Fill - Free fillable Financing Information Application Packet PDF form

Date: _________________

TO: Pepperdine Employee(s)/Applicant(s) – ______________________________

Enclosed you will find the following items which will briefly explain and list the terms,

conditions, and requirements of Pepperdine’s Contingent Interest Loan Program:

*Pepperdine Contingent Interest Loan Guidelines

*Contingent Interest Loan Agreement (sample)

*Deed of Trust (sample)

*Promissory Note (sample)

* To be retained by borrower

Please COMPLETE and RETURN to me the attached documents as soon as possible.

encl:

1.) Residential Loan Application

2.) Monthly Budget Worksheet

3.) W-9

4.) Confidential Statement of Identity

5.) Vesting Statement of Declaration

Also remit the following:

6.) Dean’s letter of offer

7.) Purchase Agreement, Preliminary Title Report and Escrow Instructions (only

signed copies are acceptable)

8.) Copy of Appraisal

9.) Copy of Borrower(s) Credit Report

10.) Real Estate Broker and Mortgage Broker Contact Information

NOTES: ________________________________________________________________

________________________________________________________________________

Sincerely,

JoAnna Elliott

Director, Real Estate Operations TAC-100

310-506-6348

U:\Real Estate\Forms\Lending Only\Contingent Interest Loan\INFOMEMO.DOC

Confidential

PEPPERDINE UNIVERSITY

CONTINGENT INTEREST LOAN GUIDELINES

FOR OFF CAMPUS HOUSING

(01/26/05)

Purpose:

The principal purpose of the Contingent Interest Loan program is to

assist in the recruitment of faculty and staff by assisting them in acquiring suitable

housing in the vicinity of or on the University's campuses and educational centers.

Guidelines

1. Qualification/No Entitlement

. This program is not an entitlement, and is

limited to members of faculty and staff being recruited for full-time positions at the

University who receive a University authorized offer for a loan to buy his/her

Residence, thereby enabling them to move to or near a Pepperdine University

campus (hereinafter “Borrower”). Except as may be required by law, the details

and existence of the loan transaction shall be maintained strictly confidential

between the Borrower and the authorizing University officials.

2. Required Authorization

. The use of a Contingent Interest Loan shall be

considered by the recruiting officials on an as needed basis only. The discussion,

offer, and amount of such a loan shall be done only with the written authorization

of the Provost and the Dean of the School, or the Senior Vice President for

Investments, or Executive Vice Chancellor, as appropriate.

3. Limitation on Amount/Approval of Residence and Purchase Terms

. The

amount of the Loan is entirely in the judgment of the University, shall be related to

the expected need of the Borrower, shall not exceed the limitations established by

the University Management Committee, and shall be subject to availability and

approval of budgeted funds to be used for the Loan. The Loan shall typically be

expressed as a dollar amount. Though the Borrower will have considerable

latitude in selection of the Residence, the University must approve the Residence

proposed to be purchased with the proposed Loan, as well as the proposed terms of

the Residence purchase. The Loan shall be paid directly into escrow immediately

prior to the close and applied to the purchase price as instructed by the University.

The Loan should not be used as the escrow deposit or any closing costs, except in

cases of special need when pre-approved in writing by the Senior Vice President

for Investments.

On Campus Contingent Interest Loan Guidelines 01/26/05 02-18-2011 08:55

4. Affordability/Personal Financial Information

. The Borrower must

demonstrate, to the reasonable satisfaction of the University, that he or she can not

only afford to purchase the home, but also continue to meet all debt financing and

pay for proper maintenance of the Residence. Detailed personal financial

information and copies of all documentation regarding the Residence purchase

must be provided to the University officials administering the Loan program. This

information will be kept confidential.

5. Costs Borne by Borrower

. All costs of the transaction shall be borne by the

Borrower, including a University transaction fee (currently at $250) and all costs of

recording documents, title reports and policies, insurance, escrow fees, tax lien,

etc.

6. Loan Documentation

. The Contingent Interest Loan shall be documented by

the University and may include a Contingent Interest Loan Agreement, Promissory

Note, Deed of Trust covering the real property, subordinate only to the lien of any

senior deed of trust on the Residence approved by the University, and a UCC

Financing Statement covering any personal property in the Residence (collectively,

the “Loan Documents”).

7. Acceleration of Loan

. The maximum term of the Loan is thirty (30) years,

however, as set forth more fully in the Loan Documents, the University’s Loan

shall become immediately due and payable upon sale, lease, disposition, further

encumbrance or other transfer of the Residence. Additionally, the University’s

Loan shall become immediately due and payable within 120 days of: (a)

Borrower’s cessation of full-time employment with the University for any reason,

whether voluntary or involuntary; (b) death or incapacity of the Borrower; (c)

cessation of use of the Residence as the primary year round Residence of the

Borrower (i.e., the full time employee of the University); (d) default in payment of

any loan or other payments related to the Residence; (e) material breach of any

agreement between Borrower and the University or between Borrower and a lender

who holds a security interest in the Residence; (e) the University’s determination

of the falsity of any material statement, representation or warranty contained in the

Loan Documents associated with the Loan; (f) the attachment, levy, execution or

other judicial seizure of any portion of the Residence which is not released,

expunged, discharged or dismissed prior to sixty (60) days after such attachment,

levy, execution or seizure.

On Campus Contingent Interest Loan Guidelines 01/26/05 02-18-2011 08:55

8. Loan Terms. As set forth more fully in the Loan Documents, two interest

components shall accrue on the Loan: (a) Fixed Interest on the unpaid principal

sum of the Promissory Note; and (b) Contingent Interest on the Net Appreciated

Value of the Residence (as defined in the Promissory Note). Borrower may prepay

the principal and Fixed Interest without penalty according to the terms of the

Promissory Note. Borrower may not

prepay Contingent Interest unless Borrower

first pays in full all principal and fixed interest, and all other amounts owed under

the Note, whether or not then due. The amount of the Loan shall not be reduced as

a result of any decrease in the price or value of the Residence.

9. Insurance

. The Borrower shall maintain property and casualty insurance for

the full replacement value of the property and liability insurance in the minimum

amount of $300,000.00. The University shall be named as a loss payee on the

insurance policies for the Residence. Evidence of adequate property and casualty

insurance in force must be on file with the University until the Loan is repaid to the

University. Each policy shall contain a 30-day notice to the University prior to

cancellation or material alteration. Owners shall cause their insurance broker to

provide the University with a Certificate of Insurance evidencing these coverages.

10. Expenses, Taxes, Encumbrances, and Indemnity

. Borrower will be

responsible to pay all taxes, assessments, homeowner's fees, utilities, repairs,

maintenance, capital improvements, upkeep, insurance, losses, damages, claims,

and any and all other costs and expenses of the Residence. Except with respect to

the approved first trust deed lien, Borrower shall not permit any other monetary or

other material encumbrances against the Residence during the term of the Loan

without the prior written consent of the University, which consent may be withheld

in the University’s sole discretion.

11. Income Tax Consequences

. Borrower agrees that the University has made

no warranties or representations regarding the tax consequences of the Loan.

Borrower shall rely upon his or her own legal and tax professionals for such

advice.

12. No Obligation Without Agreement

. The University shall not be obligated to

make the Loan unless and until Borrower has signed the University’s Contingent

Interest Loan Agreement and all other related documents reasonably required by

the University.

On Campus Contingent Interest Loan Guidelines 01/26/05 02-18-2011 08:55

13. Budgetary Responsibility. The academic or administrative department

employing the Borrower shall be responsible for the financial and budgetary

resources required for the Loan arrangement with the Borrower. For example, a

Loan of $20,000 would result in a charge of $20,000 against the departmental

budget. In limited, exceptional cases, and upon written approval of the Senior Vice

President for Investments, the departmental budget may borrow the funds from the

University and be charged annually for the carrying cost of the funds (estimated at

8-9%) and for amortization of the Loan amount until repaid. Loan funds that have

been charged against a departmental budget shall become part of a Loan fund

allocated for that school, and thus, upon repayment to the University said funds,

increased or decreased by the gain or loss on the equity investment, shall belong to

the school for reuse in the Contingent Interest Loan program.

14. Exceptions

. Material exceptions to this policy may be made only by the

agreement of the following officers: (a) Provost, (b) Senior Vice President for

Investments, and (c) Vice Chancellor. In the event one of these officers is

unavailable, or in the event of disagreement, at least two of said officers shall

approve any material exception.

15. Conflicts

. In the event that there is any conflict between the terms of the

Loan Documents and these Guidelines, the terms of the Loan Documents shall

prevail.

For more information, please contact:

For Implementation

For Policy

Real Estate Operations – TAC100 Charles J. Pippin

Pepperdine University Senior Vice-President and

Malibu, CA 90263-4109 Chief Investment Officer – TAC 4

Ms. JoAnna Elliott Pepperdine University

Director Malibu, CA 90263-7500

(310) 506-6348 (310) 506-7500

Approved by University Management Committee.

On Campus Contingent Interest Loan Guidelines 01/26/05 02-18-2011 08:55

937874.2

CONTINGENT INTEREST LOAN AGREEMENT

«LastName»

Definitions

Effective Date: «DocumentDate»

Employee: «LastName»:

Borrower: «Vesting» ([collectively]“Borrower”)

«StreetAddress»

«CityStateZip»

Lender: Pepperdine University (“Pepperdine”)

a California non-profit public benefit corporation

24255 Pacific Coast Highway

Malibu, CA 90263-4109

Attn: Real Estate Operations

Residence: Single family home located at «StreetAddress»,

«CityStateZip», APN «APN» as more particularly described on EXHIBIT A

attached hereto (the “Property”).

Recitals

A. On or before «CloseOfEscrow» (the “Closing”), Borrower shall purchase the Property

for principal residence purposes at a purchase price of $«PurchasePrice» with $«DownPayment»

down and a Note (the “Senior Loan”) for the sum of $«FirstTDAmount» (excluding closing costs),

with fixed interest not to exceed «FirstTDInterestRate»% (subject to adjustment pursuant to the loan

documents evidencing or securing such Senior Loan, herein collectively called the “Senior Loan

Documents”). The Senior Loan shall be secured by the lien of a first trust deed (the “Senior Trust

Deed”).

B. On «DateOfHire», «FullName» (“Primary Obligor”) began employment with

Pepperdine as «UniversityTitle» in the «AcademicDivision» of «College» at Pepperdine University.

C. As an incentive to encourage Primary Obligor to accept the position described above,

Pepperdine has agreed to lend to Borrower the sum of «LoanAmtInWords» ($«LoanAmtNumeric»)

as a Contingent Interest Loan (the “Loan”), to be secured by lien of a second trust deed (the

”Subordinate Trust Deed”) against the Property. The loan funds shall be forwarded directly into

escrow by Pepperdine’s Real Estate Operations Department to enable Borrower to close the purchase

of the Property. Borrower acknowledges and agrees that Pepperdine shall not incur any other costs

or expenses related to this transaction and the ownership of the Property.

D. This Contingent Loan Agreement (the “Agreement”) sets forth the benefits, duties and

obligations among the various parties with regard to the Property.

937874.2 2

Agreement

It is therefore agreed, as follows:

1. Incorporation of Recitals. The above Definitions and Recitals A through D are

hereby fully incorporated into this Agreement.

2. Loan. Pepperdine agrees to lend, and Borrower agrees to borrow from Pepperdine,

the Loan in accordance with the terms and conditions of this Agreement, the Promissory Note (as

defined below) and Subordinate Trust Deed (as defined above and more fully described below)

securing the Loan. The full amount of the Loan shall be deposited to escrow and credited toward the

purchase price of the Property. The Loan shall be evidenced by a Promissory Note (the “Note”) in

the form of EXHIBIT B hereto, which provides for payment of Fixed Interest and Contingent

Interest as more fully described therein. The Note and this Agreement shall be secured by the

Subordinate Trust Deed which shall be in the form of the Deed of Trust With Assignment of Rents,

Security Agreement and Fixture Filing attached as EXHIBIT C hereto, to be recorded at the

Closing. All such documents are referred to herein as the “Loan Documents.” The Subordinate Trust

Deed shall be subordinate only to the lien of the Senior Trust Deed in an amount not to exceed

$«FirstTDAmount».

3. Security/Title/Closing Costs. If escrow does not close for any reason, all or any

portion of the Loan deposited into escrow shall be immediately returned to Pepperdine without

diminution. Borrower shall be responsible for any costs of escrow related to the Loan, including but

not limited to Loan escrow and recording fees, a realty tax service contract for benefit of Pepperdine

and title premiums for a Pepperdine’s ALTA title insurance policy insuring Pepperdine’s secured

interest as holder of the Subordinate Trust Deed against the Property in the amount of the Loan

(including such endorsements as Pepperdine may reasonably require), and Borrower shall hold

Pepperdine harmless for all costs of the purchase and sale transaction, including without limitation,

escrow fees, broker’s commissions, title premiums and any other costs of the transaction.

4. Maturity Events. Borrower and Borrower’s heirs, assignees, and personal

representatives, shall be required to repay the Loan within the time period set forth below upon the

following events (the “Maturity Events”):

(a) Except as set forth in Paragraph 4(c) below, within 120 days of retirement, whether

voluntary or involuntary, of Primary Obligor from the full-time employment of Pepperdine

University.

(b) Except as set forth in Paragraph 4(c) below, within 120 days of cessation of Primary

Obligor’s full-time employment at Pepperdine University for any other reason, whether voluntary or

involuntary (excluding sabbatical or other leave of absence approved by Pepperdine).

elimination of Primary Obligor’s position or (iii) reduction in work force shall be deemed a Maturity

Event, provided that upon the occurrence of such Maturity Event, the Loan shall be payable in amortized

Installment Payments and shall be all due and payable as provided in the Note.

(d) Within 120 days of death or incapacity of Primary Obligor.

937874.2 3

(e) Within 120 days of cessation of the use of the Property as Primary Obligor’s primary

residence.

(f) Upon Borrower’s failure to pay, when due, any monetary obligation related to the

Loan, including without limitation, principal and interest, taxes, assessments, insurance premiums,

homeowner’s association dues, which is not cured within five (5) days following written notice of

such failure by Pepperdine.

(g) Upon Pepperdine’s good faith determination of the falsity of any material statement,

representation or warranty contained in the Loan Documents or any Senior Loan Documents.

(h) Upon any breach, default or failure of performance of any other non-monetary

obligation of Borrower under any of the Loan Documents which breach shall continue for thirty (30)

days or more, following written notice of such failure by Pepperdine, provided that if such failure

cannot be reasonably cured within such thirty (30) day period, such period shall be extended to a

period not to exceed ninety (90) days, provided Borrower commences and diligently pursues to such

cure to completion such cure during the initial thirty (30) day period.

(i) Upon any of the following defaults in the Senior Loan Documents: (i) monetary

defaults which are not cured within five (5) days after written notice from Pepperdine; (ii) non-

monetary defaults which are not cured within thirty (30) days after written notice from Pepperdine,

provided that in no event shall the cure periods for clauses (i) or (ii) above exceed the respective cure

period set forth in the Senior Loan Documents; and (iii) the commencement of foreclosure

proceedings, whether judicial on non-judicial, under the Senior Loan Documents.

(j) Upon any attachment, levy, execution or other judicial seizure of any portion of the

Property which is not released, expunged, discharged or dismissed sixty (60) days after such

attachment, levy, execution or seizure.

(k) Upon any sale, exchange, conveyance, alienate, transfer, unauthorized lease or

sublease, or other disposition or further encumbrance of the Property or any portion thereof or

interest therein (whether voluntarily or involuntarily, by operation of law or otherwise), except as

more fully described in the Note and the Subordinate Trust Deed.

(l) The passage of Thirty (30) Years after the date of Closing.

5. Use of Premises. Borrower shall use the Property as a year-round principal

residence; provided, however, if Borrower is on sabbatical or leave of absence approved by

Pepperdine for a period not to exceed one year, the Property may be leased by Borrower to a third

party on terms approved by Pepperdine, which approval shall not be unreasonably withheld. Subject

to the terms of the Loan Documents, Borrower shall comply with all duties and restrictions on

possession, occupancy, use, and transfer as set forth in any Covenants, Conditions and Restrictions

(“CC&Rs”) related to the Property.

6. Responsibility for Maintenance and Expenses of Property. Borrower shall be

responsible for timely payment of all expenses related to ownership and occupancy of the Property,

including but not limited to all real and personal property taxes, special assessments, utilities, debt

service on the approved Senior Loan, repairs, landscaping, insurance premiums for such hazard and

937874.2 4

liability coverage as may be required by Pepperdine pursuant to Paragraph 8 below (including, but

not limited to, public liability and hazard insurance for fire, earthquake and other hazards covering

the improvements in, at or on the Property), upgrades, homeowners association dues and

assessments, costs or expenses of maintaining all structural and non-structural parts of the Property

and the mechanical, electrical, roofs, and plumbing systems in good working order, any other

expenses necessary to protect and preserve the value of the Property. Borrower shall keep clean,

maintain in good working order and condition, and prevent waste of the Property and other facilities

on the Property, reasonable wear and tear excepted. Borrower shall make such repairs and

replacements as would be made by a reasonable and prudent fee simple owner using the Property as

a principal residence, including any such work as may be deemed a capital improvement. If

Borrower does not make such repairs or pay all such costs or expenses in a timely fashion,

Pepperdine may, at its election, make such payments and perform such repairs or cause such repairs

to be performed, in which case all amounts paid by Pepperdine and interest thereon at the Default

Rate set forth in the Note shall be an obligation of Borrower to Pepperdine secured by the

Subordinate Trust Deed, and shall be paid within five (5) days of written notice by Pepperdine to

Borrower. Borrower’s failure to pay such amount within five (5) days of written notice by

Pepperdine shall be deemed to constitute a Maturity Event under Paragraph 4(e) above. Borrower

shall be fully responsible for all major and minor maintenance to the Property, including the

structural elements and major electrical, mechanical, and plumbing systems of the Property

(including, but not limited to any damages or defects arising from the negligence, failure to act, or

intentional actions of Borrower or Borrower’s guests, family members or other invitees).

Borrower’s failure to perform such obligations within thirty (30) days after written notice from

Pepperdine shall be a Maturity Event under Paragraph 4(g) above, provided if such performance

cannot be reasonably completed within thirty (30) days, such thirty (30) day period may be extended

to a period not to exceed ninety (90) days, provided Borrower commences performance within such

initial thirty (30) day period and diligently pursues such performance to completion.

7. Indemnification. Borrower shall be responsible for and shall indemnify and hold

Pepperdine harmless for all losses, costs, damages, claims or other liability to Pepperdine or to any

third parties due to the negligent or intentional action(s) or failure to act of Borrower, or Borrower’s

guests, vendors, employees, agents, family members or other invitees.

8. Property and Liability Insurance. Borrower shall keep the improvements now

existing or hereafter erected in, at or on the Property insured against loss by earthquake, fire, flood or

other hazard in such form and amount (including deductible levels) and for the periods as Pepperdine

shall reasonably require (the “Owner Hazard Policy”). The insurance which Pepperdine requires

pursuant to the preceding sentence may be changed during the term of the Loan by written notice

from Pepperdine to Borrower. In the event that the homeowners association for the Property

purchases any policies of insurance that provide insurance coverage for the Property against loss by

fire, hazards included within the term “extended coverage,” and/or any other hazards, including, but

not limited to, earthquakes and floods (the “Association Insurance Policies”) in forms and amounts

and for periods acceptable to Pepperdine, Borrower shall be relieved of the obligation to purchase

any such fire, earthquake, flood or other hazard coverage for the Property (as required by Pepperdine

pursuant to the first sentence of this Paragraph 8) that is duplicative of the coverage for the Property

provided by the Association Insurance Policies. Owner shall insure such other real and/or personal

property located at, in or on the Property not included within the scope of coverage under the

Association Insurance Policies (such as upgrades, wall coverings, etc.) against loss by fire, hazards

937874.2 5

included within the term “extended coverage,” or other hazard in such form and amounts as

Pepperdine from time to time shall require (the “Owner Policy”). Borrower shall also obtain a

policy of public liability insurance with Pepperdine as an additional named insured and containing

limits of liability not less than $300,000 (the “Owner Liability Policy”). The Owner Hazard Policy,

Owner Policy, Owner Liability Policy and the Association Insurance Policies (collectively the

“Insurance Policies”) shall each include an extended coverage endorsement insuring Pepperdine as

additional named insured, and shall also include a standard mortgage clause, naming Pepperdine as

mortgagee and/or as additional loss payee, and Borrower agrees, subject to the terms of the Senior

Trust Deed to generally assign Borrower’s rights to insurance proceeds to Pepperdine up to the

amount of the outstanding Loan balance. Additionally, each such policy shall include an

endorsement waiving all of the insurer’s subrogation rights against Pepperdine, to the extent such

endorsement is reasonably available. Each such policy shall also contain a 30-day written notice to

Pepperdine prior to cancellation. Borrower shall instruct Borrower’s insurance broker to provide

Pepperdine with a Certificate(s) of Insurance evidencing these coverages.

If Borrower fails to maintain any of the coverages described above, such failure shall

constitute a Maturity Event under Paragraph 4(e) above. Borrower further agrees that Pepperdine

may obtain such insurance coverage, at Pepperdine’s option and Borrower’s expense, and that

Pepperdine is under no obligation to purchase any particular type or amount of coverage. Any such

coverage obtained by Pepperdine shall cover Pepperdine, but might or might not protect Borrower,

Borrower’s equity in the Property, or the contents of the Property, against any risk, hazard or liability

and might provide greater or lesser coverage than was previously in effect. Borrower acknowledges

that the cost of the insurance coverage so obtained might significantly exceed the cost of insurance

that Borrower could have obtained. Any amounts paid by Pepperdine to purchase insurance

pursuant to this Paragraph 8 shall become additional debt of the Borrower secured by the

Subordinate Trust Deed executed by Borrower in connection with this Loan Agreement and shall

bear interest at the rate of ten percent (10%) per annum and shall be paid within five (5) days of

written notice by Pepperdine to Borrower. Borrower’s failure to pay such amount within five (5)

days of written notice by Pepperdine shall be deemed to constitute a Maturity Event under Paragraph

4(e) above.

9. Damage or Destruction. The provisions of this Paragraph are subject and

subordinate to the rights of the holder of the Senior Loan Documents. In the event of damage or

destruction to the Property resulting in a loss in excess of $50,000, Borrower shall give prompt

notice to Pepperdine. Pepperdine may make proof of loss if not made promptly by Borrower.

Unless Pepperdine and Borrower otherwise agree in writing, any insurance proceeds, whether or not

the underlying insurance was required by Pepperdine, shall be applied to restoration or repair of the

Residence, if the restoration or repair is economically feasible and Pepperdine’s security is not

lessened. During such repair and restoration period, Pepperdine shall have the right to hold such

insurance proceeds until Pepperdine has had an opportunity to inspect the Residence to ensure that

the work has been completed to Pepperdine’s satisfaction, provided that such inspection shall be

undertaken promptly. Pepperdine may disburse proceeds for the repairs and restoration in a single

payment or in a series of progress payments as the work is completed. Unless an agreement is made

in writing, or applicable law requires interest to be paid on such insurance proceeds, Pepperdine shall

not be required to pay Borrower any interest or earnings on such proceeds. Fees for public adjusters,

or other third parties retained by Borrower shall not be paid out of the insurance proceeds and shall

be the sole obligation of Borrower. If the restoration or repair is not economically feasible or

937874.2 6

Pepperdine’s security would be lessened, the entire insurance proceeds paid under any or all of the

Owner’s Hazard Policy, Owner’s Policy and/or Owner’s Liability Policy, shall be paid to Pepperdine

up to the entire unpaid amount of the Loan and/or the amounts secured by the Subordinate Trust

Deed, whether or not then due, together with all interest thereon (including any contingent interest as

determined by appraisal or agreement of the parties), with the excess of such insurance proceeds, if

any, paid to Borrower. If Borrower abandons the Residence, Pepperdine may file, negotiate and

settle any available insurance claim and related matters. If Borrower does not respond within thirty

(30) days to a notice from Pepperdine that the insurance carrier has offered to settle a claim, then

Pepperdine may negotiate and settle the claim. The thirty (30)-day period will begin when the notice

is given. In either event, Borrower hereby assigns to Pepperdine (a) Borrower’s rights to any

insurance proceeds in an amount not to exceed the amounts unpaid under the Note and/or the

Subordinate Trust Deed, whether or not then due, and (b) any other of Borrower’s rights under all

insurance policies covering the Property, insofar as such rights are applicable to the coverage of the

Property. Pepperdine may use the insurance proceeds either to repair or restore the Property or to

pay amounts unpaid under the Note and/or the Subordinate Trust Deed, whether or not then due.

10. Income Tax Consequences. Borrower acknowledges and agrees that Pepperdine has

made no representation or warranty relating to any potential or actual income tax consequence

related to this transaction. Borrower hereby agrees to hold Pepperdine harmless from any and all

claims or liabilities related to any such income tax consequence(s) to Borrower arising from this

transaction and/or any actions, claims or liabilities related thereto.

11. Encumbrances. Except for the Senior Trust Deed in an amount not to exceed

$«FirstTDAmount» to the maximum extent permitted by law, Borrower shall not permit any other

encumbrances (whether junior or senior, monetary or nonmonetary) on the Property without

Pepperdine's prior written consent, which consent may be given or withheld in Pepperdine's sole

discretion.

12. Survival of Agreement. All representations, warranties, rights and obligations

contained in this Agreement shall survive the close of escrow and the recording of the Loan.

13. Attorney’s Fees and Legal Costs. If any action is instituted between Borrower and

Pepperdine in connection with this Agreement, including the collection of payments due to

Pepperdine or to third parties, the prevailing party shall be entitled to recover from the losing party

all of its/his/her costs and expenses, including court and discovery costs, costs of appeal or

collection, and reasonable attorney's fees (including any costs and time of Pepperdine’s internal

corporate counsel).

14. No Waiver. Either party may waive, or elect not to assert against the other party, any

failure to perform or breach of this Agreement by such party. No such waiver or failure to assert

shall constitute a waiver of any other breach of the same or any other provision.

15. Governing Law. This Agreement and all documents related thereto have been and

will be negotiated and executed in the State of California and shall be governed by and construed

under the laws of said State.

937874.2 7

16. Entire Agreement. This Agreement, inclusive of the Loan Documents, contains the

complete and entire agreement between Borrower and Pepperdine respecting the matters contained

herein, and any agreement, representation, or warranty, expressed or implied, of any nature

whatsoever respecting the Property or the duties of either party in relation thereto not expressly set

forth in this Agreement, or other writing executed by both parties expressly referring hereto, is and

shall be entirely null and void.

17. Vesting of Title/Title Insurance. TITLE TO THE PROPERTY SHALL BE

INITIALLY VESTED AS FOLLOWS:

«Vesting»*

* The interest owned by «LastName» may be held in a revocable living trust, as

«LastName» may determine from time to time.

18. No Partnership or Joint Venture. Nothing herein shall be construed to make the

parties partners or joint venturers, and neither party shall have any authority to act for the other party

with regard to the Property except as explicitly set forth herein.

19. Exemption from Maximum Interest Rate Limitations. The parties recognize and

agree that the Loan evidenced by this Agreement and applicable Promissory Note is subject to the

provisions of California Financial Code Section 28000(c) and, therefore, is exempt from the

maximum interest limitations imposed by other provisions of California law. Notwithstanding the

foregoing, however, if from any circumstances whatsoever Lender shall ever receive as interest an

amount which a court determines has exceeded the highest lawful rate, then such amount deemed to

be excessive interest shall be applied to the reduction of the unpaid principal balance due thereunder,

rather than to the payment of interest, as of the date such amount was received or deemed to be

received by Lender.

20. Notices. All notices, demands and other communications required or permitted to be

given hereunder shall be in writing and shall be deemed to have been given on the date of personal

delivery, when sent by facsimile to the number shown below (if actual receipt is confirmed by

electronic transmission to the recipient during normal business hours or on the next business day if

receipt is confirmed after normal business hours), or on actual delivery or attempted delivery (if such

attempt is made on a business day) by a reputable commercial delivery service or by the United

States express or certified mail, with certification and postal charges prepaid, addressed to the

respective party as follows:

IF TO PEPPERDINE:

Pepperdine University

24255 Pacific Coast Highway TAC100

Malibu, CA 90263-4109

Tel. No.: (310) 506-4109

Fax No. (310) 506-7421

IF TO «LastName»:

«FullName»

«StreetAddress»

«CityStateZip»

Tel. No.:

Fax No.

937874.2 8

IN WITNESS WHEREOF, this Agreement is executed on the dates shown below, but to be effective

for all purposes as of the date first written above.

ate: __________________, 20______

«Las

tName»

y_______________________________ By_________________________________

«FullName» «FullNameSpouse»

****************************************************************

Date: ___________________, 20______

EPPERDINE UNIVERSITY

By_______________________________ By_________________________________

Rick R. Marrs, Provost

Charles J. Pippin, Senior Vice President

and Chief Investment Officer

937874.2

EXHIBIT A

The Property

937874.2

EXHIBIT B

The Note

937874.2

EXHIBIT C

The Subordinate Trust Deed

937871.1 Page 1 of 7

Order No.

Escrow No.

Loan No.

WHEN RECORDED MAIL TO:

SPACE ABOVE THIS LINE FOR RECORDER’S USE

_________________________________________________________________________________________________

DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY

AGREEMENT & FIXTURE FILING

[CONTINGENT INTEREST]

THIS DEED OF TRUST IS SUBJECT AND SUBORDINATE TO THAT CERTAIN DEED OF TRUST DATED

__________________, ____, IN THE ORIGINAL PRINCIPAL AMOUNT OF $________________, EXECUTED

BY TRUSTOR IN FAVOR OF ____________________________ [RECORDING CONCURRENTLY

HEREWITH] [RECORDED AS INSTRUMENT NO. ______________, IN THE OFFICIAL RECORDS OF

____________ COUNTY, CALIFORNIA].

This DEED OF TRUST, made _________________, 20__, by __________________________________________

(the faculty member, herein called the “Primary Obligor”) and ___________________________________________

(herein individually or collectively called the “Trustor” or “Borrower”), whose address is

________________________________________________, California, to WAVE ENTERPRISES, INC., a California

nonprofit corporation (herein called “Trustee”), for the benefit of PEPPERDINE UNIVERSITY, a California nonprofit

corporation (herein called “Beneficiary” or “Lender”), whose address is 24255 Pacific Coast Highway, Malibu,

California 90263-4109, Attention: Real Estate Operations.

WITNESSETH:

That Trustor grants to Trustee in Trust, with Power of Sale, that property in the [City of ______________],

County of __________________, State of California (the “Property”), described as follows:

SEE EXHIBIT “A” ATTACHED HERETO

together with the rents, issues and profits thereof, subject, however, to the right, power and authority hereinafter given to

and conferred upon Beneficiary to collect and apply such rents, issues and profits in favor of Beneficiary for the purpose

of securing (1) payment of the sum of $_________________ , with interest thereon according to the terms of a

promissory note or notes of even date herewith made by Trustor, payable to order of Beneficiary, and any extensions,

renewals or modifications thereof (the “Note”); (2) the performance of each agreement of Trustor incorporated by

reference or contained herein or in that certain Contingent Interest Loan Agreement dated ______________, 20___

(the “Loan Agreement”) between Trustor and Beneficiary; and (3) payment of additional sums and interest thereon

which may hereafter be loaned to Trustor, or his successors or assigns, when evidenced by a promissory note or notes

reciting that they are secured by this Deed of Trust.

937871.1 Page 2 of 7

A. To protect the security of this Deed of Trust, Trustor hereby expressly agrees:

(1) To keep said Property in good condition and repair, not to remove or demolish any building thereon; to

complete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or

destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor, to comply with

all laws affecting said Property or requiring any alterations or improvements to be made thereon, not to commit or permit

waste thereof; not to commit, suffer or permit any act upon said Property in violation of law; to cultivate, irrigate,

fertilize, fumigate, prune and do all other acts which from the character or use of said Property may be reasonably

necessary, the specific enumerations herein not excluding the general.

(2) To provide, maintain and deliver to Beneficiary Fire all risk, extended coverage and other Insurance

satisfactory to and with loss payable to Beneficiary. The amount collected under any fire or other insurance policy may

be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at

option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or

release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such

notice.

(3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights

or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney’s

fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit

brought by Beneficiary to foreclose this Deed of Trust, whether or not pursued to final judgment, and in any exercise of

the power of sale contained herein, whether or not the sale is actually consummated.

(4) To pay or deliver evidence of payment to Beneficiary at least ten days before delinquency all taxes and

assessments affecting said Property, including assessments on appurtenant water stock; when due, all encumbrances,

charges and liens, with interest, on said Property or any part thereof, which appear to be prior or superior hereto; all

costs, fees and expenses of this Trust.

Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but

without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any

obligation hereof, may; make or do the same is such manner and to such extent as either may deem necessary to protect

the security hereof, Beneficiary or Trustee being authorized to enter upon said Property for such purposes; appear in and

defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee;

pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be

prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his

reasonable fees.

(5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest

from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided

for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary

not to exceed the maximum allowed by law at the time when said statement is demanded.

B. It is mutually agreed:

(1) That any award of damages in connection with any condemnation for public use of or injury to said

Property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys

received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or

other insurance.

(2) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive

his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to

pay.

(3) That at any time or from time to time, without liability therefor and without notice, upon written

request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal

937871.1 Page 3 of 7

liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said Property;

consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any extension

agreement or any agreement subordinating the lien or charge hereof.

(4) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon

surrender of this Deed of Trust and said Note to Trustee for cancellation and retention or other disposition as Trustee in

its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the Property then

held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness

thereof. The Grantee in such reconveyance may be described as “the person or persons legally entitled thereto”.

(5) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and

authority, during the continuance of these Trusts, to collect the rents, issues and profits of said Property, reserving unto

Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any

agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such

default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a

court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take

possession of said Property or any part thereof, in his own name sue for or otherwise collect such rents, issues, and

profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection,

including reasonable attorney’s fees, upon any indebtedness secured hereby, and in such order as Beneficiary may

determine. The entering upon and taking possession of said Property, the collection of such rents, issues and profits and

the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any

act done pursuant to such notice.

(6) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any

agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to

Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to

be sold said Property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee

this Deed of Trust, the Note and all documents evidencing expenditures secured hereby.

After the lapse of such time as may then be required by law following the recordation of said notice of default,

and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said

Property at the time and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order

as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time

of sale. Trustor expressly waives any right to direct the order in which the Property is sold or to otherwise marshal the

sale of all or any portion of the Property. Trustee may postpone sale of all or any portion of said Property by public

announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public

announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed

conveying the Property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of

any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or

Beneficiary as hereinafter defined, may purchase at such sale.

After deducting all costs, fees and expenses of Trustee and of this Trust, including cost of evidence of title in

connection with sale, and all reasonable costs, fees and expenses of Beneficiary, including but not limited to reasonable

attorneys’ fees, expended in connection with this Deed of Trust and the exercise of the power of sale, Trustee shall apply

the proceeds of sale, in such order as Beneficiary shall determine, to payment of: all sums expended under the terms

hereof, not then repaid, with accrued interest at the Default Rate; all other sums then secured hereby; and the remainder,

if any, to the person or persons legally entitled thereto.

(7) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to

time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder,

which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the

county or counties where said Property is situated shall be conclusive proof of proper substitution of such successor

Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights,

powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder,

the book and page where this Deed is recorded and the name and address of the new Trustee.

937871.1 Page 4 of 7

(8) That this Deed applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees,

devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder,

including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the

context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the

plural.

(9) That Trustee accepts this Trust when this Deed, duly executed and acknowledged, is made a public

record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of

Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee.

(10) To the fullest extent permitted by applicable law, including but not limited to California Civil Code

Section 2924.5, Beneficiary shall have the right, at its option, to declare all sums secured hereby –including but not

limited to all Deferred Interest—immediately due and payable, should Trustor sell, exchange, convey, alienate, transfer,

unauthorized lease or sublease, dispose of or further encumber the Property or any portion thereof or interest therein

(whether voluntarily or involuntarily, by operation of law or otherwise), but excluding from the foregoing the following

transfers, so long as Primary Obligor remains a faculty or staff member of Pepperdine University in each case.

(a) A transfer resulting from the death of the spouse of the Primary Obligor where the

transfer is to the Primary Obligor as the sole owner of the Property;

(b) A transfer to the Primary Obligor as the sole owner of the Property, or to the spouse of

the Primary Obligor as a co-owner of the Property so long as the Primary Obligor remains in title as a co-owner of

the Property;

from a property settlement agreement incidental to such a decree which requires the Primary Obligor to continue to

make the loan payments, by which the Primary Obligor becomes the sole owner of the Property;

(d) A transfer by either or both of the obligors into an inter vivos trust in which such party or

parties are beneficiaries of such trust; and

(e) The Property or any portion thereof is made subject to a junior encumbrance or lien, so long

as the holder of such junior encumbrance or lien signs a reasonable subordination agreement assuring Beneficiary that

the lien and all provisions of this Deed of Trust at all times remains superior to the lien and provisions of any such junior

encumbrance.

(11) This instrument secures a deferred interest loan made pursuant to the Note and Loan Agreement. The

Loan and all deferred interest thereon shall be due and payable upon the occurrence of any of the following Maturity

Events set forth in the Note and Loan Agreement:

(a) Within 120 days of retirement, whether voluntary or involuntary, of Primary Obligor from the

full-time employment of Pepperdine University.

(b) Within 120 days of cessation of Primary Obligor’s full-time employment at Pepperdine

University for any other reason, whether voluntary or involuntary (excluding sabbatical or other leave of absence

approved by Lender).

elimination of Primary Obligor’s position or (iii) reduction in work force shall be deemed a Maturity Event, provided

that upon the occurrence of such Maturity Event, the Loan shall be payable in amortized Installment Payments and shall

be all due and payable as provided in the Note.

(d) Within 120 days of death or incapacity of Primary Obligor.

937871.1 Page 5 of 7

(e) Within 120 days of cessation of the use of the Property as Primary Obligor’s primary

residence.

(f) Upon Borrower’s failure to pay, when due, any monetary obligation related to the Loan,

including without limitation, principal and interest, taxes, assessments, insurance premiums, homeowner’s association

dues, which is not cured within five (5) days following written notice of such failure by Lender.

(g) Upon Lender’s good faith determination of the falsity of any material statement,

representation or warranty contained in the Loan Documents or any Senior Loan Documents (as defined in the Loan

Document).

(h) Upon any breach, default or failure of performance of any other non-monetary obligation of

Trustor under any of the Loan Documents which breach shall continue for thirty (30) days or more, following written

notice of such failure by Lender, provided that if such failure cannot be reasonably cured within such thirty (30) day

period, such period shall be extended to a period not to exceed ninety (90) days, provided Borrower commences and

diligently pursues to such cure to completion such cure during the initial thirty (30) day period.

(i) Upon any of the following defaults in the Senior Loan Documents: (i) monetary defaults

which are not cured within five (5) days after written notice from Lender; (ii) non-monetary defaults which are not cured

within thirty (30) days after written notice from Lender, provided that in no event shall the cure periods for clauses (i) or

(ii) above exceed the respective cure period set forth in the Senior Loan Documents; and (iii) the commencement of

foreclosure proceedings, whether judicial on non-judicial, under the Senior Loan Documents.

(j) Upon any attachment, levy, execution or other judicial seizure of any portion of the Property

which is not released, expunged, discharged or dismissed sixty (60) days after such attachment, levy, execution or

seizure.

(k) Upon any sale, exchange, conveyance, alienate, transfer, unauthorized lease or sublease, or

other disposition or further encumbrance of the Property or any portion thereof or interest therein (whether voluntarily or

involuntarily, by operation of law or otherwise), except as more fully described in the Note and this Deed of Trust.

(l) The passage of 30 years after the date of Closing.

(12) If any payment herein provided for, or any part thereof, is not paid upon a Maturity Event, or if

Beneficiary advances any amounts to protect its security interest hereunder or to cure Trustor’s default, such defaulted

payment or advance shall bear simple interest at the Default Rate set forth in the Note from the due date or date of the

advance until paid.

C. SECURITY AGREEMENT AND FIXTURE FILING.

(1) Security Agreement. Trustor further grants to Beneficiary, pursuant to the California Uniform

Commercial Code, as amended or recodified from time to time (the “UCC”), a security interest in all present and future

right, title and interest of Trustor in and to all or any part of the personal property in which a security interest may be

created under the UCC and that are or are to become “fixtures” to the Property (collectively, the “Personal Property”);

and as to all of the foregoing: (a) whether now owned or hereafter at any time acquired by Trustor, (b) all products,

additions, accessions, replacements and substitutions; and (c) all proceeds, including but not limited to (i) whatever is

now or hereafter receivable or received by Trustor upon the sale, exchange, collection or other disposition of any such

item, whether voluntary or involuntary, and whether such proceeds constitute inventory, intangibles, equipment or

intellectual property or other assets; (ii) any such items which are now or hereafter acquired by Trustor with any

proceeds of collateral hereunder; and (iii) any insurance or payments under any indemnity, warranty or guaranty now or

hereafter payable by reason of damage or loss or otherwise with respect to any item of collateral or any proceeds thereof.

Upon a default, Beneficiary shall have all rights, remedies and recourse available to a secured party under the UCC with

respect to the Personal Property, including the right to proceed under the provisions of the UCC with respect to any

Personal Property which may be deemed nonrealty in a foreclosure of the Deed of Trust or to proceed as to such Personal

Property in accordance with the procedures and remedies available to a foreclosure of real estate.

937871.1 Page 6 of 7

(2) Fixture Filing. As to all of the Personal Property which is or which hereafter becomes a “fixture”

under applicable law, upon due recordation of this Deed of Trust in the real estate records of the county in which the

Property is located, this Deed of Trust constitutes a fixture filing under Sections 9102(a)(4) and 9502 of the UCC, as

amended or recodified from time to time. To this end, Trustor, as Debtor, acknowledges that (i) this Deed of Trust

covers goods which are or are to become fixtures on the Land; (ii) this financing statement is to be recorded; (iii) Trustor

is the record owner of such Property; and (iv) products of collateral are also covered. Except as otherwise provided in

the Loan Documents, no financing statement in favor of any secured party other than Beneficiary covering the Personal

Property described herein or any portion thereof is on file in any public office. Trustor represents, as of the date hereof,

that the following information is true and correct:

(i) The exact Legal Name and address of Debtor is: ____________________________

____________________________________________________________________

(ii) Name and address of Secured Party: Pepperdine University, 24255 Pacific Coast Highway,

Malibu, California 90263-4109, Attention: Real Estate Operations.

(iii) Description of the types (or items) of property covered by this Financing Statement: All of

the property described in Paragraph 13(1) of this Rider described or referred to herein and

included as part of the Property.

(iv) Description of real estate to which collateral is attached or upon which it is located:

Described in Exhibit A.

D. INTERPRETATION. In the event of any conflict between this Deed of Trust and the Loan Agreement, the

Loan Agreement shall control.

The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be

mailed to him at his address hereinbefore set forth.

Signature of Trustor

937871.1 Page 7 of 7

A notary public or other officer completing this certificates verifies only the identity of the individual who signed the

document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA }

} ss.

COUNTY OF }

On _____________________, before me, ____________________________________ (here insert name and title of

officer), personally appeared ______________________________________, who proved to me on the basis of

satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to

me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on

the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California, that the foregoing paragraph is true

and correct.

WITNESS my hand and official seal.

Signature ________________________________________________________

(This area for official notarial seal)

937871.1

EXHIBIT A

The Property

937679.2 2/5/2016

PROMISSORY NOTE

(CONTINGENT INTEREST)

$_____________.00 _____________, 20____

NOTE: This instrument evidences a contingent-interest loan. A balloon payment of principal and

interest will be required upon the occurrence of any of the “Maturity Events” described in the

Contingent Interest Loan Agreement dated ___________, 20___

1. Promise To Pay. For value received, __________________________________ and

___________________________________ [insert name of spouse] (collectively, “Borrower”)

promise to pay to PEPPERDINE UNIVERSITY, a California non-profit public benefit corporation

(“Lender” or “Pepperdine”), or order, at the address shown below, on or before any “Maturity

Event” (described below), the principal sum of

____________________________________________ Dollars ($____________.00), or so much of

that sum as may be advanced under this Note by any holder from the date of each such advance, plus

interest thereon consisting of both Fixed Interest and Contingent Interest (as provided below). [For

purposes of this Note ______________________________________ is a faculty or staff member of

Pepperdine University and is herein defined as the “Primary Obligor.”]

2. Loan Documents. This Note is given pursuant to a Loan by Lender to Borrower in

the foregoing principal amount as provided in a Contingent Interest Loan Agreement dated

______________, 20___, between Borrower and Lender (the “Loan Agreement”), and is secured by

certain real property (the “Property”) described in and encumbered by a Deed of Trust with

Assignment of Rents, Security Agreement and Fixture Filing (the “Deed of Trust”) and certain other

related documents, all of even date herewith and executed by Borrower in favor of Lender. Such

documents, and all other agreements and documents securing or relating to the Loan, are herein

collectively called the “Loan Documents.”

3. Definitions of Terms. All terms which are capitalized but not defined in this Note

shall have the same meanings given them in the Loan Agreement.

4. Place and Manner of Payment. Subject to all applicable provisions of the Loan

Agreement, all payments hereunder shall be made (unless otherwise instructed by Lender) to Lender

at: Pepperdine University, Department of Real Estate Operations, 24255 Pacific Coast Highway,

Malibu, CA 90263, or at such other place or manner as the holder of this Note may from time to time

designate. All payments under this Note shall be made in lawful money of the United States, by wire

transferred funds, cashier’s or certified checks or Borrower’s checks, at Borrower’s election until a

different means is specified by Lender to Borrower in writing. All checks shall constitute payment

only when collected; but for the purpose of avoiding a Default hereunder, amounts so collected shall

be considered paid as of the date of tender by Borrower.

5. Interest. Two interest components will accrue on the Loan, as follows:

(a) Fixed Interest (at the Interest rate described below) shall accrue on the unpaid

principal sum of this Note from the date of the disbursement of principal evidenced by this Note and

shall be payable as of the date the Note is fully paid following the occurrence of any of the

Maturity Events described in the Loan Agreement. The Fixed Interest rate shall be 1.00% computed

on a 360-day basis and the actual number of days elapsed.

937679.2 2/5/2016 2

(b) Contingent Interest shall be paid to Lender upon a prepayment in full of all

principal and accrued but unpaid Fixed Interest then outstanding or upon occurrence of any of the

Maturity Events described in Paragraph 6 hereof in an amount equal to ______________ percent

(__%) (“Lender’s Percentage”) of the “Net Appreciated Value” of the Property. The Lender’s

Percentage is the 11

District Cost of Funds Index rate then publically announced and made available

by the Federal Home Loan Bank of San Francisco as of the calendar month preceding the date of this

Note.

(i) Definition of “Net Appreciated Value.” The term “Net Appreciated

Value” shall be the difference between the Fair Market Value of the Property, as determined below

and the Borrower’s original Purchase Price for the Property. For the purposes of this Note, the Fair

Market Value shall be deemed to be either (A)(1) the sale price of the Property if sold to a bona fide

unrelated third party or (2) in connection with the refinancing of the Property, the fair market value

of the Property as determined by an appraisal made on behalf of the lender if the Property is

refinanced by a bank, savings and loan association, credit union or other institutional lender approved

by Lender on or before a Maturity Event, or (B)(1) if for any reason the Property is not sold or

refinanced on or before a Maturity Event, including, without limitation, a Maturity Event described

in Paragraphs 6 (e), (f), (g), (i), (j) or (k) hereof, or (2) for any event not described in subclause

(b)(i)(A) above, then the amount determined by an appraiser certified as an MAI appraiser selected

by Lender with at least five (5) years’ experience appraising residential properties in the Malibu,

California submarket area market place.

the Property or any portion thereof, whether determined at the time of any sale or other disposition or

at any other time. In addition, Borrower will not be entitled to reduce the amount of Loan payable to

Lender by any decrease in price or in the fair market value of the Property below Borrower’s original

purchase price for the Property.

(d) Subject to the terms of this subparagraph, provided Borrower is not then in

default under the Loan Documents, Borrower may make payments of principal or accrued but unpaid

Fixed Interest at any time before they are due (“Prepayment”), provided that Borrower shall have no

right to make Prepayments of Contingent Interest except upon a Maturity Event (as described below)

or a Prepayment in full of all principal and accrued but unpaid Fixed Interest then outstanding,

together with any other amounts then outstanding and secured by the Deed of Trust. When Borrower

makes a Prepayment, Borrower must notify Lender in writing that Borrower is doing so. Borrower

may not designate a payment as a Prepayment if Borrower has not made all the other payments due

under the Loan Documents. Borrower may make a full Prepayment or partial Prepayments without

paying a Prepayment charge, provided that Borrower may not make a full Prepayment unless

concurrently therewith Borrower pays all accrued but unpaid Fixed Interest, the Contingent Interest

and all other payments due under the Loan Documents. Lender shall use Borrower’s Prepayment to,

first, reduce the amount of accrued but unpaid Fixed Interest that Borrower owes under this Note,

with the balance, if any, to be applied against principal. If Borrower makes a partial Prepayment,

there will be no changes in the due date unless Lender agrees in writing to those changes.

(e) Subject to the terms of this subparagraph, commencing on the first day of the

calendar month following the occurrence of the Maturity Event described in Paragraph 6(c) hereof,

Borrower shall pay monthly installments of principal and interest in such amount as would fully

amortize the then unpaid principal balance of the Loan, together with Fixed Interest at the Fixed

Interest Rate described in Paragraph 5(a), over a 30 year period (hereinafter the “Installment

937679.2 2/5/2016 3

Payment”), provided further that such Installment Payment amount shall be due and payable on the

first day of each calendar month thereafter, until the earlier of five years after the occurrence of the

Maturity Event described in Paragraph 6(c) or ten years after the Closing, at which time the then

unpaid principal balance of the Loan, accrued but unpaid Fixed Interest and Contingent Interest, as

determined in Paragraph 5(b) above, shall be all due and payable.

(f) This Contingent Interest Loan may result in substantial income tax or estate

planning consequences, depending upon Borrower’s own financial and tax situation. Borrower is

urged to consult his or her own accountant, attorney or other financial advisor regarding such

matters.

6. Loan Maturity.

The Loan, all Fixed Interest and Contingent Interest thereon shall be due and payable

upon t

he occurrence of any of the following events (a “Maturity Event”):

(a) Except as set forth in Paragraph 6(c) below, within 120 days of retirement,

whether voluntary or involuntary, of Primary Obligor from the full-time employment of Pepperdine

University.

(b) Except as set forth in Paragraph 6(c) below, within 120 days of cessation of

Primary Obligor’s full-time employment at Pepperdine University for any other reason, whether

voluntary or involuntary (excluding sabbatical or other leave of absence approved by Lender).

disability, (ii) elimination of Primary Obligor’s position or (iii) reduction in work force shall be

deemed a Maturity Event, provided that upon the occurrence of such Maturity Event, the Loan shall

be payable in Installment Payments and shall be all due and payable as provided in Paragraph 5(e)

hereof.

(d) Within 120 days of death or incapacity of Primary Obligor.

(e) Within 120 days of cessation of the use of the Property as Primary Obligor’s

primary residence.

(f) Upon Borrower’s failure to pay, when due, any monetary obligation related to

the Loan, including without limitation, principal and interest, taxes, assessments, insurance

premiums, homeowner’s association dues, which is not cured within five (5) days following written

notice of such failure by Lender.

(g) Upon Lender’s good faith determination of the falsity of any material

statement, representation or warranty contained in the Loan Documents or any Senior Loan

Documents (as defined in the Loan Agreement).

(h) Upon any breach, default or failure of performance of any other non-

monetary obligation of Borrower under any of the Loan Documents which breach shall continue for

thirty (30) days or more, following written notice of such failure by Lender, provided that if such

failure cannot be reasonably cured within such thirty (30) day period, such period shall be extended

to a period not to exceed ninety (90) days, provided Borrower commences and diligently pursues to

such cure to completion such cure during the initial thirty (30) day period.

937679.2 2/5/2016 4

(i) Upon any of the following defaults in the Senior Loan Documents: (i)

monetary defaults which are not cured within five (5) days after written notice from Lender; (ii) non-

monetary defaults which are not cured within thirty (30) days after written notice from Lender,

provided that in no event shall the cure periods for clauses (i) or (ii) above exceed the respective cure

period set forth in the Senior Loan Documents; and (iii) the commencement of foreclosure

proceedings, whether judicial on non-judicial, under the Senior Loan Documents.

(j) Upon any attachment, levy, execution or other judicial seizure of any portion

of the Property which is not released, expunged, discharged or dismissed sixty (60) days after such

attachment, levy, execution or seizure.

(k) Upon any sale, exchange, conveyance, alienate, transfer, unauthorized lease

or sublease, or other disposition or further encumbrance of the Property or any portion thereof or

interest therein (whether voluntarily or involuntarily, by operation of law or otherwise), except as

more fully described in the Note and the Deed of Trust.

(l)

The passage of thirty (30) years after the date of Closing.

7. DEFAULT RATE. BORROWER RECOGNIZES THAT DEFAULT BY

BORROWER IN MAKING THE PAYMENTS HEREIN AGREED TO BE PAID UPON A

MATURITY EVENT WILL RESULT IN LENDER INCURRING ADDITIONAL EXPENSE IN

SERVICING THE LOAN, IN LOSS TO LENDER OF THE USE OF THE MONEY DUE, AND IN

FRUSTRATION TO LENDER IN MEETING ITS COMMITMENTS. BY PLACING ITS

INITIALS BELOW THIS PARAGRAPH, BORROWER AGREES THAT, IF FOR ANY REASON

BORROWER FAILS TO PAY THE AMOUNTS DUE UNDER THIS NOTE WHEN DUE,

LENDER SHALL BE ENTITLED TO DAMAGES FOR THE DETRIMENT CAUSED THEREBY,

BUT THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN THE

EXTENT OF SUCH DAMAGES. BORROWER AGREES THAT A DEFAULT RATE OF

INTEREST OF TEN PERCENT (10%) PER ANNUM (THE “DEFAULT RATE”) WILL RESULT

IN A PAYMENT WHICH CONSTITUTES A REASONABLE ESTIMATE OF SUCH ABOVE-

DESCRIBED DAMAGES. ACCORDINGLY, BORROWER AGREES THAT IF ANY PAYMENT

HEREIN PROVIDED FOR, OR ANY PART THEREOF, IS NOT PAID UPON A MATURITY

EVENT, SUCH DEFAULTED PAYMENT SHALL BEAR SIMPLE INTEREST AT THE

DEFAULT RATE FROM ITS DUE DATE UNTIL DATE OF PAYMENT.

____________ _____________

[Initials] [Initials]

8. Security for Note; Acceleration of Maturity. This Note is secured by the Deed of

Trust encumbering the “Property” (defined therein). Among other things, Section B (10) the Deed of

Trust includes the following provisions:

(10) Acceleration Clause. To the fullest extent permitted by applicable law, including but not

limited to California Civil Code Section 2924.5, Beneficiary shall have the right, at its option,

to declare all sums secured hereby -- including but not limited to all Contingent Interest --

immediately due and payable, should Trustor sell, exchange, convey, alienate, transfer,

unauthorized lease or sublease, dispose of or further encumber the Property or any portion

thereof or interest therein (whether voluntarily or involuntarily, by operation of law or

937679.2 2/5/2016 5

otherwise), but excluding from the foregoing provisions the following transfers, so long as

Primary Obligor remains a faculty or staff member of Pepperdine University in each case.

(a) A transfer resulting from the death of the spouse of the Primary

Obligor where the transfer is to the Primary Obligor as the sole owner of the Property;

(b) A transfer to the Primary Obligor as the sole owner of the Property,

or to the spouse of the Primary Obligor as a co-owner of the Property so long as the Primary

Obligor remains in title as a co-owner of the Property and occupies the Property as his/her

principal residence;

legal separation, or from a property settlement agreement incidental to such a decree which

requires the Primary Obligor to continue to make the loan payments, by which the Primary

Obligor becomes the sole owner of the Property and occupies the Property as his/her

principal residence;

(d) A transfer by either or both of the obligors into an inter vivos trust in

which such party or parties are beneficiaries of such trust; and

(e) The Property or any portion thereof is made subject to a junior

encumbrance or lien, so long as the holder of such junior encumbrance or lien signs a

reasonable subordination agreement assuring Beneficiary that the lien and all provisions of

this Deed of Trust at all times remains superior to the lien and provisions of any such junior

encumbrance.”

9. Defaults and Charges. Upon Default under any provision of this Note or any Loan

Documents, Lender at its sole discretion may exercise any of the remedies available to it under any

or all of the Loan Documents, including but not limited to the option to declare immediately due and

payable the entire unpaid principal balance of this Note, together with all accrued Fixed Interest and

other fees or charges due and payable by Borrower to Lender. The failure of Lender or other holder

hereof promptly to exercise its right to declare the indebtedness remaining unpaid hereunder to be

immediately due and payable or the acceptance of one or more payments from any person thereafter

shall not constitute a waiver of such right while any default continues, if applicable, or a waiver of

such right in connection with any future default.

10. Exemption from Maximum Interest Rate Limitations. The parties recognize and agree

that the Loan evidenced by this Note and the Loan Agreement is subject to the provisions of California

Financial Code Section 28000(c) and, therefore, is exempt from the maximum interest limitations

imposed by other provisions of California law. Notwithstanding the foregoing, however, if from any

circumstances whatsoever Lender shall ever receive as interest an amount which a court determines

has exceeded the highest lawful rate, then such amount deemed to be excessive interest shall be

applied to the reduction of the unpaid principal balance due thereunder, rather than to the payment of

interest, as of the date such amount was received or deemed to be received by Lender.

937679.2 2/5/2016 6

11. Miscellaneous.

11.1. Continuing Obligations. All representations, warranties and covenants of

Borrower herein shall also survive the maturity of and the repayment in full of the principal

amount owed hereunder.

11.2. Waiver of Notices. Borrower hereby waives presentment, protest, demand,

notice of protest, dishonor and nonpayment of this Note, and any and all other notices or matters of a

like nature, consent to any and all renewals and extensions of the time of payment hereof, and agree

further that at any time and from time to time without notice, the terms of payment hereof may be

modified, or the security described in any documents at any time securing this Note may be released

in whole or in part, or increased, changed or exchanged by agreement between the holder hereof and

any owner of the Property or other collateral affected thereby, without in any way affecting the

liability of any party to this Note, any endorser, any guarantor or any person liable or to become

liable with respect to any indebtedness evidenced hereby.

11.3. Incorporation. All applicable provisions contained in the Loan Agreement

are hereby incorporated in and made a part of this Note by this reference as if here set forth in full.

11.4. Governing Document. If there is any conflict or inconsistency between any

terms, conditions or provisions contained in this instrument and the Loan Agreement, then the Loan

Agreement shall govern and control over this instrument.

[

SIGNATURE PAGE FOLLOWS]

937679.2 2/5/2016 7

IN WITNESS WHEREOF, Borrower has executed this Note as of the date first above

written.

BORROWER:

1003 Page 1 08/05 ~ Encompass

from Ellie Mae ~ www.elliemae.com

Uniform Residential Loan Application

This application is designed to be completed by the applicant(s) with the Lender’s assistance. Applicants should complete this form as “Borrower” or “Co-Borrower”, as

applicable. Co-Borrower information must also be provided (and the appropriate box checked) when the income or assets of a person other than the Borrower (including

the Borrower’s spouse) will be used as a basis for loan qualification or the income or assets of the Borrower’s spouse or other person who has community property rights

pursuant to state law will not be used as a basis for loan qualification, but his or her liabilities must be considered because the spouse or other person has community property

rights pursuant to applicable law and Borrower resides in a community property state, the security property is located in a community property state, or the Borrower is relying

on other property located in a community property state as a basis for repayment of the loan.

If this is an application for joint credit, Borrower and Co-Borrower each agree that we intend to apply for joint credit (sign below).

Borrower Co-Borrower

I. TYPE OF MORTGAGE AND TERMS OF LOAN

Mortgage VA Conventional Other (explain):

Applied for: FHA USDA/Rural

Housing

Service

Agenc

y Case Number Lender Case Number

Amount

Interest Rate

No. of Months Amortization Fixed Rate Other (explain):

Type: GPM ARM (t

ype):

II. PROPERTY INFORMATION AND PURPOSE OF LOAN

Subject Property Address (street, city, state, & ZIP) No. of Units

Legal Description of Subject Property (attach description if necessary)

Year Built

Purpose of Loan: Purchase Construction Other (explain):

Refinance

Construction-Perm

anent

Property will be:

Primary

Secondary Investment

Residence Residence

Complete this line if construction or construction-permanent loan.

Year Lot Acquired Original Cost

Amount Existing Liens

(a) Present Value of Lot

(b) Cost of Improvements

Total (a+b)

Complete this line if this is a refinance loan.

Year Acquired Original Cost

Amount Existing Liens

Purpose of Refinance

Describe Improvements made to be made

Cost $

Title will be held in what Name(s) Manner in which Title will be held

Source of Down Payment, Settlement Charges and/or Subordinate Financing (explain)

Estate will be held in:

Fee Simple

Leasehol

(show expiration date)

Borrower III. BORROWER INFORMATION Co-Borrower

Borrower’s Name (include Jr. or Sr. if applicable) Co-Borrower’s Name (include Jr. or Sr. if applicable)

Social Security Number Home Phone (incl. area code) DOB (MM/DD/YYYY) Yrs. School Social Security Number Home Phone (incl. area code) DOB (MM/DD/YYYY) Yrs. School

Dependents (not listed by Co-Borrower) Dependents (not listed by Borrower)

Married Unmarried (include single,

divorced, widowed)

Separated

no. ages

Married Unmarried (include single

divorced, widowed)

Separated

no. ages

Present Address (street, city, state, ZIP) Own Rent No. Yrs. Present Address (street, city, state, ZIP) Own Rent No. Yrs.

Mailing Address, if different from Present Address Mailing Address, if different from Present Address

If residing at present address for less than two years, complete the following:

Former Address (street, city, state, ZIP) Own Rent No. Yrs. Former Address (street, city, state, ZIP) Own Rent No. Yrs.

Borrower IV. EMPLOYMENT INFORMATION Co-Borrower

Yrs. on this job Yrs. on this job Name & Address of Employer Self Employed

Yrs. employed in

this line of

work/profession

Name & Address

of Employer Self Employed

Yrs. employed

in this line of

work/profession

Position/Title/Type of Business Business Phone (incl. area code) Position/Title/Type of Business Business Phone (incl. area code)

If employed in current position for less than two years or if currently employed in more than one position, complete the following:

Dates (from-to) Dates (from-to) Name & Address of Employer Self Employed

Monthly Income

Name & Address

of Employer Self Employed

Monthly Income

Position/Title/Type of Business Business Phone (incl. area code) Position/Title/Type of Business Business Phone (incl. area code)

Dates (from-to) Dates (from-to) Name & Address of Employer Self Employed

Monthly Income

Name & Address

of Employer Self Employed

Monthly Income

Position/Title/Type of Business Business Phone (incl. area code) Position/Title/Type of Business Business Phone (incl. area code)

Freddie Mac 65 07/05 Page 1 of 4 Fannie Mae Form 1003 07/05

1003 Page 2 08/05 ~ Encompass

from Ellie Mae ~ www.elliemae.com

V. MONTHLY INCOME AND COMBINED HOUSING EXPENSE INFORMATION

Gross Monthly

Inco

me B

orrower Co-Borrower Total

Combined Monthly

Housing Expense Present Proposed

Base Empl. Income* $ $ $ Rent $

Overtime First Mortgage (P&I) $

Bonuses Other Financing (P&I)

Commissions Hazard Insurance

Dividends/Interest Real Estate Taxes

Net Rental Income Mortgage Insurance

Homeowner Assn. Dues

Other (before completing,

see the notice in “describe

other income,” below)

Other

Total $ $ $ Total $ $

* Self Employed Borrower(s) may be required to provide additional documentation such as tax returns and financial statements.

Described Other Income Notice: Alimony, child support, or separate maintenance income need not be revealed if the

Borrower (B) or Co-Borrower (C) does not choose to have it considered for repaying this loan.

B/C Monthly Amount

VI. ASSETS AND LIABILITIES

This Statement and any applicable supporting schedules may be completed jointly by both married and unmarried Co-Borrowers if their assets and liabilities are sufficiently

joined so that the Statement can be meaningfully and fairly presented on a combined basis; otherwise separate Statements and Schedules are required. If the Co-Borrower

section was completed about a non-applicant spouse or other person, this Statement and supporting schedules must be completed about that spouse or other person also.

Completed Jointly Not Jointly

ASSETS

Description

Cash or Market

Value

Liabilities and Pledged Assets. List the creditor’s name, address and account number for all

outstanding debts, including automobile loans, revolving charge accounts, real estate loans, alimony,

child support, stock pledges, etc. Use continuation sheet, if necessary. Indicate by (*) those liabilities

which will be satisfied upon sale of real estate owned or upon refinancing of the subject property.

Cash deposit toward purchase held by:

LIABILITIES

Monthly Payment &

Months Left to Pay

Unpaid Balance

List checking and savings accounts below Name and address of Company

Name and address of Bank, S&L, or Credit Union

Acct. no.

$ Payment/Months $

Acct. no. $ Name and address of Company

Name and address of Bank, S&L, or Credit Union

Acct. no.

$ Payment/Months $

Acct. no. $ Name and address of Company

Name and address of Bank, S&L, or Credit Union

Acct. no.

$ Payment/Months $

Acct. no. $ Name and address of Company

Name and address of Bank, S&L, or Credit Union

Acct. no.

$ Payment/Months $

Acct. no. $ Name and address of Company

Acct. no.

$ Payment/Months $

Stocks & Bonds (Company name/number

& description)

$ Payment/Months $

Life insurance net cash value

Face amount: $

Subtotal Liquid Assets $

Name and

address of Company

Real estate owned (enter market value $

Acct. no.

from schedule of real estate owned)

Name and address of Company $ Payment/Months $

Vested interest in retirement fund $

Net worth of business(es) owned

(attach financial statement)

Automobiles owned (make and year) $

Acct. no.

Other Assets (itemize) $

Alimony/Child Support/Separate Maintenance

Payments Owed to:

Job-Related Expense (child care, union dues, etc.)

Total Monthly Payments

Total Assets a. $

Net Worth

(a minus b)

Total Liabilities b. $

Freddie Mac 65 07/05 Page 2 of 4 Fannie Mae Form 1003 07/05

1003 Page 3 08/05 ~ Encompass

from Ellie Mae ~ www.elliemae.com

VI. ASSETS AND LIABILITIES (cont.)

Schedule of Real Estate Owned (If additional properties are owned, use continuation sheet.)

Property Address (enter S if sold, PS if pending sale or

R if rental being held for income)

Type of

Property

Present

Market Value

Amount of

Mortgages & Liens

Gross

Rental Income

Mortgage

Payments

Insurance,

Maintenance,

Taxes & Misc.

Net

Rental Income

$ $ $ $ $ $

Totals $ $ $ $ $ $

List any additional names under which credit has previously been received and indicate appropriate creditor name(s) and account number(s):

Alternate Name Creditor Name Account Number

VII. DETAILS OF TRANSACTION VIII. DECLARATIONS

a. Purchase Price $

b. Alterations, improvements, repairs

c. Land (if acquired separately)

d. Refinance (incl. debts to be paid off)

e. Estimated prepaid items

f. Estimated closing costs

g. PMI, MIP, Funding Fee

h. Discount (if Borrower will pay)

i. Total costs (add items a through h)

j. Subordinate financing

k. Borrower’s closing costs paid by Seller

l. Other Credits (explain)

m. Loan amount

(exclude PMI, MIP, Funding Fee financed)

n. PMI, MIP, Funding Fee financed

o. Loan amount (add m & n)

p. Cash from / to Borrower

(subtract j, k, l & o from i)

If you answer “Yes” to any questions a through i, please use

continuation sheet for explanation.

a. Are there any outstanding judgments against you?

b. Have you been declared bankrupt within the past 7 years?

c. Have you had property foreclosed upon or given title or deed in lieu thereo

in the last 7 years?

d. Are you a party to a lawsuit?

e. Have you directly or indirectly been obligated on any loan which resulted in

foreclosure, transfer of title in lieu of foreclosure, or judgment?

(This would include such loans as home mortgage loans, SBA loans, home improvement loans,

educational loans, manufactured (mobile) home loans, any mortgage, financial obligation,

bond, or loan guarantee. If “Yes,” provide details, including date, name and address of Lender,

FHA or VA case number, if any, and reasons for the action.)

f. Are you presently delinquent or in default on any Federal debt or any other

loan, mortgage, financial obligation, bond or loan guarantee?

If “Yes,” give details as described in the preceding question.

g. Are you obligated to pay alimony, child support, or separate maintenance?

h. Is any part of the down payment borrowed?

i. Are you a co-maker or endorser on a note?

j. Are you a U.S. citizen?

k. Are you a permanent resident alien?

l. Do you intend to occupy the property as your primary residence?

If “Yes,” complete question m below.

m. Have you had an ownership interest in a property in the last three years?

(1) What type of property did you own – principal residence (PR), second

home (SH), or investment property (IP)?

(2) How did you hold title to the home – solely by yourself (S), jointly with

your spouse (SP), or jointly with another person (O)?

Borrower

Yes No

Co-Borrower

Yes No

IX. ACKNOWLEDGEMENT AND AGREEMENT

Each of the undersigned specifically represents to Lender and to Lender’s actual or potential agents, brokers, processors, attorneys, insurers, servicers, successors and

assigns and agrees and acknowledges, that: (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any

intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer

any loss due to reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both

under the provisions of Title 18, United States Code, Sec. 1001, et seq.; (2) the loan requested pursuant to this application (the “Loan”) will be secured by a mortgage or deed

of trust on the property described in this application; (3) the property will not be used for any illegal or prohibited purpose or use; (4) all statements made in this application are

made for the purpose of obtaining a residential mortgage loan; (5) the property will be occupied as indicated in this application; (6) the Lender, its servicers, successors or

assigns may retain the original and/or electronic record of this application, whether or not the Loan is approved; (7) the Lender and its agents, brokers, insurers, servicers,

successors and assigns may continuously rely on the information contained in the application, and I am obligated to amend and/or supplement the information provided in this

application if any of the material facts that I have represented herein should change prior to closing of the Loan; (8) in the event that my payments on the Loan become

delinquent, the Lender, its servicers, successors or assigns may, in addition to any other rights and remedies that it may have relating to such delinquency, report my name

and account information to one or more consumer reporting agencies; (9) ownership of the Loan and/or administration of the Loan account may be transferred with such notice

as may be required by law; (10) neither Lender nor its agents, brokers, insurers, servicers, successors or assigns has made any representation or warranty, express or

implied, to me regarding the property or the condition or value of the property; and (11) my transmission of this application as an “electronic record” containing my “electronic

signature,” as those terms are defined in applicable federal and/or state laws (excluding audio and video recordings), or my facsimile transmission of this application containing

a facsimile of my signature, shall be as effective, enforceable and valid as if a paper version of this application were delivered containing my original written signature.

Acknowledgement:

Each of the undersigned hereby acknowledges that any owner of the Loan, its servicers, successors and assigns, may verify or reverify any information

contained in this application or obtain any information or data relating to the Loan, for any legitimate business purpose through any source, including a source named in this

application or a consumer reporting agency.

Borrower’s Signature Date Co-Borrower’s Signature Date

X. INFORMATION FOR GOVERNMENT MONITORING PURPOSES

The following information is requested by the Federal Government for certain types of loans related to a dwelling in order to monitor the lender’s compliance with equal credit

opportunity, fair housing and home mortgage disclosure laws. You are not required to furnish this information, but are encouraged to do so. The law provides that a lender may

not discriminate either on the basis of this information, or on whether you choose to furnish it. If you furnish the information, please provide both ethnicity and race. For race,

you may check more than one designation. If you do not furnish ethnicity, race, or sex, under Federal regulations, this lender is required to note the information on the basis of

visual observation and surname if you have made this application in person. If you do not wish to furnish the information, please check the box below. (Lender must review the

above material to assure that the disclosures satisfy all requirements to which the lender is subject under applicable state law for the particular type of loan applied for.)

BORROWER I do not wish to furnish this information. CO-BORROWER I do not wish to furnish this information.

Ethnicity: Hispanic or Latino Not Hispanic or Latino Ethnicity: Hispanic or Latino Not Hispanic or Latino

Race: American Indian or Asian Black or

Alaska native African American

Native Hawaiian or White

Other Pacific Islander

Race: American Indian or Asian Black or

Alaska native African American

Native Hawaiian or White

Other Pacific Islander

Sex: Female Male Sex: Female Male

Interviewer’s Name (print or type)

Interviewer’s Signature Date

To be Completed by Interviewer

This application was taken by:

Face-to-face interview

Mail

Telephone

Internet

Interviewer’s Phone Number (incl. area code)

Name and Address of Interviewer’s Employer

Freddie Mac 65 07/05 Page 3 of 4 Fannie Mae Form 1003 07/05

1003 Page 4 08/05 ~ Encompass

from Ellie Mae ~ www.elliemae.com

Continuation Sheet/Residential Loan Application

Borrower:

Agency Case Number:

Use this continuation sheet if you

need more space to complete the

Residential Loan Application.

Mark B for Borrower or C for

Co-Borrower.

Co-Borrower:

Lender Case Number:

I/We fully understand that it is a Federal crime punishable by fine or imprisonment, or both, to knowingly make any false statements concerning any of

the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq.

Date Date

Borrower’s Signature:

Co-Borrower’s Signature:

Freddie Mac 65 07/05 Page 4 of 4 Fannie Mae Form 1003 07/05

Pepperdine University

Monthly Budget Worksheet

Applicant Name(s):________________________________________________ Date: _______________________

NET Income:

1st Salary: [Employer:______________________________] $______________

2nd Salary: [Employer:______________________________] $______________

Bonus Program: [Source:________________________________] $______________

Rental Income: [Source:________________________________] $______________

Other Income: [Source:________________________________] $______________

TOTAL MONTHLY NET INCOME $______________

Expenses

Residence: 1st T.D. Loan Amt. $_______________ @ ____ % $______________

Residence: 2nd T.D. Loan Amt. $_______________ @ ____ % $______________

Property Taxes (Purch Price x .0125) $_______________

12 mos. $______________

Home Insurance (Purch Price x .0055) $_______________

12 mos. $______________

Homeowner Assoc. Dues $______________

Utilities (Electric/Gas/Water) $______________

Telephone $______________

Car Loans $______________

Credit Cards - Total $______________

Rental: 1st T.D. Payment $________ @ ____% $______________

Rental: 2nd T.D. Payment $________ @ ____% $______________

Rental Expenses - Total $______________

Auto Insurance $________

12 mos. $______________

Auto Expenses (Gas/Oil) $______________

Groceries $______________

Medical/Dental $______________

Clothing $______________

Child Care $______________

Life Insurance $______________

Travel/Vacation $______________

Entertainment $______________

Contributions $______________

Miscellaneous - _____________ $______________

TOTAL MONTHLY EXPENSES $______________

NET MONTHLY SURPLUS/DEFICIT $

Applicant Initials: __________

Give form to the

requester. Do not

send to the IRS.

Form W-9

Request for Taxpayer

Identification Number and Certification

(Rev. January 2003)

Department of the Treasury

Internal Revenue Service

Name

List account number(s) here (optional)

Address (number, street, and apt. or suite no.)

City, state, and ZIP code

Print or type

See

Specific Instructions

on page 2.

Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. For individuals, this is your social security number (SSN).

However, for a resident alien, sole proprietor, or disregarded entity, see the Part I instructions on

page 3. For other entities, it is your employer identification number (EIN). If you do not have a number,

see How to get a TIN on page 3.

Social security number

––

Requester’s name and address (optional)

Employer identification number

Note: If the account is in more than one name, see the chart on page 4 for guidelines on whose number

to enter.

–

Certification

1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and

I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal

Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has

notified me that I am no longer subject to backup withholding, and

Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup

withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply.

For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement

arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the Certification, but you must

provide your correct TIN. (See the instructions on page 4.)

Sign

Here

Signature of

U.S. person

䊳

Date

䊳

Purpose of Form

Form W-9 (Rev. 1-2003)

Part I

Part II

Business name, if different from above

Cat. No. 10231X

Check appropriate box:

Under penalties of perjury, I certify that:

U.S. person. Use Form W-9 only if you are a U.S. person

(including a resident alien), to provide your correct TIN to the

person requesting it (the requester) and, when applicable, to:

1. Certify that the TIN you are giving is correct (or you are

waiting for a number to be issued),

2. Certify that you are not subject to backup withholding,

3. Claim exemption from backup withholding if you are a

U.S. exempt payee.

Foreign person. If you are a foreign person, use the

appropriate Form W-8 (see Pub. 515, Withholding of Tax on

Nonresident Aliens and Foreign Entities).

3. I am a U.S. person (including a U.S. resident alien).

A person who is required to file an information return with

the IRS, must obtain your correct taxpayer identification

number (TIN) to report, for example, income paid to you, real

estate transactions, mortgage interest you paid, acquisition

or abandonment of secured property, cancellation of debt, or

contributions you made to an IRA.

Individual/

Sole proprietor Corporation Partnership Other

䊳

Exempt from backup

withholding

Note: If a requester gives you a form other than Form W-9

to request your TIN, you must use the requester’s form if it is

substantially similar to this Form W-9.

Nonresident alien who becomes a resident alien.

Generally, only a nonresident alien individual may use the

terms of a tax treaty to reduce or eliminate U.S. tax on

certain types of income. However, most tax treaties contain a

provision known as a “saving clause.” Exceptions specified

in the saving clause may permit an exemption from tax to

continue for certain types of income even after the recipient

has otherwise become a U.S. resident alien for tax purposes.

If you are a U.S. resident alien who is relying on an

exception contained in the saving clause of a tax treaty to

claim an exemption from U.S. tax on certain types of income,

you must attach a statement that specifies the following five

items:

1. The treaty country. Generally, this must be the same

treaty under which you claimed exemption from tax as a

nonresident alien.

2. The treaty article addressing the income.

3. The article number (or location) in the tax treaty that

contains the saving clause and its exceptions.

4. The type and amount of income that qualifies for the

exemption from tax.

5. Sufficient facts to justify the exemption from tax under

the terms of the treaty article.

Form W-9 (Rev. 1-2003) Page 2

Sole proprietor. Enter your individual name as shown on

your social security card on the “Name” line. You may enter

your business, trade, or “doing business as (DBA)” name on

the “Business name” line.

Other entities. Enter your business name as shown on

required Federal tax documents on the “Name” line. This

name should match the name shown on the charter or other

legal document creating the entity. You may enter any

business, trade, or DBA name on the “Business name” line.

If the account is in joint names, list first, and then circle,

the name of the person or entity whose number you entered

in Part I of the form.

Limited liability company (LLC). If you are a single-member

LLC (including a foreign LLC with a domestic owner) that is

disregarded as an entity separate from its owner under

Treasury regulations section 301.7701-3, enter the owner’s

name on the “Name” line. Enter the LLC’s name on the

“Business name” line.

Specific Instructions

Name

Exempt From Backup Withholding

Generally, individuals (including sole proprietors) are not

exempt from backup withholding. Corporations are exempt

from backup withholding for certain payments, such as

interest and dividends.

5. You do not certify to the requester that you are not

subject to backup withholding under 4 above (for reportable

interest and dividend accounts opened after 1983 only).

Certain payees and payments are exempt from backup

withholding. See the instructions below and the separate

Instructions for the Requester of Form W-9.

Civil penalty for false information with respect to

withholding. If you make a false statement with no

reasonable basis that results in no backup withholding, you

are subject to a $500 penalty.

Criminal penalty for falsifying information. Willfully

falsifying certifications or affirmations may subject you to

criminal penalties including fines and/or imprisonment.

Penalties

Failure to furnish TIN. If you fail to furnish your correct TIN

to a requester, you are subject to a penalty of $50 for each

such failure unless your failure is due to reasonable cause

and not to willful neglect.

Misuse of TINs. If the requester discloses or uses TINs in

violation of Federal law, the requester may be subject to civil

and criminal penalties.

If you are an individual, you must generally enter the name

shown on your social security card. However, if you have

changed your last name, for instance, due to marriage

without informing the Social Security Administration of the

name change, enter your first name, the last name shown on

your social security card, and your new last name.

Exempt payees. Backup withholding is not required on any

payments made to the following payees:

1. An organization exempt from tax under section 501(a),

any IRA, or a custodial account under section 403(b)(7) if the

account satisfies the requirements of section 401(f)(2);

2. The United States or any of its agencies or

instrumentalities;

3. A state, the District of Columbia, a possession of the

United States, or any of their political subdivisions or

instrumentalities;

4. A foreign government or any of its political subdivisions,

agencies, or instrumentalities; or

5. An international organization or any of its agencies or

instrumentalities.

Other payees that may be exempt from backup

withholding include:

6. A corporation;

7. A foreign central bank of issue;

8. A dealer in securities or commodities required to register

in the United States, the District of Columbia, or a

possession of the United States;

If you are exempt, enter your name as described above and

check the appropriate box for your status, then check the

“Exempt from backup withholding” box in the line following

the business name, sign and date the form.

4. The IRS tells you that you are subject to backup

withholding because you did not report all your interest and

dividends on your tax return (for reportable interest and

dividends only), or

3. The IRS tells the requester that you furnished an

incorrect TIN, or

2. You do not certify your TIN when required (see the Part

II instructions on page 4 for details), or

You will not be subject to backup withholding on payments

you receive if you give the requester your correct TIN, make

the proper certifications, and report all your taxable interest

and dividends on your tax return.

1. You do not furnish your TIN to the requester, or

What is backup withholding? Persons making certain

payments to you must under certain conditions withhold and

pay to the IRS 30% of such payments (29% after December

31, 2003; 28% after December 31, 2005). This is called

“backup withholding.” Payments that may be subject to

backup withholding include interest, dividends, broker and

barter exchange transactions, rents, royalties, nonemployee

pay, and certain payments from fishing boat operators. Real

estate transactions are not subject to backup withholding.

Payments you receive will be subject to backup

withholding if:

If you are a nonresident alien or a foreign entity not

subject to backup withholding, give the requester the

appropriate completed Form W-8.

Example. Article 20 of the U.S.-China income tax treaty

allows an exemption from tax for scholarship income

received by a Chinese student temporarily present in the

United States. Under U.S. law, this student will become a

resident alien for tax purposes if his or her stay in the United

States exceeds 5 calendar years. However, paragraph 2 of

the first Protocol to the U.S.-China treaty (dated April 30,

1984) allows the provisions of Article 20 to continue to apply

even after the Chinese student becomes a resident alien of

the United States. A Chinese student who qualifies for this

exception (under paragraph 2 of the first protocol) and is

relying on this exception to claim an exemption from tax on

his or her scholarship or fellowship income would attach to

Form W-9 a statement that includes the information

described above to support that exemption.

Note: You are requested to check the appropriate box for

your status (individual/sole proprietor, corporation, etc.).

Note: If you are exempt from backup withholding, you should

still complete this form to avoid possible erroneous backup

withholding.

Form W-9 (Rev. 1-2003) Page 3

Part I. Taxpayer Identification

Number (TIN)

Enter your TIN in the appropriate box. If you are a resident

alien and you do not have and are not eligible to get an

SSN, your TIN is your IRS individual taxpayer identification

number (ITIN). Enter it in the social security number box. If

you do not have an ITIN, see How to get a TIN below.

How to get a TIN. If you do not have a TIN, apply for one

immediately. To apply for an SSN, get Form SS-5,

Application for a Social Security Card, from your local Social

Security Administration office or get this form on-line at

www.ssa.gov/online/ss5.html. You may also get this form

by calling 1-800-772-1213. Use Form W-7, Application for

IRS Individual Taxpayer Identification Number, to apply for an

ITIN, or Form SS-4, Application for Employer Identification

Number, to apply for an EIN. You can get Forms W-7 and

SS-4 from the IRS by calling 1-800-TAX-FORM

(1-800-829-3676) or from the IRS Web Site at www.irs.gov.

If you are asked to complete Form W-9 but do not have a

TIN, write “Applied For” in the space for the TIN, sign and

date the form, and give it to the requester. For interest and

dividend payments, and certain payments made with respect

to readily tradable instruments, generally you will have 60

days to get a TIN and give it to the requester before you are

subject to backup withholding on payments. The 60-day rule

does not apply to other types of payments. You will be

subject to backup withholding on all such payments until you

provide your TIN to the requester.

If you are a sole proprietor and you have an EIN, you may

enter either your SSN or EIN. However, the IRS prefers that

you use your SSN.

If you are a single-owner LLC that is disregarded as an

entity separate from its owner (see Limited liability

company (LLC) on page 2), enter your SSN (or EIN, if you

have one). If the LLC is a corporation, partnership, etc., enter

the entity’s EIN.

Note: See the chart on page 4 for further clarification of

name and TIN combinations.

Note: Writing “Applied For” means that you have already

applied for a TIN or that you intend to apply for one soon.

Caution: A disregarded domestic entity that has a foreign

owner must use the appropriate Form W-8.

9. A futures commission merchant registered with the

Commodity Futures Trading Commission;

10. A real estate investment trust;

11. An entity registered at all times during the tax year

under the Investment Company Act of 1940;

12. A common trust fund operated by a bank under

section 584(a);

13. A financial institution;

14. A middleman known in the investment community as a

nominee or custodian; or

15. A trust exempt from tax under section 664 or

described in section 4947.

THEN the payment is exempt

for . . .

If the payment is for . . .

All exempt recipients except

for 9

Interest and dividend payments

Exempt recipients 1 through 13.

Also, a person registered under

the Investment Advisers Act of

1940 who regularly acts as a

broker

Broker transactions

Exempt recipients 1 through 5Barter exchange transactions

and patronage dividends

Generally, exempt recipients

1 through 7

Payments over $600 required

to be reported and direct

sales over $5,000

See Form 1099-MISC, Miscellaneous Income, and its instructions.

However, the following payments made to a corporation (including gross

proceeds paid to an attorney under section 6045(f), even if the attorney is a

corporation) and reportable on Form 1099-MISC are not exempt from backup

withholding: medical and health care payments, attorneys’ fees; and payments

for services paid by a Federal executive agency.

The chart below shows types of payments that may be

exempt from backup withholding. The chart applies to the

exempt recipients listed above, 1 through 15.

Form W-9 (Rev. 1-2003) Page 4

What Name and Number To Give the

Requester

Give name and SSN of:For this type of account:

The individual1. Individual

The actual owner of the account

or, if combined funds, the first

individual on the account

2. Two or more individuals (joint

account)

The minor

3. Custodian account of a minor

(Uniform Gift to Minors Act)

The grantor-trustee

4. a. The usual revocable

savings trust (grantor is

also trustee)

1. Interest, dividend, and barter exchange accounts

opened before 1984 and broker accounts considered

active during 1983. You must give your correct TIN, but you

do not have to sign the certification.

The actual owner

b. So-called trust account

that is not a legal or valid

trust under state law

2. Interest, dividend, broker, and barter exchange

accounts opened after 1983 and broker accounts

considered inactive during 1983. You must sign the

certification or backup withholding will apply. If you are

subject to backup withholding and you are merely providing

your correct TIN to the requester, you must cross out item 2

in the certification before signing the form.

The owner

5. Sole proprietorship or

single-owner LLC

Give name and EIN of:For this type of account:

3. Real estate transactions. You must sign the

certification. You may cross out item 2 of the certification.

A valid trust, estate, or

pension trust

Legal entity

4. Other payments. You must give your correct TIN, but

you do not have to sign the certification unless you have

been notified that you have previously given an incorrect TIN.

“Other payments” include payments made in the course of

the requester’s trade or business for rents, royalties, goods

(other than bills for merchandise), medical and health care

services (including payments to corporations), payments to a

nonemployee for services, payments to certain fishing boat

crew members and fishermen, and gross proceeds paid to

attorneys (including payments to corporations).

The corporationCorporate or LLC electing

corporate status on Form

8832

The organizationAssociation, club, religious,

charitable, educational, or

other tax-exempt organization

5. Mortgage interest paid by you, acquisition or

abandonment of secured property, cancellation of debt,

qualified tuition program payments (under section 529),

IRA or Archer MSA contributions or distributions, and

pension distributions. You must give your correct TIN, but

you do not have to sign the certification.

The partnershipPartnership or multi-member

LLC

The broker or nomineeA broker or registered

nominee

10.

The public entityAccount with the Department

of Agriculture in the name of

a public entity (such as a

state or local government,

school district, or prison) that

receives agricultural program

payments

11.

Privacy Act Notice

List first and circle the name of the person whose number you furnish. If only

one person on a joint account has an SSN, that person’s number must be

furnished.

Circle the minor’s name and furnish the minor’s SSN.

You must show your individual name, but you may also enter your

business or “DBA” name. You may use either your SSN or EIN (if you have

one).

List first and circle the name of the legal trust, estate, or pension trust. (Do

not furnish the TIN of the personal representative or trustee unless the legal

entity itself is not designated in the account title.)

Note: If no name is circled when more than one name is

listed, the number will be considered to be that of the first

name listed.

Sole proprietorship or

single-owner LLC

The owner

12.

Part II. Certification

For a joint account, only the person whose TIN is shown in

Part I should sign (when required). Exempt recipients, see

Exempt from backup withholding on page 2.

You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 30% of taxable

interest, dividend, and certain other payments to a payee who does not give a TIN to a payer. Certain penalties may also apply.

To establish to the withholding agent that you are a U.S.

person, or resident alien, sign Form W-9. You may be

requested to sign by the withholding agent even if items 1, 3,

and 5 below indicate otherwise.

Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons who must file information returns

with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or

abandonment of secured property, cancellation of debt, or contributions you made to an IRA or Archer MSA. The IRS uses the

numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this information

to the Department of Justice for civil and criminal litigation, and to cities, states, and the District of Columbia to carry out their

tax laws. We may also disclose this information to other countries under a tax treaty, or to Federal and state agencies to enforce

Federal nontax criminal laws and to combat terrorism.

Signature requirements. Complete the certification as

indicated in 1 through 5 below.

STATEMENT OF INFORMATION

CONFIDENTIAL INFORMATION STATEMENT TO BE USED IN CONNECTION WITH ORDER NO:

COMPLETION OF THIS FORM WILL EXPEDITE YOUR ORDER AND WILL HELP PROTECT YOU.

THE STREET ADDRESS of the property in this transaction is:

IF NONE LEAVE BLANK

ADDRESS ____________________________________________ CITY _______________________________________________

IMPROVEMENTS: SINGLE RESIDENCE MULTIPLE RESIDENCE COMMERCIAL

OCCUPIED BY: OWNER LESSEE TENANTS

ANY PORTION OF NEW LOAN FUNDS TO BE USED FOR CONSTRUCTION YES NO

NAME

____________________________________________________________________________

FIRST MIDDLE LAST

________________________________ ________________________________

BIRTHPLACE BIRTH DATE

__________________________________ _______________________________________ _________________________________

I HAVE LIVED IN CALIFORNIA SINCE SOCIAL SECURITY NUMBER DRIVER'S LICENSE NO.

SPOUSES NAME

____________________________________________________________________________

FIRST MIDDLE LAST

________________________________ ________________________________

BIRTHPLACE BIRTH DATE

__________________________________ _______________________________________ _________________________________

I HAVE LIVED IN CALIFORNIA SINCE SOCIAL SECURITY NUMBER DRIVER'S LICENSE NO.

WIFE'S MAIDEN NAME ________________________________________

WE WERE MARRIED ON

_________________________________ AT ______________________________________________________

RESIDENCE(S) FOR LAST 10 YEARS

____________________________________________________________________________________________________________________

NUMBER AND STREET CITY FROM TO

____________________________________________________________________________________________________________________

NUMBER AND STREET CITY FROM TO

____________________________________________________________________________________________________________________

NUMBER AND STREET CITY FROM TO

____________________________________________________________________________________________________________________

NUMBER AND STREET CITY FROM TO

OCCUPATION(S) FOR LAST 10 YEARS

Appplicant

___________________________________________________________________________________________________________________

PRESENT OCCUPATION FIRM NAME ADDRESS NO. OF YEARS

____________________________________________________________________________________________________________________

PRIOR OCCUPATION FIRM NAME ADDRESS NO. OF YEARS

____________________________________________________________________________________________________________________

PRIOR OCCUPATION FIRM NAME ADDRESS NO. OF YEARS

Co-Applicant

____________________________________________________________________________________________________________________

PRESENT OCCUPATION FIRM NAME ADDRESS NO. OF YEARS

____________________________________________________________________________________________________________________

PRIOR OCCUPATION FIRM NAME ADDRESS NO. OF YEARS

____________________________________________________________________________________________________________________

PRIOR OCCUPATION FIRM NAME ADDRESS NO. OF YEARS

FORMER MARRIAGES: IF NO FORMER MARRIAGES, WRITE "NONE" ___________________

NAME OF FORMER SPOUSE _____________________________________________________________________________________________

IF DECEASED: DATE ________________________________ WHERE _____________________________________________

CURRENT LOAN ON PROPERTY

PAYMENTS ARE BEING MADE TO:

1. ____________________________________________________ 2. _____________________________________________________

3. ____________________________________________________

HOMEOWNERS ASSOCIATION

______________________________________ NUMBER ( ) ______________________________



ATE__________________________ SIGNATURE ________________________________________________________________________

HOME PHONE ___________________________ BUSINESS PHONE ___________________________

DATE__________________________ SIGNATURE ________________________________________________________________________

HOME PHONE ___________________________ BUSINESS PHONE ___________________________

Clear Form

U:\Real Estate\Forms\Lending Only\Contingent Interest Loan\Vesting.doc

VESTING DECLARATION (BUYER)

RETURN TO: Real Estate Operations - JoAnna Waldear-Lucas

24255 Pacific Coast Highway TAC-100 Malibu, CA 90263-4109

Telephone (310) 506-4109 FAX (310) 506-7421

Please complete the following regarding how you would like the title held. Be Specific

as to how your name should be vested (how title will be held is also how you will

sign all documents). (See the attached possibilities)

Property Address:________________________________________________________

Unit # __________________

I (We) would like title in this property to be held as:

____________________________________________________________

Name(s)

____________________________________________________________

Relationship

____________________________________________________________

Type of Ownership (Vesting)

______________________________ ______________________________

Buyer's Signature Buyer's Signature

______________________________ ______________________________

Buyer's Signature Buyer's Signature

U:\Real Estate\Forms\Lending Only\Contingent Interest Loan\VestOptions.doc

HOW TO TAKE TITLE

Title to real property in California, may be held by individuals, either in SOLE OWNERSHIP or in CO-

OWNERSHIP. CO-ownership of real property is where title is held by two or more persons. There are

several variations as to how title may be held in each type of ownership. The following brief summaries

are six of the more common examples of sole ownership and CO-ownership.

SOLE OWNERSHIP

A SINGLE MAN/WOMAN:

A man or woman who is not legally married.

i.e. JOHN DOE, A single man.

AN UNMARRIED MAN/WOMAN:

A man or woman who, having been married, is legally divorced.

i.e. JOHN DOE, an unmarried man.

A MARRIED MAN/WOMAN, AS HIS/HER SOLE AND SEPARATE PROPERTY:

When a married man or woman wishes to acquire title in his or her name alone, the spouse must

consent, by quitclaim deed or otherwise, to transfer thereby relinquishing all right, title and

interest in the property.

i.e. JOHN DOE, A married man, as his sole and separate property.

A TRUST WITH ONE TRUSTEE:

i.e. JOHN DOE, as Trustee of the John Doe Living Trust, dated xxxxx yy, zzzz.

CO-OWNERSHIP

COMMUNITY PROPERTY:

A. The California Civil Code defines community property as property acquired by husband and wife,

or either, during marriage, when not acquired as the separate property of either. Real property

conveyed to a married man or woman is presumed to be community property, unless otherwise stated.

Under community property, both spouses have the right by will, to dispose of one half of the

community property, but all of it will go to the surviving spouse without administration if the

other spouse dies without a will. If a spouse exercises his/her right to dispose of one-half, that

half is subject to administration in the estate.

i.e. JOHN DOE and MARY DOE, Husband and Wife, as community property.

JOHN DOE and MARY DOE, Husband and Wife.

JOHN DOE, a married man.

B. On or after July 01, 2001, a husband and wife can acquire title to any and all real property

as follows: “Mary and Dave, Husband and Wife as community property, with right of survivorship”.

Should Dave be the first to die, Mary will acquire Dave’s portion of the title automatically at

Dave’s death. This new automatic transfer of title to community property is similar to the

automatic transfer of title where property is held by two or more joint tenants with right of

survivorship. In joint tenancy, the surviving joint tenant(s) records the form entitled “Affidavit

of Death of Joint Tenant” with the county recorder. This Affidavit allows the public record to

reflect the automatic transfer of title from the deceased joint tenant to the surviving joint

tenant(s).

Similarly, in the community property with right of survivorship setting, when the first spouse

dies, the surviving spouse should record the new form entitled “Affidavit of Community Property

with Right of Survivorship”. The Affidavit should be recorded with the county recorder where the

real property is located to document that title has transferred to the surviving spouse. This

quick title transfer allows the surviving spouse the freedom to complete a sale or loan on the

property without “red tape” and expensive probate proceedings. The details of the new law may be

found in California Probate Code, Section 682.1 (a).

BEWARE, married persons holding title to real property as community property acquired prior to July

1, 2001 WILL NOT AUTOMATICALLY benefit from this new law. In order to take advantage of the right

of survivorship, spouses should transfer title to themselves as community property with right of

survivorship. This title transfer will not be effective unless done on or after July 1, 2001.

JOINT TENANCY:

A joint tenancy estate is defined in the Civil Code as follows: "A joint interest is one owned by

two or more persons in equal shares, by a title created by a single will or transfer, when

U:\Real Estate\Forms\Lending Only\Contingent Interest Loan\VestOptions.doc

expressly declared in the will or transfer to be a joint tenancy." The chief characteristic of

joint tenancy property is the right of survivorship. When a joint tenant dies, title to the

property immediately vests in the survivor or surviving joint tenants. As a consequence, joint

tenancy property is not subject to disposition by will.

i.e. JOHN DOE and MARY DOE, Husband and wife, as joint tenants.

TENANCY IN COMMON:

Under tenancy in common, the CO-owners own undivided interest, but unlike joint tenancy, these

interests need not be equal in quantity or duration, and may arise from different times. There is

no right of survivorship; each tenant owns an interest which on his or her death vests in his or

her heirs or devisees.

i.e. JOHN DOE, a single man, as to an undivided 3/4ths interest, and GEORGE SMITH, a single man,

as to an undivided 1/4th interest, as tenants in common.

A TRUST WITH TWO TRUSTEES:

i.e. JOHN DOE and JANE DOE, as Trustees of the Doe Family Trust, dated xxxxx yy, zzzz.

The preceding summaries, are a few of the more common ways to take title to real property in California.

For a more comprehensive understanding of the legal and tax consequences, appropriate consultation is

recommended.

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