention is shown, again at a high level of abstraction, in FIG. 2. In FIG. 2, a revenue stream of S85,000 per month comprising rent from a tenant/ lessee 200 is used to create at least two notes. The revenue Stream amount is paid into a lockbox 210 (an industry term indicating that the rent is to be paid directly to the designee of the noteholder) and then divided based first on paying the debt service on the TA Note that is based on an underwritten debt service coverage ratio, the TANote Amortization Term, an underwritten TA Note to value ratio and the value of the asset being leased. In the example, shown in FIG. 2, the monthly debt service portion is S57,390.27, and is used to support a TA Note 220 of S7,500,000. The monthly Excess Cash Flow amount of S27, in this example is used to support a CL Note 230 of $2,285, The borrower 240 receives a loan based on the combined notes of S9,785, at a rate to be discussed below Referring now to FIG. 3, there is shown an embodiment for implementing the processing System and method of the present invention. The processing System may, in one example, be implemented as a computer System 300 which includes all of the customary components of a computer system including a CPU 310, a display 320, a keyboard and/or other I/O device 330, a network or com munications interface 340, RAM or ROM or other memory 350, as well as storage devices 360, which for example may be implemented by disk and CD-ROM drives or arrays for Storing one or more electronic data bases. For purposes of explication only, the Storage device 360 is shown, in one embodiment, with a file 370 for a TA Note, and a file 380 for a CLNote. It should be understood that the computer system 300 could also take a variety of other forms, such as a PDA, communications devices, Such as a WAP enabled device, that communicates directly with processing Software at one or more processing Systems or at an intermediate computer Server that communicates with a processing System, or various other convenient forms The computer system 300 could be connected through the communication interface 340 and via a com munications network to one or more other processing Sys tems. The processing software to be described below may be contained on computer 300 or in other remote processing systems using the communications network 390. In the preferred embodiment, the communication network might be the Internet. However, the communication network could also include a wide area network (WAN), internetwork, a public tariff telephone network or a private Value Added Network (VAN). Alternatively, the communication network can be implemented using any combination of these differ ent kinds of communication networks. It should be appre ciated that many other similar configurations are within the abilities of one skilled in the art and all of these configura tions could be used with the method of the present invention. Furthermore, it should be recognized that the computer System and network disclosed herein can be programmed and configured in a variety of different manners, by one skilled in the art, to implement the method Steps described further herein The storage and databases for the method may be implemented by a single database Structure at an appropri ate Site, or by a distributed data base Structure that is distributed across an intra or an Internet network It should also be noted that a single CPU based computer System is shown for clarity in the figure. One skilled in the art would recognize that the processing System 300 is representative only and could be implemented using a multi-processor computer System. Alternatively, a distrib uted computer System could be implemented in which the functionality of the processing System could be provided by Several computer Systems that are connected over a com puter network. It is also possible to distribute the function

20 US 2003/O A1 Jul. 17, 2003 ality of the processing System over a multitude of Sites which are Suitably connected together using conventional network ing or inter-networking techniques Furthermore, it should be recognized that the com puter System and network disclosed herein can be pro grammed and configured in a variety of different manners by one skilled in the art, to implement the method steps discussed further herein The files and file components discussed herein may be paper files, but in a preferred embodiment comprise data Structures with electronic data which may be implemented by one or a plurality of files and Subfiles with appropriate electronic associations. The files or Subfiles may be located in one computer or may be distributed in a plurality of local and/or remote computers across a network. The number of files and the manner of distribution among computers and across a network and the method of association is a design feature that may be chosen by the System designer. 0094) Referring now to FIG. 4, there is shown a sche matic block diagram of a preferred embodiment of the present invention. It is contemplated that at least one, and preferably a plurality of the method steps to be disclosed herein be performed via the computer implementation of FIG. 3, but may be performed in a different order than as shown in the exemplary figure. In block 400 a revenue Stream amount is obtained for a lease of a tangible asset in order to facilitate a Multi-Note Loan to a borrower. In one embodiment, the tangible asset is real estate and the revenue Stream is rent from the tenant/lessee to a borrower. A Screen shot of a graphical user interface of a computer program designed to perform one or more of these Steps is shown in FIGS. 5A-5C, using an example of real estate being leased under a 20 year lease by a Company A for a predetermined retail store use. FIGS. 5A-5C comprises a single screen shot that has been broken up to comport with drawing require ments for the application. (Note that the underwriting parameters will change for different assets.) In the example, Company Ahas a Moody's Rating of A2, and an S&P Rating of BBB+, and a Lease Type of NNN. The revenue stream of rent is $85,000 per month (Monthly Lease Payment slot in FIG.5A) over the entire 240 month lease term in the present example. AS noted above, the rent may be a fixed amount per time period, or may vary In block 401, in the event that the lease is not a bond lease, Steps are taken to underwrite the lease. This process comprises identifying lessor maintenance and other obligations and lessee offset and termination rights and utilizing appropriate lease enhancement mechanisms to mitigate risk of potential termination of or interruption in the lease payments due to the failure of the lessor to perform its obligations or for other causes that might cause Such an interruption. By way of example but not by way of limita tion, Such a lease enhancement mechanisms might comprise Subtracting from the revenue Stream and escrowing a reserve to assure adequate resources for the lessor to perform its maintenance obligations. Additionally, this block would also encompass Subtracting amounts from the Multi-Note Loan proceeds for the payment of the premiums for casualty and condemnation insurance and other appropriate insurance. The foregoing Steps may be taken in order to enhance a lease other than a bond lease to bond type Status allowing Such lease to Support a traditional CTL financing and a financing under the Multi-Note Loan structures of the present inven tion. Note that this step is optional and may not be necessary for Some leases Such as bond leases The next step, represented by block 402, comprises determining a TA Note to tangible asset value ratio. This ratio is generally an input that is market-determined, based on factors Such as the tangible asset type, location, demo graphic profile, credit rating of the lessee, the lease term, and other factors. In FIG. 5C, the note to asset ratio for real estate for purposes of this example, shown next to the heading Maximum LTV, is 75% The next step in the diagram, as represented by block 404, is to obtain an indication of the value of the tangible asset that is being leased. By way of example, this indication of value could be obtained by an appraisal of the tangible asset, or Simply by estimating the value of the tangible asset or by Some other convenient means. In the example of FIG. 5, the indication of value, shown next to the heading Appraised Value, is S10,000,000 in FIG. 5A The next step shown in the diagram, represented by block 406, is to determine the TA Note Amortization Term. This amortization term is generally a given input that is market-determined, based on factors Such as the tangible asset type, location, demographic profile, credit rating of the lessee, the lease term, lease type and other factors. In FIG. 5B, the TA Note Amortization Term for real estate for purposes of this example, shown next to the heading Term/ Amortization in the column titled Lender is 300 months The next step shown in the diagram, represented by block 408, is to estimate the Multi-Note Loan Coupon, (i.e., the interest rate charged to the borrower). An estimate, based on market parameters, of the Multi-Note Loan Coupon is made which incorporates a lender's profit margin. In FIG. 5B, the Multi-Note Loan Coupon for real estate for purposes of this example, shown next to the heading Coupon in the column titled Tangible Asset is 7.90% Note that due to the multi-note structure, in a preferred embodiment the calculations are performed by working backwards in structuring the Multi-Note Loan by starting with an estimate of the Multi-Note Credit Loan Coupon. Using Such an example calculation, the various other parameters for the multi-note loan are calculated. Finally, the Multi-Note Credit Loan coupon is calculated, rather than estimated. Then this calculated Multi-Note Credit Loan Coupon is reviewed to determine if a Satisfac tory margin is obtained with that coupon interest rate level and whether the other parameters in the calculation are acceptable. In a preferred embodiment, if the resulting margin or another parameter is not acceptable, then this calculated Multi-Note Credit Loan Coupon is plugged back in and the individual note parameters are recalculated in an iterative process using the calculated Multi-Note Credit Loan Coupon figure By way of example but not by way of limitation, in a typical real estate loan, a lender Sets the coupon on the loan marginally higher than the breakeven rate on the loan to establish the lender's profit. Both the coupon and the breakeven rate are applied to the same Set of debt Service payments. In the Multi-Note Credit Loan, the Breakeven Multi-Note Credit Loan Rate is based on two distinct breakeven rates, the Breakeven TA Note Rate and the

21 US 2003/O A1 Jul. 17, 2003 Breakeven CL Note Rate, two distinct amortization terms, the TA Note Amortization Term and the CL Note Amorti Zation Term, and two distinct Sets of debt Services payments, the TA Note Debt Service and the CL Note Debt Service. The Multi-Note Loan Coupon is initially estimated at a premium to the Breakeven Multi-Note Credit Loan Rate to establish the lender's profit. However, as one or more of the parameters upon which any of the calculations are based changes as the result of changes in market parameters, the TA Note Debt Service and CL Note Debt Service, among other things, also change, resulting in changes to the Multi Note Loan Coupon. This, in turn, may cause the Breakeven Multi-Note Loan Rate to change. This creates an iterative process for Structuring the loan whereby adjustments to the Multi-Note Loan Coupon are made causing, in Some instances, a recalculation of the Breakeven Multi-Note Loan Rate one or more times in order to structure the Multi-Note Loan with the desired level of profitability. 0102) The next step shown in the diagram, represented by block 410, is to calculate the TA Note Face Amount based on the required TA Note to tangible asset ratio and the value of the tangible asset. Using the TANote to asset ratio of 75% and an indication of value for the tangible asset of S10,000, 000, the TA Note Face Amount would be S7,500,000. This TANote Face Amount is shown in the Face Amount Of Note row in the Tangible Asset column of FIG. 5B. 0103) The next step shown in the diagram, represented by block 412, is to calculate the TA Note Debt Service (the monthly payment to Service the loan, including interest and principal and the final balloon payment due at the end of the TANote Term). The calculation of the TA Note Debt Service is determined based upon predetermined elements includ ing: the estimate of the Multi-Note Loan Coupon, the TA Note Amortization Term and the TANote Face Amount. The calculated TA Note Debt Service may then be tested to verify that the required minimum debt Service coverage ratio is adequate such that the calculated TA Note Debt Service coverage ratio is greater than a minimum required debt Service coverage ratio, which is a market input based on factors Such as the tangible asset type, location, demo graphic profile, credit rating of the lessee, the lease term, lease type and other factors. An algorithm that may be used to calculate the TANote Debt Service in a preferred embodi ment is as follows: i: (1 + i) TA Note Debt Service = TA Note Face Amount ( (1 + if 12) - 1 where n = TA Note Amortization Term i = Multi-Note Credit Loan Coupon 0104 (Note: This method is the preferred embodiment however there is a variety of other methods to calculate this TA Note Debt Service. By way of example but not by way of limitation, Such other methods might be based on Such factors as varying the calendar used for the payment calcu lations, and varying the payment period.) 0105 The next step in the diagram, represented by block 414, comprises determining a Breakeven TA Note Spread. This Breakeven TA Note Spread is a market-determined input based upon a number of different criteria, which will depend on the tangible asset involved, but typically might include the tangible asset type, location, demographic pro file, credit rating of the lessee, the lease term, lease type, amortization term, loan term, prevailing capital markets asset interest rate spreads and other factors. For example, for a real estate asset, the spread would be determined, in part, based on whether the real estate was for a retail, office, or other use and is generally a market determined input. In the example, the market-determined input for the Breakeven TA Note Spread, shown in the Spread/Cost of Funds row in the Tangible Asset column, is 2.30% in FIG. 5B The next step in the diagram, as represented by block 416, is to obtain a Breakeven TA Note Rate. The Breakeven TA Note Rate may be determined based on the Breakeven TA Note Spread determined in block 414 and a benchmark interest rate. The benchmark rate may be any Standard benchmark, Such as a U.S. Treasury interest rate, for example, the 5 year or 10 year on-the-run US Treasury interest rates, or the LIBOR rate for 1 week, 1 month, or 2 month, etc. Referring to FIG. 5B, the benchmark interest rate used in the present example is shown in the Base Treasury Rate row in the Tangible Asset column as 5.20% (10 year on-the-run US Treasury). The Breakeven TA Note Spread in FIG. 5B, listed in the Spread/Cost of Funds row in the Tangible Asset column, is 2.30%. Accordingly, the Breakeven TANote Rate is 7.50%, shown in FIG. 5B in the Discount Rate row in the Tangible Asset column The next step in the diagram, represented by block 418, comprises calculating a Breakeven TA Note Value amount based on predetermined elements, including the TA Note Debt Service, the Breakeven TA Note Rate, and the loan term for the TA Note. By way of example but not by way of limitation, this calculation could comprise determin ing the present value of the amount of the TA Note Debt Service at the calculated Breakeven TA Note Rate. The calculated Breakeven TA Note Value amount in the Screen shot example is S7,695,437.10, and is shown in the Loan Value row in the Tangible Asset column of FIG. 5B. An algorithm that may be used to calculate the Breakeven TA Note Value is as follows: Breakeven TA Note Value = where n = TA Note loan term i = Breakeven TA Note Rate TA Note Debt Service (including balloon amount) (1 + if 12) 0108) (Note: This method is the preferred embodiment however there is a variety of other methods to calculate this Breakeven TA Note Value. By way of example but not by way of limitation, Such other methods might be based on Such factors as varying the calendar used for the payment calculations, and varying the payment period.) 0109 The next step in the diagram, as indicated by block 420, comprises calculating the Excess Cash Flow (also referred to as the CLNote Debt Service), defined as the cash flow remaining after subtracting the TA Note Debt Service (as calculated in Block 412), and deductions for any

22 US 2003/O A1 Jul. 17, 2003 reserves, any cash going directly to the borrower, and any other appropriate amounts from the lease revenue Stream. The following is a description of a preferred methodology that may be used in determining the amounts available for debt Service for both the TA Note and the CL Note in Multi-Note Loans secured by real estate: 0.110) If there are no monetary lessor obligations under the lease (a Bond/NNN Lease ), including, without limitation, for maintenance, repair, environ mental remediation or correction of latent defects, then 100% of the rent is available to be applied to debt service for all notes of the Multi-Note Loan If there are monetary lessor obligations under the lease (a NN Lease ), then the total rent is divided by 1.05 and the quotient (the Debt Service Quotient ) of Such calculation is the amount avail able to be applied to the debt Service and any monthly reserves on all notes of the Multi-Note Loan The difference obtained by Subtracting the Debt Service Quotient from the total rent is cash which is generally released to the Borrower each month (the Borrower Monthly Cash') after pay ment of debt service and reserves for all notes of the Multi-Note Loan The amount available for debt service for the Multi-Note Loan (the Multi-Note Loan Debt Ser vice ) is either (a) for a Bond/NNN Lease, 100% of the rent, or (b) for a NN Lease, the difference obtained by Subtracting all monthly reserves from the Debt Service Quotient The TA Note is created based upon appropri ate underwriting parameters for the particular asset Securing the Multi-Note Loan as more particularly described above and is to be serviced by a portion of the Multi-Note Loan Debt Service (the TA Note Debt Service ) The CL Note, which will be serviced by the difference obtained by subtracting the TA Note Debt Service from the Multi-Note Loan Debt Service (the CL Note Debt Service ) is then created based upon the methodology more particularly described The next step in the diagram, represented by block 422, is to calculate a Breakeven CL Note Spread and Breakeven CL Note Rate. By way of example but not by way of limitation, the Breakeven CL Note Spread may be calculated by adding a premium (in this example 100 basis points) to the lessee's corporate bond interest rate spread as determined in the marketplace. For example, in the Screen shot of FIG. 5B, the corporate bond interest rate spread for the particular lessee Company A with an S&P corporate bond rating of BBB+ is shown in the Spread/Cost Of Funds row in the Credit Lease column as 3.40%, which is a 100 basis point premium over the actual corporate bond spread of Company A, which is 240 basis points, as shown in the row labeled Corporate Spread in FIG. 5A. Referring again to FIG. 5B, the benchmark interest rate used in the present example is shown in the Base Treasury Rate row in the Credit Lease column as 4.80%. In this example calculation as noted earlier, the Base Treasury Rate of 4.80% is obtained by performing a Straight-line interpolation of the 5 year Treasury Curve (4.74%) and the 10 year Treasury Curve (5.20%) based on an average life of the CLNote of 5.7 years. Accordingly, the Breakeven CL Note Rate, which is the sum of the Breakeven CL Note Spread and the Base Treasury Rate, is 8.20% in this example Alternatively, the corporate bond spread to be added to the benchmark rate in block 422 could be a generic corporate bond Spread based on the debt rating and/or other factors for the tenant/lessee or it could be another convenient Spread The next step in the diagram, represented by block 424, comprises calculating the CL Note Face Amount based on predetermined elements, including the CL Note Debt Service, the Multi-Note Credit Loan Coupon, and the CL Note Amortization Term. By way of example but not by way of limitation, this calculation could comprise determining the present value of the amount of the CLNote Debt Service discounted at the Multi-Note Credit Loan Coupon over the CL Note Amortization Term. The calculated CL Note Face Amount in the screen shot example of FIG. 5B is S2,285, , shown in the row in the Credit Lease column. 0119) The next step in the diagram, represented by block 426, comprises calculating a Breakeven CL Note Value amount based on predetermined elements, including the CL Note Debt Service, the Breakeven CLNote Rate, and the CL Note Amortization Term. By way of example but not by way of limitation, this calculation could comprise determining the present value of the amount of the CLNote Debt Service discounted at the calculated Breakeven CL Note Rate. The calculated Breakeven CL Note Value amount in the Screen shot example of FIG. 5B is S2,255,936.95, shown in a row in the Credit Lease column. An algorithm that may be used in a preferred embodiment to calculate Breakeven CL Note Value is as follows: CL Note Debt Service Breakeven CL. Note Walue = X. (1 nine) x=l where n = CL Note Amortization Term i = Breakeven CL. Note Rate (Note: This method is the preferred embodiment however there is a variety of other methods to calculate this Breakeven CL Note Value. By way of example but not by way of limitation such other methods might be based on Such factors as varying the calendar used for the payment calculations, and varying the payment period.) 0120) The next step in the diagram, as represented by block 428, comprises calculating a Breakeven Multi-Note Loan Rate. The Multi-Note Loan is based on predetermined elements comprising the Breakeven TA Note Rate, the TA Note Debt Service, the Breakeven CL Note Rate and the CL Note Debt Service. The Breakeven Multi-Note Loan Rate, in a preferred embodiment, is the approximate interest rate which, when applied to the Multi-Note Loan Debt Service, produces a present value equal to the Sum of the present value of the TA Note Debt Service discounted at the Breakeven TA Note Rate over the TA Note Maturity Term

23 US 2003/O A1 Jul. 17, 2003 and the present value of the CL Note Debt Service dis counted at the Breakeven CL Note Rate over the CL Note Amortization Term. In FIG. 5B, the present value of the TA Note Debt Service is S7, , i.e., the Breakeven TA Note Value, when discounted at the Breakeven TANote Rate of 7.50%. The present value of the CL Note Debt Service payments is S2,255,936.95, i.e., the Breakeven CL Note Value, when discounted at the CL Note interest rate of 8.20%. The sum of the present values for the two notes is S9,951, A discount rate of approximately 7.620% is required to produce a present value of S9,951, for the Multi-Note Loan Debt Service. This resulting Breakeven Multi-Note Loan rate is shown in the Lender column next to the Discount Rate row. A variety of other methods are available to calculate the Breakeven Multi-Note Loan Rate. Such other methods would use one or more of the prede termined elements of the Breakeven TA Note Rate, the TA Note Debt Service, the Breakeven CL. Note Rate and the CL Note Debt Service as elements in the calculation The next step in the diagram, represented by block 430, comprises calculating the Multi-Note Credit Loan Face Amount, which is the Sum of the TA Note Face Amount and the CL Note Face Amount. The calculated Multi-Note Credit Loan Face Amount in the screen shot example of FIG. 5B is S9,785,576.67, shown in the Face Amount of Note row in the Lender column. 0122) The next step in the diagram is to add an estimated margin to the Break Even Multi-Note Loan Rate to obtain a calculated Multi-Note Loan Coupon intended to incorporate a desired level of lender profit. The calculated Multi-Note Loan Coupon is then plugged back into block 408 and the parameters for the TA Note and the CL note are recalculated in an iterative process. This operation may be repeated multiple times, as necessary to fine tune the Multi-Note Loan Coupon to generate the desired level of lender profit. The foregoing operation is represented by block A further step could be implemented, represented by Block 432 in the diagram, to improve the efficiency of a CMBS securitization, a CBO securitization, a loan sale transaction, or for other reasons, whereby the Multi-Note Loan Coupon is reset at an annual rate which is lower than the original Multi-Note Loan Coupon, and the Multi-Note Loan Face Amount is recalculated based on Such reduced Multi-Note Loan Coupon (a Loan Gross-Up.) without (a) reducing the loan proceeds received by the borrower or (b) increasing the combined debt Service payments for the TA Note and the CL Note. In one embodiment, the Multi-Note Loan Coupon would be reset at a lower annual interest rate (e.g. 25 basis points lower, depending on market conditions) and the Multi-Note Loan Face Amount would be recalcu lated in the Same manner Set forth above using Such lower annual interest rate, which could have the effect of improv ing the execution and marketability of the loan by among other things, artificially creating a discount to par note FIG. 6 is a screen shot of a GUI for a computer program in accordance with the present invention, using an example of a 15 year lease to a property owner whose property is net leased to Company B. The Same headings are used as with FIG. 5. Reference is made to the rents that are shown in FIG. 6A in the middle column. The rents could be fixed, as shown in the figure, or varying. Typically, with a full term, fully leveraged 15 year CTL loan, the entire rental payment from the tenant (except for double net leases where generally only 90-95% of the rental payments are mon etized) would be monetized into a 15 year fully leveraged loan of approximately $8.8 million Using the example from above, utilizing a Multi Note Loan Structure, the loan proceeds are Summarized in FIG. 6. By using the Multi-Note Loan structure, a loan amount of approximately $9.3 million is obtained, which exceeds the loan amount generated by a 15 year fully amortizing CTL loan of approximately $8.8 million The next step in the diagram, represented by block 434, comprises selling the TANote and/or the CL Note. This Step could comprise pooling a plurality of the TA Notes, Securitizing and Selling the resulting Security, and/or pooling a plurality of the CL Notes, Securitizing, and then Selling the resulting Security. The pooling could be performed manu ally, or automatically, and could be performed on the web using appropriate web content downloaded from a web site, as noted below An additional step represented by block 436, is comprised of creating an interactive web site with web content to accept input information from a potential bor rower, calculate the Multi-Note Loan Face Amount based on determinations of a TA Note and a CL Note as described above and then determining the Multi-Note Loan Coupon. The screen shot of the interface shown in FIG. 5 could be used as the interface for the web site. Alternatively or in addition, the calculated Multi-Note Loan Face Amount and Multi-Note Loan Coupon could be transmitted to a prede termined location using a predetermined medium, Such as , fax or telephone, for example A further step could be performed using web content, wherein TA Notes and CL Notes are displayed to a potential aggregator or buyer, who may then aggregate various TA Notes into a pool and various CL Notes into a pool Note that an important component in a preferred embodiment of the present invention comprises using an intercreditor agreement to associate legally and in a pre ferred embodiment electronically, the TA Note and the CL Note together for various purposes including: (i) determin ing/calculating and distributing the proceeds from a fore closure on the leased tangible asset, e.g. typically real estate and (ii) allocating the rights and responsibilities of the holders of Such notes. The association of the notes would comprise, in one embodiment, creating one or more files for a TA Note and a CL Note, and on the occurrence of a sale of the leased tangible asset, calculating an excess of Sale proceeds over at least amounts due for the payoff of the TA Note. In a preferred embodiment, the amount of the TA note would be paid off and other required amounts thereunder Settled, and then the excess of the Sale proceeds would be associated electronically or otherwise with the file for the CL Note. The further step of actually transferring the calculated excess amount to a holder of the CL Note or to another appropriate party could then be performed in one embodi ment. In a preferred embodiment, the one or more files would be electronic files and the association would be by means of references, and the calculation and transfers would be performed electronically A further important aspect of the invention and the intercreditor agreement is to associate electronically or

24 US 2003/O A1 Jul. 17, 2003 otherwise a claim for rents under the bankruptcy code after rejection of the tangible asset lease in bankruptcy or other claim for rents and/or other amounts due under the tangible asset lease after default thereunder, (collectively a Defaulted Lease Claim ) with the CL Note. This embodi ment might also include the Step of electronically associat ing any proceeds from the Defaulted Lease claim with the file for the CL Note. In a preferred embodiment, the amount of the CL note would be paid off and other required amounts thereunder settled, and then the excess of the Defaulted Lease claim proceeds would be associated electronically or otherwise with the file for the TA Note. An example inter creditor agreement is shown in the Appendix. 0131) Internet Broadcasting 0132) The present invention also includes providing a computer implemented method for providing loan Services in accordance with the present invention over the Internet, including Internet broadcasting or Video Streaming to deliver information and Services requested by clients. This concept includes providing an electronic calculator by downloading web content from a web site for calculating the various loan amounts, rates, and other terms disclosed herein Internet broadcasting is a generic term that covers both live one-way or two-way Video and access to other on demand material, whether Video or not, that a user can request. Therefore, the present invention includes using Internet broadcasting to explain, market, Sell, and assist people to obtain loan Services products from banks, broker age firms, mutual funds, insurance companies, etc. Thus the client's questions or information requests could be answered by a Video of a person or a live person SMIL 0135 SMIL is a technology whose abbreviation stands for Synchronized Multimedia Integrated Language, which is free Software that can be downloaded and allows both Internet broadcasting and data display of a form at the same time on a computer Screen. In other words the client can See the person who is helping fill out the form at the same time as filling out the form The broadcasting site or Internet server can stream Video, Still photos, data, charts, images, and text at the same time for side-by-side display. This may be used for loan Service products, banks, mutual funds, Stock brokerage firms, etc Links The present invention also includes providing cli ents with loan Services through an internet website including providing hot links which automatically take the client to another web page of the provider or of a third-party for information or calculations requested by a client These technologies include media-on-demand which works by having a button or other indicator on the web site, which when clicked, links (or hot links) to another Server, which maintains a mirror of the Web Site web page, and provides a stream or broadcast of the requested content. The reason this technology is preferable relative to import ing just the Stream or feed into the provider's Web Site is that when changes are made by the provider of the media-on demand, the changes can be automatically adjusted at the media-on-demand web site and there is no need to keep adjusting the provider's web site every time there is a change at the media on demand Server Therefore, the present invention includes the use of hot links in loan Service products to explain, assist, Sell, market or cause Internet broadcasting to be used to Sell a loan services product. Whether the link is to a mirrored site on another Server or simply imports data, pictures or other information from another Site, these are all included in the present invention Accordingly, the present invention contemplates the use of hot links to cover banks, brokerage firms, mutual funds, all other types of financial institutions, insurance companies, their agents, and certainly anyone who markets a loan product including an Internet portal (e.g., AOL) As an alternative or in addition, the web site could be used as a tool to allow a buyer of notes to interactively assemble TA and CL Note pools for securitization and purchase Structure The inherent value of the Multi-Note Loan struc ture implemented in accordance with the present invention is that it is able to satisfy one or more of the following constituents while at the Same time meeting their exacting Standards: 0145 Borrowers-the Multi-Note Loan structure gener ates Similar loan proceeds to those generated by a 20 year fully amortizing CTL loan, which makes it a viable loan product Rating Agencies-in senior/subordinate A/B loan structures, the B Notes take many different forms. For instance, the B notes may take the form of mezzanine debt, preferred equity or hard and/or Soft Second mortgage notes. The rating agencies evaluate this form of additional indebt edness, as increasing the risk profile of the loan while also adding an additional layer of complexity. Consequently, the rating agencies, when rating a loan (or pool of loans), typically ascribe a higher Subordination level to loans using a traditional Senior/Subordinate loan Structure to compensate for the additional indebtedness. This means that a greater percentage of the loan (or pool of loans) will be rated below AAA as a result of the additional indebtedness The Multi-Note Loan structure of the present invention is unique because it generates Substantially fully leveraged loan proceeds (i.e. loan proceeds similar to a traditional CTL loan at debt Service coverage ratios ranging from approximately 1.0 to approximately 1.05 times) while at the same time achieving more favorable treatment from the Rating Agencies than traditional CTL loans and other Senior/Subordinate loan Structures. Because the intercreditor agreement between the holders of the CL Note and the TA Note clearly delineates the Sources and priority of tangible asset recovery in the event of a default, and maintains the credit quality of the cash flows from the underlying credit tenant's lease, the Rating Agencies can treat the Multi-Note Loan Structure more favorably than traditional Senior/Sub ordinate loan Structures and apply the following treatment to the Multi-Note Loan structure: At worst, ascribe a normal subordination level consistent with those loans that are similar to the TA Note

25 US 2003/O A1 Jul. 17, 2003 and, at best, ascribe a shadow' or "rating estimate' equal to (or slightly lower than) the credit rating of the underlying lessee for the TA Note; and 0149 AScribe a shadow' or rating estimate equal to the credit rating of the underlying lessee for the CL Note Tangible Asset/Conduit Lenders-as the majority of the economics of the loan reside with the TA Note, which will be contributed to or placed into generic public (or private) capital market Securitization transactions, Such as generic real estate CMBS Securitizations in the present example, the Multi-Note Loan structure should conform to the standards of the tangible asset/conduit lenders. The Multi-Note Loan structure Satisfies these investors because it meets or exceeds their requirements in terms of: LTV ratio; 0152) DSCR ratio; 0153 Asset type; 0154 Loan underwriting, structure and terms; and O155 It also meets or exceeds their requirements for tangible asset recovery in terms of disposition authority and priority. In the event of a default, the source of recovery for the tangible asset lender is the tangible asset CBO investors-as these types of investors are purely fixed income and credit/bond oriented and not tan gible asset knowledgeable, the CL Note product should look and feel like a bond of a credit tenant. The Multi Note Loan Structure Satisfies these investors as it provides for regular uninterrupted Scheduled payments from the credit tenant and delineates tangible asset recovery and priority of claims in the intercreditor agreement. The CL Note holder has first priority in the unsecured claim in bankruptcy under Section 502(b)(6) of the Bankruptcy Code for the remaining rent due under the lease and any other claims for rent due under a defaulted loan. The priority of this claim is exactly or Substantially the Same as priority of the claim of Senior unsecured bondholders B piece buyers the B piece buyers are the holders of the most junior certificates in the tangible asset/ conduit Securitization. AS Such, they are in the first loss position of the Securitization and the holders of the riskiest class of bonds. The universe of B piece buyers is very limited, amounting to only a few investors. They are influ ential with the tangible asset/conduit lenders as to the composition of the tangible asset/conduit Securitizations and have the power to have certain loans removed from a tangible asset/conduit loan securitization. The TA Note generated by the inventive Multi-Note Loan structure described herein Substantially meets tangible asset/conduit Securitization Standards as more particularly described above and are thus acceptable to the various B piece buyers Inter-Creditor Agreement The inter-creditor agreement, as described previ ously, is a document which governs the rights between the TA Note and CL Note holders. The inter-creditor agreement, in a preferred embodiment, accomplishes the following: 0160 assigns most of the rights and responsibilities with respect to the tangible asset, lease modifica tions, loan workouts, property protection advances, and other tangible asset/real estate collateral related matters to the TA Note holder; addresses the allocation of recoveries amongst the two note holders; 0162 provides first priority recovery under the tan gible asset to the TA Note holder; and 0163 provides first priority recovery under Section 502(b)(6) of the US Bankruptcy Code and any other Defaulted Lease claims to the CL Note holder provides first priority of lease payments to the TA Note The structure of the present invention, in the example shown, provides proceeds to a borrower that are similar to those generated by a fully amortizing 20 year CTL loan, while at the same time meeting the requirements and Standards of the various parties involved in the disposition of both notes in the capital markets Benefits The benefits of the Multi-Note Loan structure for lenders include one or more of the following: Enables the sale of securities into two deep and liquid markets (i.e. placed into generic public (or private) capital market Securitization transactions, Such as generic real estate CMBS Securitizations and generic CBO securitizations; and Improves the certainty of the sale of the resulting notes generated in accordance with the present method and System The benefits of this new structure for borrowers may include one or more of the following: Creates liquidity for properties leased to certain types of lessees for which full leverage financing is gener ally not available due to an oversupply in the marketplace. These credits would include most drug Store credits Such as CVS Corporation and Walgreen Co. Currently, most life insurance companies and pension plans have completely depleted their allocations for Such credits, and there is little or no additional mortgage financing available for these credits in the marketplace Enables borrowers to receive substantially fully leveraged loans on properties net leased to marginal invest ment grade tenants and Some below investment grade ten ants which no other lending Source is willing to provide. This would include credits ranging from BB+ to BBB Gives borrowers a higher level of proceeds for shorter term leases. This program will enable borrowers to obtain Substantially fully leveraged proceeds for other lease terms, Such as 15 year lease terms, which are approximately equivalent to the proceeds under a 20 year lease. Most borrowers with properties leased to tenants for 15 year lease terms would be restricted to conduit type real estate financ ing limited to no more than a 75% LTV ratio, which would be well below the level of proceeds generated by the Multi-Note Loan structure of the present invention.

26 US 2003/O A1 Jul. 17, Provides better loan pricing to borrowers To Summarize one important aspect of the present invention, in a typical Senior/Subordinate (A/B) loan Struc ture, (e.g. mezzanine debt, preferred equity or hard and/or Soft Second mortgage notes) the additional indebtedness, in addition to adding a layer of complexity, also increases the risk profile of the loan. Rating agencies, when rating a loan (or pool of loans), typically ascribe a higher Subordination level to loans using a traditional Senior/Subordinate loan Structure to compensate for the added risk associated with the additional indebtedness. This means that a greater per centage of the loan (or pool of loans) will be rated below AAA as a result of the additional indebtedness. 0176) The Multi-Note Loan structure of the present invention is unique because it generates Substantially fully leveraged loan proceeds (i.e. loan proceeds similar to a traditional CTL loan at debt Service coverage ratios, in a preferred embodiment, ranging from approximately 1.0 to approximately 1.05 times) while at the same time not negatively impacting the risk profile of the overall loan or of the TA Note or the CL Note The intercreditor agreement between the holders of the CL Note and the TA Note clearly delineates the sources and priority of tangible asset recovery and Defaulted Lease claims between the note holders in the event of a loan default, and maintains the credit quality of the cash flows from the underlying credit tenant's lease. The rating agen cies therefore can treat the Multi-Note Loan structure of the present invention more favorably than the traditional Senior/ Subordinate loan Structures and allow the two notes to be Viewed, analyzed and Sold as independent instruments not dependent on one another Consequently, the Ratings Agencies will ascribe, at Worst, a normal Subordination level consistent with those loans that are similar to the TA Note and, at best, ascribe a shadow or rating estimate equal to (or slightly lower than) the credit rating of the underlying lessee to the TA Note. In addition, the rating agencies will also ascribe a shadow' or rating estimate equal to the credit rating of the underlying lessee to the CL Note It should be noted that although the flow charts provided herein show a specific order of method steps, it is understood that the order of these steps may differ from what is depicted. Also, two or more StepS may be performed concurrently or with partial concurrence. Such variation will depend on the Software and hardware Systems chosen and on designer choice. It is understood that all Such variations are within the Scope of the invention. Likewise, Software and web implementations of the present invention could be accomplished with Standard programming techniques with rule based logic and other logic to accomplish the various database Searching Steps, correlation Steps, comparison Steps and decision Steps that may be required. Note that the example loan term, loan amounts and other parameters discussed herein are provided only for ease of explanation, and the Scope of the invention is not So limited It should also be noted that the word component and the word Step as used herein and in the claims are intended to encompass implementations using one or more lines of Software code, and/or hardware implementations, and/or equipment for receiving manual inputs. Additionally, the phrase computer-implemented method means that one or more of the method steps are implemented on a computer or other automatic processing device. Additionally, the words one or more files' means that the data could be provided in one file, two or more Separate files, or Subparts of a single file or multiple files. Additionally, the word "associating means adding the item or value or a reference thereto into a file or between the files or other elements and encompasses electronic association. The words electroni cally associating mean adding the item or value or an electronic reference between electronic files or other ele ments. The words electronic reference mean a URL ref erence, or a pointer, Socket number or other backroom retail, to another internal or external location. The words elec tronic files' is intended to be interpreted as a generic phrase covering all forms of data Storage, including electronic, magnetic, optical, and any other convenient forms of Stor age The foregoing description of preferred embodi ments of the invention has been presented for purposes of illustration and description. It is not intended to be exhaus tive nor to limit the invention to the precise form disclosed, and modifications and variations are possible in light of the above teachings or may be acquired from practice of the invention. The embodiments were chosen and described in order to explain the principals of the invention and its practical application to enable one skilled in the art to utilize the invention in various embodiments and with various modifications as are Suited to the particular use contem plated. It is intended that the scope of the invention be defined by the claims appended hereto, and their equivalent.

27 US 2003/ A1 14 Jul. 17, 2003 APPENDIX Execution Copy INTERCREDITOR AGREEMENT AMONGNOTE HOLDERS Dated as of October 1, 2001 by and between CAPITAL LEASE FUNDING, L.P., and FIRST UNION NATIONAL BANK (Purchaser)

28 US 2003/ A1 Jul. 17, TABLE OF CONTENTS 1. Definitions; Conflicts. (a) Definitions. References to a "Section' or the recitals' are, unless otherwise specified, to a Section or the recitals of this Agreement. Whenever used in this Agreement, the following terms shall have the respective meanings set forth below unless the context clearly requires otherwise Payments on the Notes. (a) Distribution on Notes. On each Payment Date, all amounts on deposit in the Lockbox Account (other than (1) amounts representing payments of rent under the Credit Lease for which the due date has not yet occurred, (2) proceeds of a Defaulted Lease Claim and (3) any Loan Fee retained by CLF to the extent so identified in the Intercreditor Agreement Supplement) shall be applied in the following order of priority: Servicing. Exercise of Remedies Limitation on Liability. The Note A Holder shall have no liability to the Note B Holder with respect to Note B except with respect to losses actually suffered due to the gross negligence, willful misconduct or material breach of this Agreement on the part of the Note A Holder, it being understood that the Note A Holdershall have no liability for actions taken in good faith to enforce remedies under the Mortgage Loan in the absence of gross negligence, willful misconduct or the failure to take direction, grant consents or apply proceeds in accordance with the terms of this Agreement or otherwise act in a manner specifically required hereby. The Note B Holder shall have no liability to the Note A Holder with respect to Note A except with respect to losses actually suffered due to the gross negligence, willful misconduct or breach of this Agreement on the part of the Note B Holder Reconstitution Agreement, Agreement to Exchange. (a) Exchange Provisions. In the event CLF, as holder of Note A, or the first holder of Note A other than CLF (collectively, an "Initial Note A Holder) wishes to deposit Note A in a trust, and determines that it would be beneficial to include Note B in Such trust subject to a Reconstitution Agreement as permitted hereby, such Initial Note A Holder shall, by written notice to the Note B Holder (the "Exchange Notice") give notice to the Note B Holder to exchange its interest in Note B for comparable interests to be issued by the applicable trust (the "Certificates). The Note A Holder (to the extent it is an initial Note A Holder) and Note B Holder agree to enter into and execute an agreement (the "Exchange Agreement ) and any other documents necessary to evidence the sale by Note B Holder of all of its right, title and interest in Note B to such Initial Note A Holder and the purchase by the Note B Holder of the Certificates Purchase of Defaulted Note by Other Holders. In the event that (a) any payment of principal or interest on the Mortgage Loan becomes ninety (90) or more days delinquent; (b) Note A and Note B have been accelerated, (c) the principal balance of the Mortgage Loan is not paid at maturity or (d) the Borrower files a petition for bankruptcy, then upon notice from the Note A Holder (a Repurchase Option. Notice ) of such occurrence pursuant to Section 3(c), the Note A Holder shall be entitled (unless prohibited from doing so under the terms of any pooling and servicing or other agreement governing Page

29 US 2003/ A1 Jul. 17, the servicing of Note A) to purchase Note B at the Defaulted Note Purchase Price thereof. In the event the Note A Holder does not elect or is not permitted to purchase Note B pursuant to the preceding sentence, the Note B Holder shall have the right, by written notice to the Note A Holder (a "Note B Holder Repurchase Notice), given within ninety (90) days of delivery to the Note B Holder of the Repurchase Option Notice, to purchase Note A at the Defaulted Note Purchase Price therefor and, upon the delivery of written notice thereof to the Note A Holder, the Note A Holdershall sell (and the Note B Holdershall purchase) Note A (including, without limitation, any participations therein) at the Defaulted Note Purchase Price therefor, on a date (the "Repurchase Date ) not less than five (5) Business Days nor more than ten (10) Business Days after the date of the Note B Holder Repurchase Notice, as shall be established by the Note A Holder. The Defaulted Note Purchase Price shall be calculated by the Note A Holder three (3) Business Days prior to the Repurchase Date and shall, absent manifest error, be binding upon the Note A Holder and the Note B Holder. In addition, in connection with the institution of any foreclosure by the Note A Holder, the Note A Holdershall, by written notice to the Note B Holder delivered no later than (30) thirty days prior to such initiation of foreclosure, give notice of such intent to foreclose to the Note B Holder and whether the Note A Holder, at its option, shall purchase from the Note B Holder all of its right, title and interest in Note B pursuant to : this Section 6. Provided that the Note A Holder has not exercised its option to i purchase Note B, the Note B Holdershall, within (10) ten days of the receipt of such notice, give the Note A Holder written notice of the Note B Holder's intent to purchase from the Note A Holder all of its right, title and interest in Note A pursuant to Section 6 hereof. In connection with the exercise of either purchase option, the Note A Holder and Note B Holder agree to enter into and execute an agreement and any other documents necessary to evidence the sale by the Note B Holder or the Note A Holder, as applicable, of all of its right, title and interest in Note B or Note A, as applicable. Notwithstanding anything in this Section 6 to the contrary, the rights of the Note B Holder to purchase Note A after a Repurchase Option Notice shall not apply to any subsequent transferee of the Note B Holder without the written consent of the Note A Holder, which consent shall not be unreasonably withheld or delayed No Creation of a Partnership or Exclusive Purchase Right. Nothing contained in this Agreement, and no action taken pursuant hereto shall be deemed to constitute the Note A Holder with the Note B Holder a partnership, association, joint venture or other entity. The Note A Holder shall have no obligation whatsoever to offer to the Note B Holder the opportunity to purchase notes or participation interests relating to any future loans originated by the Note A Holder or its Affiliates, and if the Note A Holder chooses to offer to the Note B Holder the opportunity to purchase notes or any participation interests in any future mortgage loans originated by the Note A Holder or its Affiliates, such offershall be at such purchase price and interest rate as the Note A Holder chooses, in its sole and absolute discretion. The Note B Holder shall have no obligation whatsoever to purchase from the Note A Holder any notes or participation interests in any future loans originated by the Note A Holder or its Affiliates ASSignment, Sale of Note B. Transfer Restrictions. (a) With respect to any Note that is sold, assigned or transferred, the rights and obligations of any

30 US 2003/ A1 17 Jul. 17, subsequent Holdershall continue to be subject to this Agreement and any such transferee shall execute an assignment and assumption agreement whereby such transferee assumes all of the obligations of the transferor Holder hereunder with respect to related Mortgage Loan or Note, from and after the date of such sale, assignment or transfer. Any Mortgage Loan and Note not sold, assigned or transferred pursuant to the terms thereof or hereunder shall be subject to this Agreement and with respect thereto this Agreement shall remain in full force and effect... Reimbursement For Costs. Neither Holder will have recourse to the other Holder for reimbursement of costs, expenses or Property Advances (or Advance Interest thereon) not recovered from the Borrower (or any other third party) or the Mortgaged Property. If either party shall have incurred costs or expenses with respect to the Mortgage Loan and the other party is subsequently reimbursed any amount by the Borrower (or any other third party) on account of such costs and expenses, the reimbursed party shall pay to the other party its ratable share of such reimbursed amount (which shall include interest thereon to the extent received by the reimbursed party), within ten (10) days of its receipt of such payment. For purposes of this Section 9, the terms Note A Holder' and "Note B Holder shall include any servicer or trustee acting on behalf of the Note A Holder or Note B Holder, as applicable.... No Pledge or Loan. This Agreement shall not be deemed to represent a loan or a pledge of any interest in the Mortgage Loan by the Note A Holder to the Note B Holder, or a loan or a pledge of any interest in the Mortgage Loan from the Note B Holder to the Note A Holder... Governing Law; Waiver of Jury Trial THIS AGREEMENT AND THE RESPECTIVE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTRELY WITHIN SUCH STATE. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF RELATING TO THIS AGREEMENT... Modifications. This Agreement shall not be modified, cancelled or terminated except by an instrument in writing signed by the parties hereto following receipt of the written consent of any Rating Agency then rating Note B or any pass-through certificates representing interests in Note Athen outstanding... Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. None of the provisions of this Agreement shall be for the benefit of or enforceable by any Person not a party hereto... Counterparts. This Agreement may be executed in any number of counterparts and all of such counterparts shall together constitute one and the same instrument.... Captions. The titles and headings of the paragraphs of this Agreement have been inserted for convenience of reference only and are not intended to summarize or otherwise describe the subject matter of the paragraphs and shall not be given any consideration in the construction of this Agreement... Notices. All notices required hereunder shall be given by (i) telephone (confirmed in writing) or shall be in writing and personally delivered, (ii) sent 8 8 to a w w w w w 17 o e s s in 18 ww e a w a w w w v. P. P. v e a 4 won 19 a w w w w w v v. 19

31 US 2003/ A1 18 Jul. 17, by facsimile transmission if the Sender on the same day sends a confirming copy of such notice by reputable overnight delivery service (charges prepaid), (iii) reputable overnight delivery service (charges prepaid) or (iv) certified United States mail, postage prepaid return receipt requested, and addressed to the respective parties at their addresses set forth on Annex B hereto, or at such other address as any party shall hereafter inform the other party by written notice given as aforesaid. All written notices so given shall be deemed effective upon receipt... Custody of Loan Documents. The originals of all of the Mortgage Loan Documents (other than Note B) will be held by the Note A Holder or by a custodian, acting on behalf of the Note A Holder, on behalf of the Holders... Cooperation. Each Noteholder acknowledges that either Noteholder or its successors and assigns may (a) sell its Note and related rights under this Intercreditor Agreement to one or more investors as a whole loan, (b) participate the Note and related rights hereunder to one or more investors, (c) deposit its Note and related rights hereunder with a trust, which trust may sell certificates to investors evidencing an ownership interest in the trust assets or (d) otherwise sell its Note or interests therein to investors (the transactions referred to in clauses (a) through (d) are hereinafter referred to as "Secondary Market Transactions"). Each Noteholder shall cooperate in good faith with the othernoteholder in effecting any such Secondary Market Transaction and shall cooperate in good faith to implement all requirements imposed by the Rating Agencies involved in any Secondary Market Transaction including, without limitation, all structural or other changes to this Intercreditor Agreement, the Mortgage Loan or the Mortgage Loan Documents and delivery of opinions of counsel acceptable to the Rating Agencies and addressing such matters as the Rating Agencies may require, provided, however, that neither Noteholdershall be required to modify any documents evidencing or securing the Mortgage Loan which would modify (i) the interest rate payable under its Note, (ii) the stated maturity of its Note, (iii) the amortization of principal of its Note, or (iv) any other material economic term of the portion of the Mortgage Loan held by it, nor shall it be required to modify the payment terms hereof set forth in Section 2 or any other material economic term hereof. Each Noteholdershall provide such information and documents relating to such Noteholder, the Mortgage Loan or this Intercreditor Agreement as any Rating Agency may reasonably request in connection with a Secondary Market Transaction. Each Noteholdershall have the right to provide to prospective... investors any information in its possession, including, without limitation, financial statements relating to Mortgagor, the Guarantor, if any, the Mortgaged Property, the Lessee, this Intercreditor Agreement and the other Noteholder. Each Noteholder acknowledges that certain information regarding the Mortgage Loan, the parties thereto, the Mortgaged Property, this Intercreditor Agreement and the parties hereto may be included in a private placement memorandum, prospectus or other disclosure documents. The reasonable cost of complying with this Section 19 shall be borne by the party requesting such cooperation... Incorporation by Reference. The Agreement, as applicable to the Mortgage Loan, is affirmed and incorporated by reference herein as though set forth herein in full, subject to such amendments or modifications as set forth in 19 o 4s a o

32 US 2003/O A1 Jul. 17, Section 3 of this Supplement. The term "Agreement as used therein shall mean the Agreement as supplemented and modified by this Supplement, and the provisions of the Agreement (including without limitations the definitions set forth therein and the miscellaneous provisions set forth in Section 11 through 16 thereof) shall apply to the Agreement as so supplemented and modified The Mortgage Loan. The terms of the Agreement shall apply to the Mortgage Loan described in the Mortgage Loan Schedule attached as Annex A hereto Amendments and Modifications. Notwithstanding the foregoing, the terms of the Agreement are amended and modified as follows: insert any applicable amendments or modifications EXHIBITS i. : AnneX A Exhibit A to Annex A Annex B Form of Intercreditor Agreement Supplement Mortgage Loan Schedule Addresses for Notices

33 US 2003/ A1 Jul. 17, THIS INTERCREDITOR AGREEMENT AMONG NOTE HOLDERS (this Agreement), dated as of October 1, 2001, by and between CAPITAL LEASE FUNDING, L.P. (together with its successors and assigns, CLF) and FIRST UNION NATIONAL BANK (together with its successors and assigns, the "Purchaser). WITNESS ETH: WHEREAS, CLF from time to time identifies owners of real properties (each, a "Mortgaged Property ) leased to single credit-worthy tenants (each, a "Credit Tenant") under a long-term lease (a "Credit Lease") and proposes to make loans to such owners repayable from the cash flow from such Credit Lease and the value of the underlying property; WHEREAS, CLF desires to make such loans in two pieces, one a traditional conduit mortgage loan (a "Conduit Loan) having the primary benefit of a first lien on the underlying real estate and having a loan-to-value ratio and debt service coverage ratio typical for a commercial mortgage conduit loan, and a second loan (a "Credit Lease Loan' and, together with the Conduit Loan, the "Mortgage Loan') secured primarily by payments due under the Credit Lease and fully amortizing over a term no longer than the remaining term of such Credit Lease; WHEREAS, CLF intends that the respective rights of the holders of Conduit Loan and the Credit Lease Loan be such that (a) the Conduit Loan will be eligible for inclusion in a commercial mortgage conduit loan securitization rated by one or more statistical rating organizations ("Rating Agencies) and (b) the Credit Lease Loan obtain a rating from one or more Rating Agencies at least equal to the rating of the unsecured senior debt of the related Credit Tenant, WHEREAS, CLF intends from time to time to sell either Conduit Loans or Credit Lease Loans to the Purchaser (with any such sale of Conduit Loans possibly being net of any rights to receive a "Monthly Servicing Fee" under the terms of the related loan documents), and the Purchaser intends from time to time to purchase either Conduit Loans or Credit Lease Loans from CLF, in each case pursuant to the terms of a purchase agreement dated as of the date hereof and related supplements thereto (collectively, the "Purchase Agreement); WHEREAS, the Conduit Loan and the Credit Lease Loan will each be secured by a single mortgage and a single assignment of lease and rents; WHEREAS, in connection with the initial sale to the Purchaser of either the Conduit Loan or the Credit Lease Loan for a given Mortgaged Property, CLF and the Purchaser wish to set out in this Agreement, and in a supplement hereto specific to such Mortgaged Property and the related Conduit Loan and Credit Lease Loan, the relative rights of the lenders under such Conduit Loan and Credit Lease Loan, with a view to (a) providing to the holder of the Conduit Loan rights substantially the same as the holder of a traditional commercial mortgage conduit loan, including without limitation control of, and a priority with respect to any proceeds of, foreclosure and liquidation of the Mortgaged Property following a default, and (b) providing to the holder of the Credit Lease Loan, among other things, a priority with respect to certain payments due under the Credit Lease (including without limitation any claim against the Credit Tenant under the Credit Lease in the event of

34 US 2003/ A1 Jul. 17, such Credit Tenant's bankruptcy) and certain rights designed to assure that required steps are taken to prevent termination of, or abatement of rent under, such Credit Lease; WHEREAS, this Agreement will be effective only with respect to a Mortgaged Property and related Conduit Loan and Credit Lease Loan identified in a supplement hereto in the form of Annex A hereto (each, an Intercreditor Agreement Supplement ), which Intercreditor Agreement Supplement shall identify the principal terms of (a) the related Conduit Loan (referred to in this Agreement, in reference to the particular Conduit Loan identified in such Supplement, as 'Loan A', the promissory note evidencing such Loan. A referred to herein as "Note A and the holder of such Note A referred to herein as the Note A Holder'), including the amount of any "Monthly Servicing Fee" under the Mortgage Loan Documents not to exceed.003% per annum of the monthly rental payments due under the Credit Lease (the "Loan Fee") retained by CLF, and (b) the related Credit Lease Loan (referred to in this Agreement, in reference to the particular Credit Lease Loan identified in such Intercreditor Agreement Supplement, as 'Loan B", the promissory note evidencing such Loan B referred to herein as Note B and the holder of such Note B referred to herein as the 'Note B Holder'); WHEREAS, the Intercreditor Agreement Supplement for any Mortgage Loan shall incorporate by reference all the provisions hereof and shall further set out, in a schedule attached as Exhibit A thereto (the "Mortgage Loan Schedule'), among other things, (i) the identity of the borrower (the "Borrower ), (ii) the principal amount of the Mortgage Loan and each of Note A and Note B, (iii) the terms of the single first mortgage lien (the "Mortgage') on the Mortgaged Property and a description of such Mortgaged Property, and (iv) the terms of the related Assignment of Lease and Rents assigning as collateral the rights of the Borrower under the related Credit Lease; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto mutually agree, with respect to a Mortgage Loan identified in an Intercreditor Agreement Supplement, as follows: 1. Definitions; Conflicts. (a) Definitions. References to a "Section or the recitals are, unless otherwise specified, to a Section or the recitals of this Agreement. Whenever used in this Agreement, the following terms shall have the respective meanings set forth below unless the context clearly requires otherwise. "Advance Interest shall mean interest accrued on any Property Advance at the Reimbursement Rate and payable to the Note A Holder or Note B Holder, as applicable, or a servicer, trustee or other party acting on behalf of either. "Affiliate shall mean with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, control when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, relation to individuals or otherwise, and the terms controlling and "controlled' have meanings correlative to the foregoing. Agreement shall mean, with respect to any Mortgage Loan, this Intercreditor Agreement Among Note Holders, as amended from time to time, together with the related Intercreditor Agreement Supplement.

35 US 2003/ A1 Jul. 17, "Bankruptcy Code shall mean the Federal Bankruptcy Code, as amended from time to time (Title 11 of the United States Code). "Borrower shall mean the obligor or obligors under the Notes. "Borrower Lease Obligation shall mean all covenants, conditions and agreements in the Credit Lease required to be paid, performed or observed by the Borrower, as landlord under such Credit Lease, including, without limitation, (i) maintenance, repair and restoration obligations with respect to the Mortgaged Property, (ii) obligations to maintain insurance, (iii) payments and/or contributions required to be made by landlord with respect to the Mortgaged Property or pursuant to any reciprocal easement, operating or similar agreement, (iv) the enforcement of restrictions with respect to the use of any property adjacent to or within a specified area of the Mortgaged Property, (v) obligations to maintain the property in a manner which complies with applicable environmental laws, and (vi) the enforcement of the provisions of any reciprocal easement, operating or similar agreement. Section 10. "Borrower Related Parties' shall have the meaning assigned to Such term in "CERCLA': The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "Credit Lease' shall have the meaning assigned to Such term in the recitals. "Credit Tenant' shall have the meaning assigned to such term in the recitals. "Default Interest shall mean any interest accrued on any Note in excess of interest thereon at the Mortgage Interest Rate. "Defaulted Lease Claim' shall mean any claim for accelerated future rent under the Credit Lease following a default thereunder, after taking into account any reduction thereof resulting from (a) mitigation of damages after a re-leasing of the Mortgaged Property or (b) any limitation thereof arising under Section 502(b)(6) of the Bankruptcy Code in any bankruptcy proceeding involving the Credit Tenant. "Defaulted Note Purchase Price' shall mean, with respect to a purchaser of Note A or Note B, the sum of (a) the Principal Balance thereof, (b) accrued and unpaid interest thereon at the Mortgage Interest Rate, up to (but excluding) the date of purchase, (c) any unreimbursed Property Advances made by or on behalf of the Holder of such Note and accrued and unpaid Advance Interest on such Property Advances and (d) any other amounts payable to the Holder of such Note (or a servicer acting on its behalf) under the Mortgage Loan Documents (other than any applicable Prepayment Premium or comparable yield maintenance amount payable on default) and interest thereon at the Reimbursement Rate. In determining the Defaulted Note Purchase Price, amounts payable by the Borrower as a Prepayment Premium (or comparable yield maintenance amounts payable on default) and the value of such Prepayment Premium or comparable amount shall not be included. Due Date shall mean the date scheduled payments are due under the terms of the Mortgage Loan, without giving effect to any applicable grace period.

36 US 2003/ A1 Jul. 17, Mortgage. Event of Default' shall mean an "Event of Default' as defined in the Holder' shall mean each of the Note A Holder and the Note B Holder. "Lease Enhancement Insurance Policies' shall mean the lease enhancement insurance policies issued with respect to certain of the Mortgaged Properties by American International Group, Inc., or an Affiliate thereof rated AAA (or its equivalent rating) by a Rating Agency, or by such other party as may be identified in the Mortgage Loan Schedule, naming the Borrower and the Note B Holder or a servicer or other party designated by the Note B Holder (in each case acting for both the Note A Holder and the Note B Holder) as loss payee and providing, with respect to such Mortgaged Property and in the event of certain casualty or condemnation events, for payment in respect of such Mortgage Loan. "Lease Termination Condition shall mean any condition with respect to any Mortgaged Property which would permit the related lessee to either (i) offset against or abate payments of rent due under the Credit Lease or (ii) terminate such Credit Lease. "Lessor Lease Default shall mean a default or breach of an obligation by the lessor under a Credit Lease, after the expiration of any applicable grace period set forth in the Credit Lease. Loan A' shall have the meaning assigned to such term in the recitals. Loan B'shall have the meaning assigned to such term in the recitals. "Loan Fee" shall have the meaning assigned to such term in the recitals. "Lockbox Account shall mean the separate account established in accordance with the Lockbox Agreement for deposit of rent paid under the Credit Lease. "Lockbox Administrator shall have the meaning assigned in Section 2(c). 6 Lockbox Agreement shall mean that certain agreement between the Borrower and CLF, whether in a separate agreement or whether included in the terms of the Mortgage or another Mortgage Loan Document, requiring that rent under the Credit Lease be deposited directly in an account held by CLF or its designee and setting forth the disposition of funds in such account. "Mortgage Interest Rate" shall mean the per annum rate at which interest accrues on the Mortgage Loan (in the absence of a default), as set forth in the Mortgage Loan Documents, such rate being the same for both Note A and Note B. "Mortgage Loan Documents shall mean any and all documents related to the Mortgage Loan including, without limitation, Note A, Note B, the Mortgage, and all other documents evidencing or securing the Mortgage Loan. Mortgage Loan Principal Balance' shall mean, at any date of determination, the sum of the Note A Principal Balance and the Note B Principal Balance.

37 US 2003/ A1 Jul. 17, Mortgage Loan Schedule shall mean the schedule in the form attached to the Intercreditor Agreement Supplement as Exhibit A, which schedule sets forth certain information regarding the Mortgage Loan. recitals. Mortgage Loan' shall have the meaning assigned to Such term in the recitals. "Mortgage' shall have the meaning assigned to Such term in the recitals. "Mortgaged Property shall have the meaning assigned to such term in the "Nonrecoverable Advance': Any portion of a Property Advance proposed to be made or previously made (including accrued and unpaid interest at the Reimbursement Rate compounded monthly in the event of a Property Advance previously made) which has not been previously reimbursed to the Note A Holder or Note B Holder (or any servicer, trustee or custodian acting on its behalf), as applicable, and which the Note A Holder or Note B Holder (or any servicer, trustee or custodian acting on its behalf), as applicable, has determined to be nonrecoverable from future payments, reserve deposits, liquidation proceeds, insurance proceeds, condemnation proceeds or other amounts expected to be received in respect of the Mortgage Loan, as certified by an officer of the party claiming any Property Advance to be nonrecoverable, delivered to the other party hereto, and describing the basis on which it has determined that such Property Advance would be nonrecoverable. *Note A shall have the meaning assigned to such term in the recitals. "Note A Holder shall have the meaning assigned to such term in the recitals. : "Note A Holder Cure Period shall mean, with respect to any Lease Termination Condition, a period of 30 days following discovery by the Note A Holder of such Lease Termination Condition; provided that such period shall not extend beyond a date which is 5 Business Days before the earliest of (x) the date upon which any cure period (as extended by any written agreement with the Credit Tenant, if applicable) with respect to such Lease Termination Condition expires, or (y) the rent payment date with respect to which the Credit Tenant may be entitled to abate rent as a result of such Lease Termination Condition. W. Note A Principal Balance' shall mean, at any time of determination, the initial Note A Principal Balance as set forth in the Mortgage Loan Schedule, less any payments of principal thereon. Note B' shall have the meaning assigned to such term in the recitals. Note B-Controlled Borrower Covenant Default' shall mean the occurrence of a default under the Mortgage Loan based upon the Borrower's failure to make repairs, or take other action, which is required to prevent a Lease Termination Condition under the Credit Lease, if and only if the Note A Holder shall have failed to cure such Lease Termination Condition within the applicable Note A Holder Cure Period. "Note B Holder shall have the meaning assigned to such term in the recitals. "Note B Holder Repurchase Notice shall have the meaning assigned such term in Section 6.

38 US 2003/ A1 Jul. 17, "Note B Principal Balance' shall mean at any time of determination, the Initial Note B Principal Balance as set forth in the Mortgage Loan Schedule, less any payments of principal thereon. Notes' shall mean Note A and Note B. "Payment Date shall mean each date on which monthly payments are due under the Notes. "Prepayment Premium' With respect to each Mortgage Loan, the Prepayment Consideration (as defined in the Mortgage Loan Documents). Principal Balance means the Note A Principal Balance or Note B Principal Balance, as applicable. Property Advance means, as to any Mortgage Loan, any advance made by the Note A Holder or Note B Holder (or any servicer, trustee of custodian acting on its behalf) in respect of property protection expenses or any expenses incurred to protect and preserve the security for such Mortgage Loan or taxes and assessments, insurance premiums, or Borrower Lease Obligations, as applicable. recitals. "Purchase Agreement shall have the meaning assigned to such term in the "Purchase Date Mortgage Loan Principal Balance shall mean the aggregate principal balance of the Mortgage Loan on the Purchase Date. Purchase Date shall mean the date of purchase of a Note by the Purchaser pursuant to the Purchase Agreement. "Purchase Price shall mean the amount that the Note B Holder is required to pay pursuant to the Purchase Agreement to acquire Note B, as set forth on the Mortgage Loan Schedule. "Qualified Institutional Buyer means a qualified institutional buyer within the meaning of Rule 144A under the Securities Act of 1933, as amended. "Rating Agencies shall mean Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. ( S&P), Moody's Investors Service, Inc. ( Moody's') and Fitch Inc. ("Fitch') or, if any of such entities shall for any reason no longer perform the functions of a securities rating agency, any other nationally recognized statistical rating agency designated by the Note A Holder. g 99. Reconstitution Agreement: The pooling and servicing agreement or other agreement entered into by the Note A Holder and/or certain third parties on the Reconstitution Date with respect to assets including the Mortgage Loan in connection with an exchange of Note B for an interest in a trust representing substantially the same rights as those of the Note B Holder pursuant to Section 5 hereof. "Reconstitution Date: The date on which the Mortgage Loan shall be reconstituted as part of a trust formed under a Reconstitution Agreement pursuant to Section 5 hereof.

39 US 2003/ A1 Jul. 17, "Reimbursement Rate. The rate per annum applicable to the accrual of Advance Interest, which rate per annum shall be equal to the "prime rate' as published in the Money Rates' section of The Wall Street Journal, as such prime rate" may change from time to time, plus 1%. Section 6. Repurchase Date shall have the meaning assigned to Such term in Section 6. Repurchase Option Notice' shall have the meaning assigned to such term in "Reserve Accounts' shall mean any reserve accounts required under the Mortgage Loan Documents. "Restricted Event of Default' means any Event of Default constituting only (i) a breach of a covenant to take actions to prevent the occurrence of a Lease Termination Condition or otherwise to prevent abatement of rent under or termination of the Credit Lease or (ii) a breach of a covenant to reimburse the Note A Holder, the Note B Holder or their respective agents for the costs of taking any such action on behalf of the Borrower. Transfer shall have the meaning assigned to such term in Section 13. "Unrestricted Event of Default' means (x) a failure to pay scheduled interest or principal under Note A or (y) any other Event of Default other than a Restricted Event of Default. "Unscheduled Payments': All net liquidation proceeds, condemnation proceeds and insurance proceeds payable under the Mortgage Loan and any other payments under or with respect to the Mortgage Loan not scheduled to be made, including principal prepayments (but excluding Prepayment Premiums). (b) Interpretation. Whenever it is stated in this Agreement that the Note A Holder or Note B Holder shall, or shall be entitled to, take any action, make any payment or receive reimbursement of any amounts, the terms Note A Holder, Note B Holder and Holder shall be deemed to include any servicer, trustee, custodian or other party acting on behalf of any such Holder, whether or not explicitly so stated in the relevant provision. 2. Payments on the Notes. (a) Distribution on Notes. On each Payment Date, all amounts on deposit in the Lockbox Account (other than (1) amounts representing payments of rent under the Credit Lease for which the due date has not yet occurred, (2) proceeds of a Defaulted Lease Claim and (3) any Loan Fee retained by CLF to the extent so identified in the Intercreditor Agreement Supplement) shall be applied in the following order of priority: (i) first, to the Note A Holder (or any party which has made a Property Advance on its behalf), the amount of any Property Advance made by it and outstanding upon final liquidation of the Mortgage Loan or related Mortgaged Property or upon any earlier determination by any such party that such Property Advance is a Nonrecoverable Advance as certified by such party in accordance with the definition of Nonrecoverable Advance, and thereafter to the Note B Holder (or any party which has made a Property Advance on its behalf), the amount of any Property Advance made by it and outstanding upon final liquidation of the Mortgage

40 US 2003/ A1 Jul. 17, Loan or related Mortgaged Property, in each case together with Advance Interest thereon; (ii) second, to the Note A Holder in an amount equal to the accrued and unpaid interest on the Note A Principal Balance at the Note A Interest Rate; (iii) third, to the Note A Holder in an amount equal to (A) the scheduled principal payments, if any, due with respect to Note A or (B) upon acceleration of all amounts due and payable on Note A, the Note A Principal Balance, until such amount has been paid in full; (iv) fourth, to fund such Reserve Accounts as may be provided in the Mortgage Loan Documents and any other amounts required to be applied following payment of interest and principal then due on Note A in accordance with the terms of the Lockbox Agreement or other Mortgage Loan Documents including, as applicable under the Lockbox Agreement, amounts required to fund any escrow accounts or to pay taxes or insurance and any insurance proceeds required to be applied to the repair of the Mortgaged Property; (v) fifth, to the Note B Holder (or any party which has made a Property Advance on its behalf), the amount of any Property Advance made by it and outstanding upon any determination by any such party that such Property Advance is a Nonrecoverable Advance as certified by such party in accordance with the definition of Nonrecoverable Advance, in each case together with Advance Interest thereon; (vi) sixth, to the Note B Holder in an amount equal to the accrued and unpaid interest on the Note B Principal Balance at the Note B Interest Rate; (vii) seventh, to the Note B Holder in an amount equal to (A) the scheduled principal payments, if any, due with respect to Note B or (B) upon acceleration of all amounts due and payable on Note B, the Note B Principal Balance, until such amount has been paid in full; (viii) eighth, to the Note A Holder and the Note B Holder, in each case up to the amount of any unreimbursed costs and expenses paid by the Note A Holder or Note B Holder, as applicable (or, in each case, paid or advanced by any servicer or trustee on its behalf) with respect to the Mortgage Loan pursuant to this Agreement including, without limitation, unreimbursed Property Advances and Advance Interest thereon, to be applied pro rata between the Note A Holder and Note B Holder based on the amount of such amounts then owed to each such Holder; (ix) ninth, any Unscheduled Payment on the Mortgage Loan (other than proceeds of a Defaulted Lease Claim, but including without limitation lump sum payments under any Lease Enhancement Policy), shall be paid sequentially to the Note A Holder and then the Note B Holder, in each case up to the remaining Principal Balance of Note A and Note B, respectively; (x) tenth, any Prepayment Premium, to the extent actually paid, shall be paid to the Note A Holder and the Note B Holder in the same proportion as bear the respective amounts payable to each when the Prepayment Premium for each of the

41 US 2003/ A1 Jul. 17, Mortgage Loans is separately computed on the prepaid amounts of the Note A Principal Balance and the Note B Principal Balance and the respective interest rates; (xi) Note A Holder; eleventh, any Default Interest accrued on Note A shall be paid to the (xii) twelfth, any Default Interest accrued on Note B shall be paid to the Note B Holder; and (xiii) thirteenth, any remaining amount to be paid to the Borrower or as otherwise specified in the Lockbox Agreement or the Mortgage Loan Documents. (b) Proceeds of Defaulted Lease Claim. (i) All proceeds of a Defaulted Lease Claim shall be applied in the following order of priority: (i) first, to the Note B Holder in an amount equal to the amount payable to the Note B Holder under Section 2(a)(i) or Section 2(a)(v) above; (ii) second, to the Note B Holder in an amount equal to the amount payable under Section 2(a)(vi) above; (iii) third, to the Note B Holder in an amount equal t the amount payable under Section 2(a)(vi) above; (iv) fourth, to the Note A Holder and Note B Holder in amounts equal to the amounts payable to each such Holder under Section 2(a)(viii) above; (v) fourth, to the Note B Holder any Prepayment Premium attributable to Note B, to the extent actually paid, computed on the prepaid amounts of the Note B Principal Balance and the Mortgage Interest Rate: (vi) fifth, to the Note B Holder in an amount equal to the amount payable under Section 2(a)(xii) above; and (vii) sixth, to the Note A Holder, any excess amount shall be applied in the order of priority set forth in Section 2(a) above (without giving effect to clauses (v), (vi), (vii) and (xii) and, solely with respect to the Note B Holder, (i) and (x) thereof. (c) Payment Procedure. The Note A Holder and Note B Holder each hereby appoints the Note A Holder to act as holder of the Lockbox Account under the Mortgage Loan Documents, acting for the benefit of both the Note A Holder and the Note B Holder (in such capacity, the 'Lockbox Administrator) and the Note A Holder hereby accepts such appointment. The Note A Holder and Note B Holder hereby direct the Lockbox Administrator, in accordance with the priorities set forth in this Section 2, and subject to the terms of this Agreement, to deposit or credit all payments received with respect to and allocable to Note A and Note B to the account designated by the Note A Holder and Note B Holder, respectively (which payment to the Note A Holder may, if and to the extent so provided in any related pooling and servicing agreement or servicing agreement, be deposited net of servicing or other fees as specified in such agreement). The Lockbox Administrator shall deposit or credit such amounts to the applicable account on the Due Date, to the extent of funds then available in the Lockbox Account, or, for any late deposits in such Lockbox Account to be applied to amounts due under the Notes, within one Business Day next

42 US 2003/ A1 Jul. 17, following the date such payment was deposited in the Lockbox Account. If any Holder holding or having distributed any amount received or collected in respect of Note A or Note B determines, or a court of competent jurisdiction orders, at any time that any amount received or collected in respect of Note A or Note B must, pursuant to any insolvency, bankruptcy, fraudulent conveyance, preference or similar law, be returned to the Borrower or paid to the Note A Holder or the Note B Holder (or any other Person acting on behalf of either), then, notwithstanding any other provision of this Agreement, the Lockbox Administrator shall not be required to distribute any portion thereof to the Note B Holder or the Note A Holder, as applicable, and the Note B Holder or the Note A Holder, as applicable, will promptly on demand repay to such Lockbox Administrator, for deposit into the Lockbox Account, the portion thereof which shall have been theretofore distributed to the Note B Holder or the Note A Holder, as applicable, together with interest thereon at such rate, if any, as such Lockbox Administrator shall have been required to pay to the Borrower, the Note A Holder, the Note B Holder, or such other person or entity with respect thereto. The Note A Holder and the Note B Holder each agree that if at any time it shall receive from any sources whatsoever any payment on account of the Mortgage Loan in excess of its distributable share thereof, it will promptly remit such excess to the Lockbox Administrator. The Note A Holder's and the Note B Holder's obligations under this Section 2(c) are separate and distinct obligations from one another and in no event shall any third party be entitled to enforce the obligations of the Note A Holder against the Note B Holder or the obligations of the Note B Holder against the Note A Holder. In addition, each of the Note A Holder and the Note B Holder acknowledge and agree that the right of the Note A Holder to receive payments of interest and principal with respect to the proceeds of a Defaulted Lease Claim shall at all times be junior, subject and subordinate to the right of the Note B Holder to receive payments of interest and principal with respect to Note B from the proceeds of a Defaulted Lease Claim, and the right of the Note B Holder to receive payments of interest and principal with respect to all other available proceeds (other than the proceeds of a Defaulted Lease Claim) shall at all times be junior, subject and subordinate to the right of the Note A Holder to receive payments of interest and principal with respect to Note A from such other available proceeds (other than the proceeds of a Defaulted Lease Claim), in each case subject to and in accordance with the priority of payments set forth in Sections 2(a) and (b) above. 3. Servicing; Exercise of Remedies. (a) Note A Holder to Service. The Note A Holder hereby agrees that it (or any servicer acting on its behalf) shall administer the Mortgage Loan on behalf of each of the Note A Holder and the Note B Holder as their interests appear herein in accordance with any and all applicable laws and the terms of this Agreement and the Mortgage Loan Documents. The Note B Holder acknowledges that such servicing may be performed by a servicer acting on behalf of the Note A Holder pursuant to the terms of a pooling and servicing agreement or servicing agreement and agrees that, if servicing is to be performed pursuant to such an agreement and Such agreement includes a provision pursuant to which the servicer acknowledges this Intercreditor Agreement and agrees to perform the obligations of the Note A Holder hereunder for the benefit of the Note B Holder, the Note B Holder shall have recourse solely to such servicer for breaches hereof or otherwise in respect of such servicing and shall not have recourse to the Note A Holder. It is intended that servicing be performed pursuant to the terms of this agreement in such a manner (i) that the Note A Holder collect payments for both Holders and administer the Mortgage Loan for both Holders at all times prior to an Unrestricted Event of Default, (ii) that upon the occurrence of an Unrestricted Event of Default, the Note A Holder be entitled to exercise remedies, including without

43 US 2003/ A1 Jul. 17, limitation acceleration and foreclosure, acting for the primary benefit of the Note A Holder as more specifically set forth in Section 3(b) below, but subject at all times to Section 3(d) below regarding protection of the Credit Lease, (iii) that the Note A Holder not be entitled, without the consent of the Note B Holder, to amend, modify or waive rights under the Mortgage Loan in any way which may have a material adverse effect upon the Note B Holder (it being understood that waiver or amendment of rights under the Credit Lease or of the payment terms of the Mortgage Loan shall be deemed material, but waiver or amendment of rights against the remainder of the Mortgaged Property shall not be deemed material to the Note B Holder notwithstanding that the Note B Holder may have a second claim against proceeds realized from such Mortgaged Property) or, absent an Unrestricted Event of Default which has not been cured by the Note B Holder, to exercise remedies of acceleration of either Note or foreclosure upon the Mortgaged Property, all subject to and as otherwise specified in Sections 3(c) and 3(e) below, and (iv) that notwithstanding the foregoing, the Note A Holder shall at all times take such actions to protect the Credit Lease, including the making of Property Advances, subject to and as more specifically set forth in Section 3(d) below. The Note B Holder acknowledges that, except as otherwise expressly set forth in this Agreement, so long as an Unrestricted Event of Default shall have occurred and be continuing, and the Note B Holder shall not have cured such Unrestricted Event of Default as permitted by Section 3(c), the Note A Holder (or any servicer acting on behalf of the Note A Holder) may, subject to Section3(d) below, exercise, or omit to exercise, any rights that the Note A Holder may have under the Mortgage Loan Documents in a manner that may be adverse to the interests of the Note B Holder, and in such event the Note A Holder (or any servicer acting on behalf of the Note A Holder) shall have no liability whatsoever to the Note B Holder (other than pursuant to Section 3(d) hereof) in connection with the Note A Holder s exercise of rights or any omission by the Note A Holder to exercise such rights. Similarly, the Note A Holder acknowledges that the Note B Holder has no duty or obligation to the Note A Holder except as expressly set forth in this Agreement, and that the Note B Holder (or any servicer acting on behalf of the Note B Holder) may exercise, or omit to exercise, any rights that the Note B Holder may have under the Mortgage Loan Documents, to the extent it is permitted to take such action hereunder, in a manner that may be adverse to the interests of the Note A Holder, and that the Note B Holder (or any servicer acting on behalf of the Note B Holder) shall have no liability whatsoever to the Note A Holder in connection with the Note B Holder's exercise of rights or any omission by the Note B Holder to exercise such rights in a manner consistent herewith. (b) Rights of Note A Holder. Except as otherwise provided in this Agreement (including without limitation Sections 3(c)-(f)), the Note A Holder (or any servicer acting on behalf of the Note A Holder) shall have the sole and exclusive authority with respect to the administration of, and exercise of rights and remedies with respect to, the Mortgage Loan, including, without limitation, the sole authority (i) with respect to the voting of all claims with respect to the Mortgage Loan in any bankruptcy, insolvency or other similar proceedings relating to the Borrower, any guarantor or any other party (other than the Credit Tenant or any guarantor or other obligor with respect to the Credit Tenant's obligations under the Credit Lease), (ii) to call or waive any Events of Default under the Mortgage Loan Documents and, following any such Event of Default, to accelerate the Mortgage Loan or institute any foreclosure action and (iii) to amend, modify or waive any provisions of the Mortgage Loan Documents, and except as specifically set forth in this Agreement the Note B Holder shall have no voting, consent or other rights whatsoever with respect to the Note A Holder's administration of, or exercise of its rights and remedies with respect to, the Mortgage Loan. Except as otherwise provided in this Agreement, the Note B Holder agrees that it shall have

44 US 2003/ A1 Jul. 17, no right to, and hereby presently and irrevocably assigns and conveys to the Note A Holder (or any servicer acting on behalf of the Note A Holder), except as provided in Sections 3(d) and 3(e) below, the rights, if any, that the Note B Holder has to (i) call or cause the Note A Holder or such servicer to call an Event of Default under the Mortgage Loan, (ii) exercise any remedies with respect to the Mortgage Loan or the Borrower, including, without limitation, filing or causing the Note A Holder or such servicer to file any bankruptcy petition against the Borrower or (iii) vote any claims with respect to the Mortgage Loan in any bankruptcy, insolvency or similar type of proceeding of the Borrower. The Note B Holder shall, from time to time, execute such documents as the Note A Holder or any servicer acting on its behalf shall reasonably require to evidence such assignment with respect to the rights described in clause (iii) of the preceding sentence. The Note B Holder expressly and irrevocably waives for itself and any Person claiming through or under the Note B Holder any and all rights that it may have under Section 1315 of the New York Real Property Actions and Proceedings Law or the provisions of any similar law which purports to give a junior loan participant the right to initiate any loan enforcement or foreclosure proceedings. (c) Remedies Limited Absent Unrestricted Event of Default; Notice of Events of Default to Note B Holder. Notwithstanding Section 3(b) above, the Note A Holder may not institute any foreclosure action upon the occurrence of an Event of Default under the Mortgage Loan Documents without the consent of the Note B Holder except (i) upon the occurrence and continuance of any Unrestricted Event of Default, (ii) upon a determination made in the sole good faith judgment of the Note A Holder (or a servicer, trustee or custodian acting on its behalf) that any Property Advance previously made by it, including any Advance Interest thereon, shall be a Nonrecoverable Advance or (iii) in the event such Event of Default is a failure to cure a Lease Termination Condition or other Lessor Lease Default, cure thereof would require a Property Advance and the Note A Holder has determined in good faith that such Property Advance, if made, together with Advance Interest thereon, would be a Nonrecoverable Advance; provided, that the Note A Holder (or a servicer acting on its behalf) shall not be entitled to accelerate the Mortgage Loan or foreclose on the Mortgaged Property pursuant to such clause (i), (ii) or (iii) if the Note B Holder has undertaken actions to cure such default which constitutes such Lease Termination Condition or other Event of Default, or (with respect to clause (ii) or (iii)) has agreed to reimburse the Note A Holder for any such Nonrecoverable Advance (including, without limitation, Advance Interest thereon), in each case as permitted pursuant to Section 3(e) below. The Note A Holder (or a servicer acting on its behalf) shall, promptly upon becoming aware of any Event of Default, give notice to the Note B Holder of (i) the occurrence of such Event of Default, (ii) whether such Event of Default is an Unrestricted Event of Default and (iii) if it is not an Unrestricted Event of Default, the applicable Note A Holder Cure Period and a description of any action the Note A Holder (or servicer acting on its behalf) proposes to take with respect to such Event of Default. Such notice shall serve as the notice to be made in connection with the option of each Holder to purchase the entire Mortgage Loan pursuant to Section 6. (d) Servicing of the Credit Lease, Assignment of Replacement Lease. In furtherance of the foregoing and except as otherwise specifically provided herein, the Note A Holder acknowledges that the Mortgage Loan is in virtually all foreseeable circumstances more valuable with the Credit Lease in place and accordingly agrees that the Note A Holder (or any servicer acting on its behalf) shall take actions to prevent and cure any Lessor Lease Default and Lease Termination Condition in accordance with the second paragraph of this Section 3(d), and shall be entitled to, and shall (with respect to any Lease Termination

45 US 2003/ A1 Jul. 17, Condition), enforce the rights of the Note B Holder with respect thereto under the Mortgage Loan Documents in accordance with such second paragraph. In the event the Borrower or the Note A Holder enters into a new lease of the Mortgaged Property following a default by the Credit Tenant under the Credit Lease and termination of the Credit Tenant's right of occupancy thereunder, the Note A Holder shall cause the new lease to be assigned as collateral for the entire Mortgage Loan, or following foreclosure to be held as part of the Mortgaged Property, in each case for the benefit of both Holders subject to the terms of this agreement as though such new lease were the Credit Lease hereunder; provided that any remaining claim under the prior Credit Lease shall survive and proceeds of such claim shall be applied as proceeds of a Defaulted Lease Claim in accordance with the terms of this Agreement. In the event the Note A Holder (or any servicer acting on its behalf) has received actual notice of a Lease Termination Condition, the Note A Holder (or any servicer acting on its behalf), to the extent consistent with the related Mortgage Loan Documents, applicable law and the related Credit Lease, shall use reasonable efforts to cause the related Borrower to perform the Borrower Lease Obligations in a manner which would correct the Lease Termination Condition. In the event the related Borrower is required to expend funds in order to correct a Lease Termination Condition, the Note A Holder shall make withdrawals from the reserve accounts under the Mortgage Loan Documents, to the extent of available funds therein and to the extent consistent with the related Mortgage Loan Documents, for reimbursement to the related Borrower of such expenses, upon its receipt of a written disbursement request therefor from the related Borrower; provided, however, that, to the extent consistent with the related Mortgage Loan Documents, the Note A Holder may, as a condition to the disbursement of such funds to the Borrower, (x) require that the Borrower provide the Note A Holder with (1) evidence reasonably satisfactory to the Note A Holder that such expenses were actually incurred and paid by the Borrower (including, without limitation, the presentation by the Borrower to the Note A Holder of lien waivers, invoices, bills and the like) and (2) confirmation of compliance with the Borrower Lease Obligations from the Lessee in form satisfactory to the Note A Holder and (y) require an inspection by the Note A Holder of the related Mortgaged Property at the expense of the related Borrower (to be paid from amounts on deposit in the related reserve account under the Mortgage Loan Documents) in order to verify the Borrower's compliance with the Borrower Lease Obligations for which such disbursement is sought. In the event the related Borrower fails to correct a Lease Termination Condition in a timely manner (as determined by the Note A Holder), and to the extent consistent with the Mortgage Loan Documents, applicable law and the related Credit Lease, the Note A Holder shall use all efforts consistent with customary commercial mortgage loan servicing practices (with a view to the interests of the Note B Holder as well as the Note A Holder) to correct the Lease Termination Condition. The Note A Holder shall make withdrawals from the related reserve account under the Mortgage Loan Documents, to the extent of available funds therein and to the extent consistent with the related Mortgage Loan Documents, for payment of the expenses required to correct the Lease Termination Condition. Notwithstanding any provision herein, the Note A Holder shall not be required to take any action contemplated by this Agreement if the Note A Holder (or any servicer acting on its behalf) determines that taking such action would be illegal, or would otherwise result in material liability under any applicable law or the applicable Mortgage Loan Documents to the Note A Holder (or such servicer) without right of reimbursement hereunder. The Note A Holdershall promptly (but in any event prior to the date on which the related Lessee may offset or abate payments of rent or terminate such Lease as a result of Such Lease Termination Condition, to the extent the Note A Holder has knowledge, or should

46 US 2003/ A1 Jul. 17, have knowledge in the performance of its obligations in accordance with this agreement, of the event or circumstances giving rise to such right of the Lessee) provide notice to the Note B Holder of any such determination. The Note A Holder may consult legal counsel and obtain environmental assessments as shall be reasonably required in making such determination, the costs of which shall be reimbursable as a Property Advance as contemplated hereunder, provided, however, that the costs of obtaining such environmental assessments shall be reimbursed to the Note A Holder in connection with such action only if the Note A Holder determines that, as a result of such action, the Note A Holder or Note B Holder would be considered to hold title to, to be a "mortgagee-in-possession' of, or to be an owner or operator' of the related Mortgaged Property within the meaning of CERCLA or any comparable law. In the event funds in the related Maintenance Reserve Account are insufficient to pay the expenses required to correct a Lease Termination Condition, the Note A Holder (or a servicer, trustee or custodian acting on its behalf) shall be required to pay such shortfall as a Property Advance; provided, however, that the Note A Holder (or any servicer, trustee or custodian acting on its behalf) shall not be required to advance such funds to the extent that (i) such advance is determined to be a Nonrecoverable Advance or (ii) such advance relates to a Borrower Lease Obligation for which reserves have been established by or on behalf of the related Borrower with the Note A Holder in one or more reserve accounts, if and to the extent any funds so reserved remain available. The Note A Holder (or any servicer acting on its behalf) shall be entitled to withdraw any funds subsequently deposited and held in any other reserve accounts established for the purposes related to such advance in order to pay itself for any unreimbursed Property Advances (including interest thereon at the Property Advance Rate) relating to the correction of any Lease Termination Condition with respect to any related Mortgaged Property; and provided, further, that, except as required to assure payment of taxes or maintenance of insurance on the related Mortgaged Property, the Note A Holder (and any servicer, trustee or custodian acting on its behalf) shall in no event be required to make a Property Advance for any Borrower Lease Obligation which is not reserved for or of the type of obligation for which reserves are, but need not be, customarily taken from the related Borrower. (e) Rights of Note B Holder. Notwithstanding the foregoing, the Note B Holder (on behalf of itself and the Note A Holder) (i) is entitled to direct Defaulted Lease Claims of the Borrower against a defaulting or bankrupt Credit Tenant prior to foreclosure to the extent either Holder is entitled to do so under the Mortgage Loan Documents, (ii) in the event the Note A Holder fails to do so within the Note A Holder Cure Period, is entitled to take action to prevent and cure any Lessor Lease Default and any Lease Termination Condition, including making Property Advances as necessary (no such Property Advance to be deemed to be a Nonrecoverable Advance until final liquidation of the Mortgage Loan or the related Mortgaged Property), it being understood that no such Property Advance may be made by the Note B Holder in the event the Credit Lease no longer exists and neither the Borrower nor any Holder has any remaining rights thereunder, (iii) is entitled to direct the Note A Holder to enforce the rights of the Note B Holder under the Mortgage Loan Documents to receive the proceeds of Defaulted Lease Claims, (iv) can require foreclosure of the Mortgage upon the occurrence of a Note B-Controlled Borrower Covenant Default, subject to the right of the Note A Holder to cure any such related default and prevent such foreclosure, (v) is entitled, in accordance with the terms of the Mortgage Loan Documents, to approve (together with the Note A Holder) any modifications to the terms of the Mortgage Loan that affect the rights of the Borrower or Note B Holder under the Credit Lease or the assignment thereofas collateral for the Mortgage Loan, and (vi) with respect to any payment default by the Credit Tenant and any resulting Event of Default under the Mortgage Loan

47 US 2003/ A1 Jul. 17, Documents, may take any actions during the period to and including 60 days following the occurrence of such payment default to cure such default before the Note A Holder (or a servicer acting on its behalf) may accelerate the Mortgage Loan or commence foreclosure on the Mortgage Property without the consent of the Note B Holder. (f) Workouts. Notwithstanding anything to the contrary contained herein, if the Note A Holder (or any servicer acting on behalf of the Note A Holder), in connection with a workout or proposed workout of the Mortgage Loan, modifies the terms thereof such that (i) the Mortgage Loan Principal Balance is decreased, (ii) the Mortgage Interest Rate or scheduled amortization payments on Note A or Note B are reduced, (iii) payments of interest or principal on Note A or Note B are waived, reduced or deferred or (iv) any other adjustment is made to any of the payment terms of the Mortgage Loan, all payments to the Holders pursuant to Section 2 shall be made as though Such workout did not occur, with the payment terms of Note A and Note B remaining the same as they are on the Purchase Date, it being understood that the Note B Holder shall bear the full economic effect of any such modification, except as may be otherwise agreed by the Note A Holder and Note B Holder and except to the extent of proceeds of any Defaulted Lease Claim, as to which the Note A Holdershall bear the full economic effect of any such modification. (g) Lease Enhancement Policy. Any insurance policy identified on the Intercreditor Agreement Supplement as a "Lease Enhancement Policy" shall be held in the name of the Note A Holder acting on behalf of itself and the Note B Holder as insureds. The Note A Holder (or a servicer acting on its behalf) shall diligently pursue claims under any such policy for the benefit of both the Note A Holder and Note B Holder, any proceeds to be applied in accordance with Section 2. (h) Loan Fee. The Noteholders acknowledge that, to the extent so identified in the Intercreditor Agreement Supplement, a Loan Fee is payable in addition to principal and interest under the terms of Note A, and that, to the extent so identified in the Intercreditor Agreement Supplement, the rights to such Loan Fee have been retained by CLF. The Noteholders agree that Noteholder A shall apply funds received with respect to Note A in accordance with the priorities of Note A to the extent specified therein, and otherwise shall apply any amounts payable with respect to Note A (including without limitation any proceeds of a Defaulted Lease Claim to the extent payable on Note A hereunder) first to any accrued and unpaid Loan Fee, such payment to be made to the holder thereof specified in the Intercreditor Agreement Supplement and to its successors and assigns. 4. Limitation on Liability. The Note A Holder shall have no liability to the Note B Holder with respect to Note B except with respect to losses actually suffered due to the gross negligence, willful misconduct or material breach of this Agreement on the part of the Note A Holder, it being understood that the Note A Holder shall have no liability for actions taken in good faith to enforce remedies under the Mortgage Loan in the absence of gross negligence, willful misconduct or the failure to take direction, grant consents or apply proceeds in accordance with the terms of this Agreement or otherwise act in a manner specifically required hereby. The Note B Holder shall have no liability to the Note A Holder with respect to Note A except with respect to losses actually suffered due to the gross negligence, willful misconduct or breach of this Agreement on the part of the Note B Holder. 5. Reconstitution Agreement, Agreement to Exchange. (a) Exchange Provisions. In the event CLF, as holder of Note A, or the first holder of Note A other than CLF (collectively, an "Initial Note A Holder ) wishes to deposit Note A in a trust, and

48 US 2003/ A1 Jul. 17, determines that it would be beneficial to include Note B in Such trust Subject to a Reconstitution Agreement as permitted hereby, such Initial Note A Holder shall, by written notice to the Note B Holder (the "Exchange Notice) give notice to the Note B Holder to exchange its interest in Note B for comparable interests to be issued by the applicable trust (the Certificates ). The Note A Holder (to the extent it is an initial Note A Holder) and Note B Holder agree to enter into and execute an agreement (the "Exchange Agreement ) and any other documents necessary to evidence the sale by Note B Holder of all of its right, title and interest in Note B to such Initial Note A Holder and the purchase by the Note B Holder of the Certificates. (b) Reconstitution Agreement. In the event an Initial Note A Holder elects to exercise its rights to cause an exchange pursuant to Section 5(a) above, and subject to satisfaction of the exchange provisions set forth in such Section, the Mortgage Loan shall become subject to the terms of a Reconstitution Agreement. The terms of any Reconstitution Agreement shall be subject solely to the consent of the Note A Holder; provided, however, that the Note A Holder agrees that it shall not enter into any Reconstitution Agreement which (a) does not preserve this Agreement or provide the Note B Holder with substantially the same rights it has hereunder or (b) would materially adversely affect the rights of the Note B Holder without the prior consent of the Note B Holder. (c) Tax Matters Upon Reconstitution. If either Note A or Note B is included as an asset of a real estate mortgage investment conduit (a REMIC), within the meaning of Section 860D(a) of the Internal Revenue Code of 1986, as amended (the "Code') (notice of which, in the case of the Note B Holder's interest, shall be given by the Note B Holder to the Note A Holder within three (3) Business Days of the startup day, within the meaning of Section 860(G)(a)(9) of the Code, of the related REMIC), then, any provision of this Agreement to the contrary notwithstanding: (i) the Mortgage Loan shall be administered such that each of Note A and Note B shall each qualify at all times as (or as interests in) a qualified mortgage within the meaning of Section 860G(a)(3) of the Code (without regard to whether it is in fact included in a REMIC), (ii) any real property (and related personal property) acquired by or on behalf of Note A Holder pursuant to a foreclosure, exercise of a power of sale or delivery of a deed in lieu of foreclosure of the Mortgage or lien on such property following a default on the Mortgage Loan shall be administered so that the interest of the Note A Holder therein or the pro rata share of the Note B Holder therein shall at all times qualify as "foreclosure property within the meaning of Sections 860G(a)(8) of the Code, and (iii) the Note A Holder may not modify, waive or amend any provision of the Mortgage Loan, consent to or withhold consent from any action of the Borrower, or exercise or refrain from exercising any powers or rights which Note A Holder may have under the Mortgage Loan Documents, if any such action would constitute a "significant modification' of the Mortgage Loan, within the meaning of Section 1.860G-2(b) of the regulations of the United Stated Department of the Treasury, more than three months after the startup day of the REMIC which includes Note A or Note B (or any portion thereof). Note A Holder and Note B Holder agree that the provisions of this paragraph shall be effected by compliance by the Note A Holder or its assignee with any REMIC pooling and servicing agreement which governs the administration of the Mortgage Loan or the Note A Holder's interest therein. 6. Purchase of Defaulted Note by Other Holders. In the event that (a) any payment of principal or interest on the Mortgage Loan becomes ninety (90) or more days delinquent; (b) Note A and Note B have been accelerated, (c) the principal balance of the Mortgage Loan is not paid at maturity or (d) the Borrower files a petition for bankruptcy,

49 US 2003/ A1 Jul. 17, then upon notice from the Note A Holder (a "Repurchase Option Notice ) of such occurrence pursuant to Section 3(c), the Note A Holder shall be entitled (unless prohibited from doing so under the terms of any pooling and servicing or other agreement governing the servicing of Note A) to purchase Note B at the Defaulted Note Purchase Price thereof. In the event the Note A Holder does not elect or is not permitted to purchase Note B pursuant to the preceding sentence, the Note B Holder shall have the right, by written notice to the Note A Holder (a "Note B Holder Repurchase Notice ), given within ninety (90) days of delivery to the Note B Holder of the Repurchase Option Notice, to purchase Note A at the Defaulted Note Purchase Price therefor and, upon the delivery of written notice thereof to the Note A Holder, the Note A Holder shall sell (and the Note B Holder shall purchase) Note A (including, without limitation, any participations therein) at the Defaulted Note Purchase Price therefor, on a date (the "Repurchase Date ) not less than five (5) Business Days nor more than ten (10) Business Days after the date of the Note B Holder Repurchase Notice, as shall be established by the Note A Holder. The Defaulted Note Purchase Price shall be calculated by the Note A Holder three (3) Business Days prior to the Repurchase Date and shall, absent manifest error, be binding upon the Note A Holder and the Note B Holder. In addition, in connection with the institution of any foreclosure by the Note A Holder, the Note A Holdershall, by written notice to the Note B Holder delivered no later than (30) thirty days prior to such initiation of foreclosure, give notice of such intent to foreclose to the Note B Holder and whether the Note A Holder, at its option, shall purchase from the Note B Holder all of its right, title and interest in Note B pursuant to this Section 6. Provided that the Note A Holder has not exercised its option to purchase Note B, the Note B Holder shall, within (10) ten days of the receipt of such notice, give the Note A Holder written notice of the Note B Holder's intent to purchase from the Note A Holder all of its right, title and interest in Note A pursuant to Section 6 hereof. In connection with the exercise of either purchase option, the Note A Holder and Note B Holder agree to enter into and execute an agreement and any other documents necessary to evidence the sale by the Note B Holder or the Note A Holder, as applicable, of all of its right, title and interest in Note B or Note A, as applicable. Notwithstanding anything in this Section 6 to the contrary, the rights of the Note B Holder to purchase Note A after a Repurchase Option Notice shall not apply to any subsequent transferee of the Note B Holder without the written consent of the Note A Holder, which consent shall not be unreasonably withheld or delayed. 7. No Creation of a Partnership or Exclusive Purchase Right. Nothing contained in this Agreement, and no action taken pursuant hereto shall be deemed to constitute the Note A Holder with the Note B Holder a partnership, association, joint venture or other entity. The Note A Holder shall have no obligation whatsoever to offer to the Note B Holder the opportunity to purchase notes or participation interests relating to any future loans originated by the Note A Holder or its Affiliates, and if the Note A Holder chooses to offer to the Note B Holder the opportunity to purchase notes or any participation interests in any future mortgage loans originated by the Note A Holder or its Affiliates, such offer shall be at such purchase price and interest rate as the Note A Holder chooses, in its sole and absolute discretion. The Note B Holder shall have no obligation whatsoever to purchase from the Note A Holder any notes or participation interests in any future loans originated by the Note A Holder or its Affiliates. 8. Assignment, Sale of Note B. Transfer Restrictions. (a) With respect to any Note that is sold, assigned or transferred, the rights and obligations of any subsequent Holder shall continue to be subject to this Agreement and any such transferee shall execute an assignment and assumption agreement whereby such transferee assumes all of the

50 US 2003/ A1 Jul. 17, obligations of the transferor Holder hereunder with respect to related Mortgage Loan or Note, from and after the date of such sale, assignment or transfer. Any Mortgage Loan and Note not sold, assigned or transferred pursuant to the terms thereof or hereunder shall be subject to this Agreement and with respect thereto this Agreement shall remain in full force and effect. (b) No transfer of Note B shall be made unless that transfer is made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act'), and effective registration or qualification under applicable state securities laws, or is made in a transaction which does not require such registration or qualification. If a transfer (other than one by CLF or an Affiliate thereof) is to be made in reliance upon an exemption from the Securities Act, and under the applicable state securities laws, such transfer shall be made only upon delivery to CLF and the Note A Holder of either: (i) a certificate of a duly authorized officer or other representative of the transferee that the transferee is a Qualified Institutional Buyer or (ii) if such certifications cannot be provided, an opinion of counsel reasonably satisfactory to CLF and the Note A Holder that such transfer may be made pursuant to an exemption, describing the applicable exemption and the basis therefor, from registration or qualification under the Securities Act, applicable state securities laws and other relevant laws, which opinion of counsel shall not be an expense of the Note A Holder or CLF. The Note B Holder shall, and does hereby agree to, indemnify CLF and the Note A Holder against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws. (c) The Note B Holder shall not transfer all or any portion of Note B to the related Borrower or an Affiliate thereof, and any such transfer shall be voidab initio, 9. Reimbursement For Costs. Neither Holder will have recourse to the other Holder for reimbursement of costs, expenses or Property Advances (or Advance Interest thereon) not recovered from the Borrower (or any other third party) or the Mortgaged Property. If either party shall have incurred costs or expenses with respect to the Mortgage Loan and the other party is subsequently reimbursed any amount by the Borrower (or any other third party) on account of such costs and expenses, the reimbursed party shall pay to the other party its ratable share of such reimbursed amount (which shall include interest thereon to the extent received by the reimbursed party), within ten (10) days of its receipt of such payment. For purposes of this Section 9, the terms Note A Holder and Note B Holder shall include any servicer or trustee acting on behalf of the Note A Holder or Note B Holder, as applicable. 10. No Pledge or Loan. This Agreement shall not be deemed to represent a loan or a pledge of any interest in the Mortgage Loan by the Note A Holder to the Note B Holder, or a loan or a pledge of any interest in the Mortgage Loan from the Note B Holder to the Note A Holder. 11. Governing Law; Waiver of Jury Trial. THIS AGREEMENT AND THE RESPECTIVE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITH IN SUCH STATE. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF RELATING TO THIS AGREEMENT.

51 US 2003/ A1 Jul. 17, Modifications. This Agreement shall not be modified, cancelled or terminated except by an instrument in writing signed by the parties hereto following receipt of the written consent of any Rating Agency then rating Note B or any pass-through certificates representing interests in Note Athen outstanding. 13. Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. None of the provisions of this Agreement shall be for the benefit of or enforceable by any Person not a party hereto. 14. Counterparts. This Agreement may be executed in any number of counterparts and all of such counterparts shall together constitute one and the same instrument. 15. Captions. The titles and headings of the paragraphs of this Agreement have been inserted for convenience of reference only and are not intended to summarize or otherwise describe the subject matter of the paragraphs and shall not be given any consideration in the construction of this Agreement. 16. Notices. All notices required hereunder shall be given by (i) telephone (confirmed in writing) or shall be in writing and personally delivered, (ii) sent by facsimile transmission if the sender on the same day sends a confirming copy of such notice by reputable overnight delivery service (charges prepaid), (iii) reputable overnight delivery service (charges prepaid) or (iv) certified United States mail, postage prepaid return receipt requested, and addressed to the respective parties at their addresses set forth on Annex B hereto, or at such other address as any party shall hereafter inform the other party by written notice given as aforesaid. All written notices so given shall be deemed effective upon receipt. 17. Custody of Loan Documents. The originals of all of the Mortgage Loan Documents (other than Note B) will be held by the Note A Holder or by a custodian, acting on behalf of the Note A Holder, on behalf of the Holders. 18. Cooperation. Each Noteholder acknowledges that either Noteholder or its successors and assigns may (a) sell its Note and related rights under this Intercreditor Agreement to one or more investors as a whole loan, (b) participate the Note and related rights hereunder to one or more investors, (c) deposit its Note and related rights hereunder with a trust, which trust may sell certificates to investors evidencing an ownership interest in the trust assets or (d) otherwise sell its Note or interests therein to investors (the transactions referred to in clauses (a) through (d) are hereinafter referred to as "Secondary Market Transactions"). Each Noteholder shall cooperate in good faith with the other Noteholder in effecting any such Secondary Market Transaction and shall cooperate in good faith to implement all requirements imposed by the Rating Agencies involved in any Secondary Market Transaction including, without limitation, all structural or other changes to this Intercreditor Agreement, the Mortgage Loan or the Mortgage Loan Documents and delivery of opinions of counsel acceptable to the Rating Agencies and addressing such matters as the Rating Agencies may require; provided, however, that neither Noteholder shall be required to modify any documents evidencing or securing the Mortgage Loan which would modify (i) the interest rate payable under its Note, (ii) the stated maturity of its Note, (iii) the amortization of principal of its Note, or (iv) any other material economic term of the portion of the Mortgage Loan held by it, nor shall it be required to modify the payment terms hereof

52 US 2003/ A1 Jul. 17, set forth in Section 2 or any other material economic term hereof. Each Noteholder shall provide such information and documents relating to such Noteholder, the Mortgage Loan or this Intercreditor Agreement as any Rating Agency may reasonably request in connection with a Secondary Market Transaction. Each Noteholder shall have the right to provide to prospective investors any information in its possession, including, without limitation, financial statements relating to Mortgagor, the Guarantor, if any, the Mortgaged Property, the Lessee, this Intercreditor Agreement and the other Noteholder. Each Noteholder acknowledges that certain information regarding the Mortgage Loan, the parties thereto, the Mortgaged Property, this Intercreditor Agreement and the parties hereto may be included in a private placement memorandum, prospectus or other disclosure documents. The reasonable cost of complying with this Section 19 shall be borne by the party requesting such cooperation.

53 US 2003/ A1 Jul. 17, IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. CAPITAL LEASE FUNDING, L.P. By: CLF Holdings, Inc., a General Partner By: Name: Title: PURCHASER: FIRST UNION NATIONAL BANK By: Name: Title:

54 US 2003/ A1 Jul. 17, ANNEXA FORM OF INTERCREDITOR AGREEMENT SUPPLEMENT THIS INTERCREDITOR AGREEMENT SUPPLEMENT (this "Supplement ), dated as of,, by and between CAPITAL LEASE FUNDING, L.P. (together with its successors and assigns, CLF) and FIRST UNION NATIONAL BANK (together with its successors and assigns, the "Purchaser). WITNESSE TH: WHEREAS, CLF and the Purchaser have entered into an Intercreditor Agreement Among Noteholders dated as of October 1, 2001 (the "Agreement) governing the terms upon which CLF and the Purchaser shall hold promissory notes evidencing loans to be identified in supplements thereto; and WHEREAS, CLF and the Purchaser wish to have the loan (the "Mortgage Loan ) identified in Annex A hereto (the "Mortgage Loan Schedule") be subject to the terms of the Agreement and this Supplement; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto mutually agree, with respect to the Mortgage Loan, as follows: 1. Incorporation by Reference. The Agreement, as applicable to the Mortgage Loan, is affirmed and incorporated by reference herein as though set forth herein in full, subject to such amendments or modifications as set forth in Section 3 of this Supplement. The term Agreement as used therein shall mean the Agreement as supplemented and modified by this Supplement, and the provisions of the Agreement (including without limitations the definitions set forth therein and the miscellaneous provisions set forth in Section 11 through 16 thereof) shall apply to the Agreement as so supplemented and modified. 2. The Mortgage Loan. The terms of the Agreement shall apply to the Mortgage Loan described in the Mortgage Loan Schedule attached as Annex A hereto. 3. Amendments and Modifications. Notwithstanding the foregoing, the terms of the Agreement are amended and modified as follows: insert any applicable amendments or modifications

55 US 2003/ A1 Jul. 17, IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be duly executed as of the day and year first above written. CAPITAL LEASE FUNDING, L.P. By: CLF Holdings, Inc., a General Partner By: Name: Title: PURCHASER: FIRST UNION NATIONAL BANK By: Name: Title:

56 US 2003/O A1 43 Jul. 17, 2003 What is claimed is: 1. A method of creating a loan from a revenue Stream from a lessee, comprising the Steps of: determining a revenue Stream from a lease of a leased tangible asset; calculating a Breakeven TA Note Rate, and a TA Note Amount for a TA Note based on a Multi-Note Loan Coupon, a TA Note Debt Service and market deter mined underwriting parameters for the tangible asset; calculating an CL Note Debt Service after the TA Note debt Service, and other appropriate amounts, if neces Sary are Subtracted from the revenue; calculating a Breakeven CL Note Rate and a CL Note Amount for a CL Note based on the calculated CL Note Debt Service, the Multi-Note Loan Coupon, a CL Note Debt Service, and market determined underwriting parameters, creating a file Structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distributing recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default and allocating the rights and responsibilities of the holders of Such notes. 2. The method as defined in claim 1, wherein the Multi Note Loan Coupon is initially an estimated value, wherein the Breakeven TANote Rate and the CL Note Debt Service and the Breakeven CL Note Rate are calculated or deter mined using the estimated Multi-Note Loan Coupon, and further comprising calculating the Multi-Note Loan Cou pon based on the Breakeven TA Note Rate and the Breakeven CL Note Rate. 3. The method as defined in claim 2, further comprising the step of recalculating the Breakeven TA Note Rate, the Breakeven CL Note Rate and the Multi-Note Loan Coupon based on the original calculated Multi-Note Loan Coupon. 4. The method as defined in claim 3, further comprising the Step of performing the recalculating Step for the Breakeven TA Note Rate, the Breakeven CL Note Rate and the Multi-Note Loan Coupon multiple times until a criteria is met. 5. The method as defined in claim 4, wherein the criteria is that a margin from the Multi-Note Loan Coupon equals or exceeds and predetermined amount. 6. The method as defined in claim 1, wherein the CL Note Rate is determined in part from a corporate credit rate spread applicable to the lessee or its industry. 7. The method as defined in claim 1, further comprising the step of calculating a Breakeven Multi-Note Loan Rate using the Breakeven TA Note Rate and the Breakeven CL Note Rate as elements in an algorithm. 8. The method as defined in claim 1, wherein the associ ating Step comprises assigning priority of distribution of tangible asset recovery proceeds first to the TA Note, and any excess to the CL Note and assigning priority of the distribution of the proceeds of a Defaulted Lease claim first to the CL Note and any excess to the TA Note. 9. The method as defined in claim 8, wherein the deter mining and distributing Step comprises on the occurrence of a sale of the tangible asset after a default under the Multi Note Loan, calculating an excess of Sale proceeds over amounts due for a payoff of the TA Note and, on receipt of the proceeds from the Defaulted Lease claim, calculating an excess of proceeds from the Defaulted Lease claim over amounts due for a payoff of the CL Note; and electronically associating the excess of Sale proceeds over the amounts due under the TA Note with the file for the CL Note and/or electronically associating the excess of proceeds from the Defaulted Lease claim over amounts due under the CL Note with the file for the TA Note. 10. The method as defined in claim 9, further comprising the Step of transferring the calculated excess amount from the Sale proceeds of the tangible assets to a holder of the CL Note or its designee. 11. The method as defined in claim 9, further comprising the Step of transferring the calculated excess amount from the Defaulted Lease claim to a holder of the TA Note or its designee. 12. The method as defined in claim 1, further comprising the Step of electronically associating the one or more files for the TA Note and the CL Note, which comprise electronic files. 13. The method as defined in claim 1, further comprising the step of transferring the TANote and CL Note to different parties. 14. The method as defined in claim 1, further comprising the Step of Subtracting from the lease revenues loan reserve amounts to Support lessor maintenance and other obligations to mitigate risk of potential termination of or interruption in the lease payments due to the failure of the lessor or others to perform their obligations. 15. The method as defined in claim 14, further comprising the step of subtracting from the Multi-Note Loan proceeds amounts to pay premiums for Specialized insurance policies to mitigate the risk of potential termination of or interruption in the lease payments due to various potential contingencies. 16. The method as defined in claim 1, wherein the step of obtaining a Breakeven TA Note Rate comprises obtaining a benchmark rate and a Breakeven TA Note Spread. 17. The method as defined in claim 1, wherein the step of obtaining the Breakeven CL Note Rate comprises determin ing a discount rate based on an algorithm that uses a benchmark rate and a lessee corporate bond Spread as elements. 18. The method as defined in claim 1, wherein the step of obtaining the Breakeven CL Note Rate comprises determin ing a discount rate based on an algorithm that uses a benchmark rate and a generic corporate bond spread based on a debt rating. 19. A method of creating a loan from a revenue Stream from a lessee, comprising the Steps of: determining a revenue Stream from a lease of a leased tangible asset; calculating and determining parameters of a TA Note and a CL Note based in part on the revenue Stream; creating a file Structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distributing recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default.

57 US 2003/O A1 44 Jul. 17, The method as defined in claim 19, wherein the associating Step further comprises allocating rights and responsibilities of the holders of Such notes and associating those rights and responsibilities with the TA Note and CL Note file structure. 21. The method as defined in claim 19, comprising the step of calculating an CL Note Debt Service after a TA Note debt Service is Subtracted from the revenue Stream; and wherein at least one parameter for the CL Note is deter mined based on the CL Note Debt Service. 22. The method as defined in claim 19, wherein the calculating and determining parameters of a TA Note and a CL Note step is also based in part on a Multi-Note Loan Coupon. 23. The method as defined in claim 22, wherein the Multi-Note Loan Coupon is initially an estimated value, and wherein the TANote parameters and CLNote parameters are calculated or determined using the estimated Multi-Note Loan Coupon; and further comprising re-calculating the Multi-Note Loan Coupon based on the resulting TA Note parameters and the CL Note parameters. 24. The method as defined in claim 23, further comprising the Step of recalculating at least one parameter for the TA Note and the CLNote and recalculating the Multi-Note Loan Coupon based on the calculated Multi-Note Loan Coupon. 25. The method as defined in claim 24, further comprising the Step of performing the recalculating Step for the at least one parameter for the TA Note and the CL Note and the Multi-Note Loan Coupon multiple times until a criteria is met. 26. The method as defined in claim 25, wherein the criteria is that a margin from the Multi-Note Loan Coupon equals or exceeds and predetermined amount. 27. The method as defined in claim 19, wherein one of the parameters for the CL Note is a CL Note Rate which is determined in part from a corporate credit rate spread applicable to the lessee or its industry. 28. The method as defined in claim 19, wherein the associating Step comprises assigning priority of distribution of tangible asset recovery proceeds first to the TA Note, and any excess to the CL Note and assigning priority of the distribution of the proceeds of a Defaulted Lease claim first to the CL Note and any excess to the TA Note. 29. The method as defined in claim 28, wherein the determining and distributing Step comprises on the occur rence of a Sale of the tangible asset after a default under the Multi-Note Loan, calculating an excess of Sale proceeds over amounts due for a payoff of the TANote and, on receipt of the proceeds from the Defaulted Lease claim, calculating an excess of proceeds from the Defaulted Lease claim over amounts due for a payoff of the CL Note; and electronically associating the excess of Sale proceeds over the amounts due under the TA Note with the file for the CL Note and electronically associating the excess of proceeds from the defaulted lease claim over amounts due under the CL Note with the file for the TA Note. 30. The method as defined in claim 29, further comprising the Step of transferring the calculated excess amount from the Sale proceeds of the tangible assets to a holder of the CL Note or its designee. 31. The method as defined in claim 29, further comprising the Step of transferring the calculated excess amount from the Defaulted Lease claim to a holder of the TA Note or its designee. 32. The method as defined in claim 1, further comprising the Step of electronically associating the one or more files for the TA Note and the CL Note, wherein the one or more files are electronic files. 33. The method as defined in claim 1, further comprising the step of transferring the TANote and CL Note to different parties. 34. The method as defined in claim 19, further comprising the Step of Subtracting from the revenues loan reserve amounts to Support lessor maintenance and other obligations to mitigate risk of potential termination of or interruption in the lease payments due to the failure of the lessor or others to perform their obligations. 35. The method as defined in claim 34, further comprising the step of subtracting from Multi-Note Loan proceeds amounts to pay premiums for Specialized insurance policies to mitigate the risk of potential termination of or interruption in the lease payments due to various potential. 36. The method as defined in claim 19, wherein the step of calculating and determining parameters for the TA Note comprises obtaining a benchmark rate and a Breakeven TA Note Spread and then determining a Breakeven TA Note Rate. 37. The method as defined in claim 19, wherein the step of calculating and determining parameters for the CL Note comprises determining a discount rate based on an algorithm that uses a benchmark rate and a lessee corporate bond Spread as elements and then determining a Breakeven CL Note Rate. 38. The method as defined in claim 19, wherein the step of calculating and determining parameters for the CL Note comprises determining a discount rate based on an algorithm that uses a benchmark rate and a generic corporate bond Spread based on a debt rating and then determining a Breakeven CL Note Rate. 39. The method as defined in claim 19, further comprising the Step of aggregating a plurality of the TA Notes or the CL Notes to obtain a pool value. 40. The method as defined in claim 39, wherein the pool value is sent electronically to a potential buyer. 41. The method as defined in claim 19, further comprising the Steps of providing a web page with web content that performs the calculating and determining Step. 42. The method as defined in claim 41, further comprising the Step of calculating a Multi-Note Loan Coupon using the web content; and displaying the Multi-Note Loan Coupon to a potential borrower. 43. The method as defined in claim 41, wherein a web page that is provided with web content displays TA Notes and CL Notes and that facilitates a potential buyer forming a customized pool of TA Notes or CL Notes. 44. The method as defined in claim 24, further comprising the Steps of providing a web page with web content that performs the calculating and determining Step, the calculat ing of the Multi-Note Loan Coupon, and the recalculating of at least one parameter for the TA Note and the CL Note and recalculating the Multi-Note Loan Coupon Step.

58 US 2003/O A1 Jul. 17, A computer-implemented method of creating a loan from a revenue Stream from a lessee, comprising the fol lowing Steps: determining rents from a lease of an asset; obtaining an indication of a value of the asset; obtaining a TA Note to tangible asset value ratio, obtaining an estimated Multi-Note Loan Coupon; calculating a Breakeven TA Note Rate; calculating a Breakeven TA Note Value for a TA Note using an algorithm that includes as factors the indica tion of value of the tangible asset, the Breakeven TA Note Rate, and the TA Note to tangible asset value ratio and appropriate debt Service coverage ratio for the asset, calculating a CL Note Debt Service; obtaining a Breakeven CL Note Rate based in part on the market determined corporate bond spread for the lessee or its industry; calculating a Breakeven CL Note Value based on prede termined elements including the CL Note Debt Service, the Breakeven CL Note Rate and a term for the CL Note; calculating a Breakeven Multi-Note Loan Rate using the Breakeven TANote Rate, the Breakeven CLNote Rate, TANote Debt Service and the CLNote Debt Service as elements in the calculation; and calculating a Multi-Note Loan Coupon by adding a lender profit margin to the Breakeven Multi-Note loan Rate. 46. The method as defined in claim 45, wherein the Multi-Note Loan Coupon is initially an estimated value, wherein the Breakeven TANote Rate and the CL Note Debt Service and the Breakeven CL Note Rate are calculated or determined using the estimated Multi-Note Loan Coupon, and further comprising calculating the Multi-Note Loan Cou pon based on the Breakeven TA Note Rate and the Breakeven CL Note Rate. 47. The method as defined in claim 45, further comprising the step of recalculating the Breakeven TA Note Rate, the Breakeven CL Note Rate and the Multi-Note Loan Coupon based on the calculated Multi-Note Loan Coupon. 48. The method as defined in claim 47, further comprising the Step of performing the recalculating Step for the Breakeven TA Note Rate, the Breakeven CL Note Rate and the Multi-Note Loan Coupon multiple times until a criteria is met. 49. The method as defined in claim 48, wherein the criteria is that a margin from the Multi-Note Loan Coupon equals or exceeds and predetermined amount. 50. The method as defined in claim 45, wherein the tangible asset is real estate. 51. The method as defined in claim 45, wherein the TA Note to tangible asset value ratio is determined based on a type of tangible asset, quality of the tangible asset, length of the lease, and quality of lessee. 52. The method as defined in claim 45, wherein the rent is from a lease by a Single tenant. 53. The method as defined in claim 45, further comprising the Step of aggregating a plurality of the TA Notes or the CL Notes to obtain a pool value. 54. The method as defined in claim 53, wherein the pool value is sent electronically to a potential buyer. 55. A computer-implemented System of creating a loan from a revenue Stream from a lessee, comprising a processor programmed to perform the following method steps: determining a revenue Stream from a lease of a leased tangible asset; calculating a Breakeven TA Note Rate, and a TA Note Amount for a TA Note based on a Multi-Note Loan Coupon, a TA Note Debt Service and market deter mined underwriting parameters for the tangible asset; calculating an CL Note Debt Service after the TA Note debt Service, and other appropriate amounts, if neces Sary are Subtracted from the revenue; calculating a Breakeven CL Note Rate and a CL Note Amount for a CL Note based on the calculated CLNote Debt Service, the Multi-Note Loan Coupon, a CL Note Debt Service, and market determined underwriting parameters, creating a file Structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distributing recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default and allocating the rights and responsibilities of the holders of Such notes. 56. A program product for creating a loan from a revenue Stream from a lessee, comprising machine-readable program code for causing a machine to perform the following Steps of: determining a revenue Stream from a lease of a leased tangible asset; calculating a Breakeven TA Note Rate, and a TA Note Amount for a TA Note based on a Multi-Note Loan Coupon, a TA Note Debt Service and market deter mined underwriting parameters for the tangible asset; calculating an CL Note Debt Service after the TA Note debt Service, and other appropriate amounts, if neces Sary are Subtracted from the revenue; calculating a Breakeven CL Note Rate and a CL Note Amount for a CL Note based on the calculated CLNote Debt Service, the Multi-Note Loan Coupon, a CL Note Debt Service, and market determined underwriting parameters, creating a file Structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distributing recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default and allocating the rights and responsibilities of the holders of Such notes. 57. The program product as defined in claim 56, wherein the Multi-Note Loan Coupon is initially an estimated value,

59 US 2003/O A1 46 Jul. 17, 2003 wherein the Breakeven TANote Rate and the CL Note Debt Service and the Breakeven CL Note Rate are calculated or determined using the estimated Multi-Note Loan Coupon, and further comprising code for calculating the Multi-Note Loan Coupon based on the Breakeven TA Note Rate and the Breakeven CL Note Rate. 58. The program product as defined in claim 57, further comprising code for a step of recalculating the Breakeven TA Note Rate, the Breakeven CL Note Rate and the Multi Note Loan Coupon based on the original calculated Multi Note Loan Coupon. 59. The as program product defined in claim 58, further comprising code for a step of performing the recalculating step for the Breakeven TA Note Rate, the Breakeven CL Note Rate and the Multi-Note Loan Coupon multiple times until a criteria is met. 60. The program product as defined in claim 59, wherein the criteria is that a margin from the Multi-Note Loan Coupon equals or exceeds and predetermined amount. 61. The program product as defined in claim 56, wherein the CL Note Rate is determined in part from a corporate credit rate spread applicable to the lessee or its industry. 62. The program product as defined in claim 56, further comprising code for a step of calculating a Breakeven Multi-Note Loan Rate using the Breakeven TA Note Rate and the Breakeven CL Note Rate as elements in an algo rithm. 63. The program product as defined in claim 56, wherein the associating Step comprises assigning priority of distri bution of tangible asset recovery proceeds first to the TA Note, and any excess to the CL Note and assigning priority of the distribution of the proceeds of a Defaulted Lease claim first to the CL Note and any excess to the TA Note. 64. The program product as defined in claim 63, wherein the determining and distributing Step comprises on the occurrence of a Sale of the tangible asset after a default under the Multi-Note Loan, calculating an excess of Sale proceeds over amounts due for a payoff of the TANote and, on receipt of the proceeds from the Defaulted Lease claim, calculating an excess of proceeds from the Defaulted Lease claim over amounts due for a payoff of the CL Note; and electronically associating the excess of Sale proceeds over the amounts due under the TA Note with the file for the CL Note and/or electronically associating the excess of proceeds from the Defaulted Lease claim over amounts due under the CL Note with the file for the TA Note. 65. The method as defined in claim 64, further comprising code for a step of transferring the calculated excess amount from the Sale proceeds of the tangible assets to a holder of the CL Note or its designee. 66. The program product as defined in claim 64, further comprising the Step of transferring the calculated excess amount from the Defaulted Lease claim to a holder of the TA Note or its designee. 67. The program product as defined in claim 56, further comprising code for a Step of electronically associating the one or more files for the TA Note and the CL Note. 68. The method as defined in claim 56, further comprising code for a step of transferring the TA Note and CL Note to different parties. 69. The program product as defined in claim 56, further comprising code for a step of Subtracting from the lease revenues loan reserve amounts to Support lessor mainte nance and other obligations to mitigate risk of potential termination of or interruption in the lease payments due to the failure of the lessor or others to perform their obliga tions. 70. The method as defined in claim 69, further comprising code for a step of subtracting from the Multi-Note Loan proceeds amounts to pay premiums for Specialized insurance policies to mitigate the risk of potential termination of or interruption in the lease payments due to various potential contingencies. 71. The program product as defined in claim 56, wherein the step of obtaining a Breakeven TA Note Rate comprises obtaining a benchmark rate and a Breakeven TA Note Spread. 72. The method as defined in claim 56, wherein the step of obtaining the Breakeven CL Note Rate comprises deter mining a discount rate based on an algorithm that uses a benchmark rate and a lessee corporate bond Spread as elements. 73. The program product as defined in claim 56, wherein the step of obtaining the Breakeven CL Note Rate comprises determining a discount rate based on an algorithm that uses a benchmark rate and a generic corporate bond spread based on a debt rating. 74. A program product for creating a loan from a revenue Stream from a lessee, comprising machine-readable program code for causing a machine to perform the following method Steps: determining a revenue Stream from a lease of a leased tangible asset; calculating and determining parameters of a TA Note and a CL Note based in part on the revenue Stream; creating a file Structure of one or more files for the TA Note and the CL Note; and associating the TA Note and CL Note to assign priorities for purposes of determining and distributing recoveries to holders of the TA Note and/or the CL Note and/or their designees in the event of a Multi-Note Loan default. 75. The program product as defined in claim 74, wherein the associating Step further comprises allocating rights and responsibilities of the holders of Such notes and associating those rights and responsibilities with the TA Note and CL Note file structure. 76. The program product as defined in claim 74, com prising code for a step of calculating an CL Note Debt Service after a TA Note debt service is Subtracted from the revenue Stream; and wherein at least one parameter for the CL Note is deter mined based on the CL Note Debt Service. 77. The program product as defined in claim 74, wherein the calculating and determining parameters of a TA Note and a CL Note step is also based in part on a Multi-Note Loan Coupon. 78. The program product as defined in claim 77, wherein the Multi-Note Loan Coupon is initially an estimated value, and wherein the TA Note parameters and CL Note param eters are calculated or determined using the estimated Multi Note Loan Coupon; and

60 US 2003/O A1 47 Jul. 17, 2003 further comprising code for re-calculating the Multi-Note Loan Coupon based on the resulting TA Note param eters and the CL Note parameters. 79. The program product as defined in claim 78, further comprising code for a Step of recalculating at least one parameter for the TANote and the CLNote and recalculating the Multi-Note Loan Coupon based on the calculated Multi Note Loan Coupon. 80. The program product as defined in claim 79, further comprising the Step of performing the recalculating Step for the at least one parameter for the TA Note and the CL Note and the Multi-Note Loan Coupon multiple times until a criteria is met. 81. The program product as defined in claim 80, wherein the criteria is that a margin from the Multi-Note Loan Coupon equals or exceeds and predetermined amount. 82. The program product as defined in claim 74, wherein one of the parameters for the CL Note is a CL Note Rate which is determined in part from a corporate credit rate Spread applicable to the lessee or its industry. 83. The program product as defined in claim 74, wherein the associating Step comprises assigning priority of distri bution of tangible asset recovery proceeds first to the TA Note, and any excess to the CL Note and/or assigning priority of the distribution of the proceeds of a Defaulted Lease claim first to the CL Note and any excess to the TA Note. 84. The program product as defined in claim 83, wherein the determining and distributing Step comprises on the occurrence of a Sale of the tangible asset after a default under the Multi-Note Loan, calculating an excess of Sale proceeds over amounts due for a payoff of the TANote and, on receipt of the proceeds from the Defaulted Lease claim, calculating an excess of proceeds from the Defaulted Lease claim over amounts due for a payoff of the CL Note; and electronically associating the excess of Sale proceeds over the amounts due under the TA Note with the file for the CL Note and electronically associating the excess of proceeds from the defaulted lease claim over amounts due under the CL Note with the file for the TA Note. 85. The program product as defined in claim 84, further comprising code for a step of transferring the calculated excess amount from the Sale proceeds of the tangible assets to a holder of the CL Note or its designee. 86. The program product as defined in claim 84, further comprising code for a step of transferring the calculated excess amount from the Defaulted Lease claim to a holder of the TA Note or its designee. 87. The program product as defined in claim 74, further comprising code for a Step of electronically associating the one or more files for the TA Note and the CL Note. 88. The program product as defined in claim 74, further comprising code for a Step of transferring the TA Note and CL Note to different parties. 89. The program product as defined in claim 74, further comprising code for a step of Subtracting from the revenues loan reserve amounts to Support lessor maintenance and other obligations to mitigate risk of potential termination of or interruption in the lease payments due to the failure of the lessor or others to perform their obligations. 90. The program product as defined in claim 89, further comprising code for a step of Subtracting from Multi-Note Loan proceeds amounts to pay premiums for Specialized insurance policies to mitigate the risk of potential termina tion of or interruption in the lease payments due to various potential. 91. The program product as defined in claim 74, wherein the Step of calculating and determining parameters for the TA Note comprises obtaining a benchmark rate and a Breakeven TA Note Spread and then determining a Breakeven TA Note Rate. 92. The program product as defined in claim 74, wherein the Step of calculating and determining parameters for the CL Note comprises determining a discount rate based on an algorithm that uses a benchmark rate and a lessee corporate bond spread as elements and then determining a Breakeven CL Note Rate. 93. The program product as defined in claim 74, wherein the Step of calculating and determining parameters for the CL Note comprises determining a discount rate based on an algorithm that uses a benchmark rate and a generic corporate bond spread based on a debt rating and then determining a Breakeven CL Note Rate. 94. The program product as defined in claim 74, further comprising code for a step of aggregating a plurality of the TA Notes or the CL Notes to obtain a pool value. 95. The program product as defined in claim 94, further comprising code for Sending the pool value electronically to a potential buyer. 96. The program product as defined in claim 74, further comprising code for Steps of providing a web page with web content that performs the calculating and determining Step. 97. The program product as defined in claim 96, further comprising code for a step of calculating a Multi-Note Loan Coupon using the web content; and displaying the Multi-Note Loan Coupon to a potential borrower. 98. The program product as defined in claim 96, further comprising web content code for displaying on a web page displays TA Notes and CL Notes and that facilitates a potential buyer forming a customized pool of TA Notes or CL Notes. 99. The program product as defined in claim 78, further comprising code for Steps of providing a web page with web content that performs the calculating and determining Step, the calculating of the Multi-Note Loan Coupon, and the recalculating of at least one parameter for the TA Note and the CL Note and recalculating the Multi-Note Loan Coupon Step A program product for creating a loan from a revenue Stream from a lessee, comprising machine-readable program code for causing a machine to perform the following method Steps: determining rents from a lease of an asset; obtaining an indication of a value of the asset; obtaining a TA Note to tangible asset value ratio, obtaining an estimated Multi-Note Loan Coupon; calculating a Breakeven TA Note Rate; calculating a Breakeven TA Note Value for a TA Note using an algorithm that includes as factors the indica tion of value of the tangible asset, the Breakeven TA Note Rate, and the TANote to tangible asset value ratio and appropriate debt Service coverage ratio for the asset,