Common use of Worked Examples Clause in Contracts

Worked Examples. The figures and calculations included in this Appendix A are for illustrative purposes only and are based on a hypothetical portfolio of properties. Neither the hypothetical Total Formation Transaction Value nor any of the other figures or calculations presented on Appendix A shall be binding on the REIT or the Operating Partnership, and should not be considered an indication of value of the American Assets Entities. The value of the American Assets Entities will ultimately be determined by the REIT in consultation with the underwriters of the IPO based on public investor demand and may be lower or higher than the hypothetical Total Formation Transaction Value shown on Appendix A. In addition, the calculations in Appendix A assume that each of Target Assets in this hypothetical portfolio of properties will be wholly owned, directly or indirectly, by the REIT. Example – Base Case In the hypothetical examples shown below, the Target Assets that will be acquired by the REIT in the Formation Transactions consist of four shopping centers. The Total Formation Transaction Value, or “TFTV,” for this entire portfolio of properties will be $400, absent the impact of certain potential adjustments described in the subsequent examples. Each Target Asset (i) is subject to a $25 mortgage, (ii) was determined by a third-party valuator to have a relative equity value equal to 25% of the entire portfolio and (iii) has two owners, each of whom has a 50% interest in the property. Target Asset Equity Percentage (“EP”) (determined by 3rd party valuator) Property Holding Companies & Ownership % Shopping Center 1 25% Company A (50%) Company B (50%) Shopping Center 2 25% Company C (50%) Company D (50%) Shopping Center 3 25% Company E (50%) Company F (50%) Shopping Center 4 25% Company G (50%) Company H (50%) Total 100% Applying the Equity Value formula and assuming that there is no Entity Specific Debt and no increase or decrease in mortgage debt outstanding, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –TPA] + AA Shopping Center 1 100 = 25% x [400 - 0] + 0 Shopping Center 2 100 = 25% x [400 - 0] + 0 Shopping Center 3 100 = 25% x [400 - 0] + 0 Shopping Center 4 100 = 25% x [400 - 0] + 0 Total Equity Value 400 Example 2 – Mortgage Payoff In this example, all of the facts described in the Base Case above are the same, except that prior to the completion of the Formation Transactions, the $25 mortgage on Shopping Center 1 is paid off such that at the time that Shopping Center 1 is acquired by the Operating Partnership it is not subject to any mortgage debt. This results in the following variation of the variable “AA” in the formula as applied to Shopping Center 1: Property Asset Adjustment (“AA”) (i.e., Base Balance - Actual Balance) Shopping Center 1 25 = 25 – 0 Shopping Center 2 0 = 25 – 25 Shopping Center 3 0 = 25 – 25 Shopping Center 4 0 = 25 – 25 Total Portfolio Adjustment (“TPA”) 25 In addition, by virtue of the reduction in the outstanding mortgage debt that will be assumed by the Operating Partnership in connection with the Formation Transactions, the Total Formation Transaction Value will have increased by the $25 value of the mortgage repayment from $400 to $425. Applying the Equity Value formula reflecting these new facts and assuming that there is no Entity Specific Debt, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –TPA] + AA Shopping Center 1 125 = 25% x [425 - 25] + 25 Shopping Center 2 100 = 25% x [425 - 25] + 0 Shopping Center 3 100 = 25% x [425 - 25] + 0 Shopping Center 4 100 = 25% x [425 - 25] + 0 Total Equity Value 425 Example 3 – Entity Specific Debt In this example, all of the facts described in the Base Case above are the same, except that Company C is subject to $25 of Entity Specific Debt related to Shopping Center 2, which will be assumed by the Operating Partnership upon the completion of the Formation Transactions. This results in the following variation of the variable “AA” in the formula as applied to Shopping Center 2: Property Asset Adjustment (“AA”) (i.e., Base Balance - Actual Balance) Shopping Center 1 0 = 25 – 25 Shopping Center 2 -25 = 25 –50 Shopping Center 3 0 = 25 – 25 Shopping Center 4 0 = 25 – 25 Total Portfolio Adjustment (“TPA”) -25 In addition, by virtue of the assumption by the Operating Partnership of this Entity Specific Debt in connection with the Formation Transactions, the Total Formation Transaction Value will have decreased by the $25 value of the Entity Specific Debt from $400 to $375. Applying the Equity Value formula reflecting these new facts and assuming that there is no increase or decrease in mortgage debt outstanding, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –TPA] + AA Shopping Center 1 100 = 25% x [375 - (-25)] + 0 Shopping Center 2 75 = 25% x [375 - (-25)] + (-25) Shopping Center 3 100 = 25% x [375 - (-25)] + 0 Shopping Center 4 100 = 25% x [375 - (-25)] + 0 Total Equity Value 375 Here, through the operation of the Equity Value formula, all $25 of Company C’s Entity Specific Debt has been allocated to Shopping Center 2 and has not impacted the Equity Value of the other Target Assets. However, without further adjustment, Company C and Company D, each as a 50% owner of Shopping Center 2, are equally burdened by Company C’s Entity Specific Debt as show below: Company C Company D Allocated Share (unadjusted) of Equity Value before Inclusion of Entity Specific Debt: 50 = 100 x 50% 50 = 100 x 50% Allocated Share (unadjusted) of Equity Value after Inclusion of Entity Specific Debt: 37.5 = 75 x 50% 37.5 = 75 x 50% Decrease in Allocated Share (unadjusted) of Equity Value due to Inclusion of Entity Specific Debt: 12.5 = 50 - 37.5 12.5 = 50 - 37.5 Accordingly, by virtue of the operation of the Equity Value formula, Company C has only been allocated half ($12.5 of $25.0) of the Company C Entity Specific Debt obligation that should be allocated to Company C, and Company D has been allocated the remaining $12.5. In order to address this inequitable allocation of Company C Entity Specific Debt , the definition of “Allocated Share” provides for an adjustment to (i) reduce the amount that would otherwise be payable to Company C by the amount by which the Entity Specific Debt exceeds the amount of such obligation that was previously allocated to Company C and (ii) increase the amount payable to Company D by the amount of the Entity Specific Debt obligation that was previously allocated to Company D, with the following outcome: Company A Company B Allocated Share (adjusted): 25 = 37.5 - 12.5 50 = 37.5 + 12.5 As a result of this adjustment to the Allocated Shares of Company C and Company D, the economic impact of all of Company C’s Entity Specific Debt will be allocated to Company C.

Worked Examples. The figures and calculations included in this Appendix A are for illustrative purposes only and are based on a hypothetical portfolio of properties. Neither the hypothetical Total Formation Transaction Value nor any of the other figures or calculations presented on Appendix A shall be binding on the REIT or the Operating Partnership, and should not be considered an indication of value of the American Assets Entities. The value of the American Assets Entities will ultimately be determined by the REIT in consultation with the underwriters of the IPO based on public investor demand and may be lower or higher than the hypothetical Total Formation Transaction Value shown on Appendix A. In addition, the calculations in Appendix A assume that each of Target Assets in this hypothetical portfolio of properties will be wholly owned, directly or indirectly, by the REIT. Example – - Base Case In the hypothetical examples shown below, the Target Assets that will be acquired by the REIT in the Formation Transactions consist of four shopping centers. The Total Formation Transaction Value, or “TFTV,” for this entire portfolio of properties will be $400, absent the impact of certain potential adjustments described in the subsequent examples. Each Target Asset (i) is subject to a $25 mortgage, (ii) was determined by a third-party valuator to have a relative equity value equal to 25% of the entire portfolio and (iii) has two owners, each of whom has a 50% interest in the property. Target Asset Equity Percentage (“EP”) (determined by 3rd party valuator) Property Holding Companies & Ownership % Shopping Center 1 25% Company A (50%) Company B (50%) Shopping Center 2 25% Company C (50%) Company D (50%) Shopping Center 3 25% Company E (50%) Company F (50%) Shopping Center 4 25% Company G (50%) Company H (50%) Total 100% Applying the Equity Value formula and assuming that there is no Entity Specific Debt and no increase or decrease in mortgage debt outstanding, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –TPA] + AA Shopping Center 1 100 = 25% x [400 - 0] + 0 Shopping Center 2 100 = 25% x [400 - 0] + 0 Shopping Center 3 100 = 25% x [400 - 0] + 0 Shopping Center 4 100 = 25% x [400 - 0] + 0 Total Equity Value 400 Example 2 – Mortgage Payoff In this example, all of the facts described in the Base Case above are the same, except that prior to the completion of the Formation Transactions, the $25 mortgage on Shopping Center 1 is paid off such that at the time that Shopping Center 1 is acquired by the Operating Partnership it is not subject to any mortgage debt. This results in the following variation of the variable “AA” in the formula as applied to Shopping Center 1: Property Asset Adjustment (“AA”) (i.e., Base Balance - Actual Balance) Shopping Center 1 25 = 25 – 0 Shopping Center 2 0 = 25 – 25 Shopping Center 3 0 = 25 – 25 Shopping Center 4 0 = 25 – 25 Total Portfolio Adjustment (“TPA”) 25 In addition, by virtue of the reduction in the outstanding mortgage debt that will be assumed by the Operating Partnership in connection with the Formation Transactions, the Total Formation Transaction Value will have increased by the $25 value of the mortgage repayment from $400 to $425. Applying the Equity Value formula reflecting these new facts and assuming that there is no Entity Specific Debt, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –– TPA] + AA Shopping Center 1 125 = 25% x [425 - 25] + 25 Shopping Center 2 100 = 25% x [425 - 25] + 0 Shopping Center 3 100 = 25% x [425 - 25] + 0 Shopping Center 4 100 = 25% x [425 - 25] + 0 Total Equity Value 425 Example 3 – Entity Specific Debt In this example, all of the facts described in the Base Case above are the same, except that Company C is subject to $25 of Entity Specific Debt related to Shopping Center 2, which will be assumed by the Operating Partnership upon the completion of the Formation Transactions. This results in the following variation of the variable “AA” in the formula as applied to Shopping Center 2: Property Asset Adjustment (“AA”) (i.e., Base Balance - Actual Balance) Shopping Center 1 0 = 25 – 25 Shopping Center 2 -25 = 25 –– 50 Shopping Center 3 0 = 25 – 25 Shopping Center 4 0 = 25 – 25 Total Portfolio Adjustment (“TPA”) -25 In addition, by virtue of the assumption by the Operating Partnership of this Entity Specific Debt in connection with the Formation Transactions, the Total Formation Transaction Value will have decreased by the $25 value of the Entity Specific Debt from $400 to $375. Applying the Equity Value formula reflecting these new facts and assuming that there is no increase or decrease in mortgage debt outstanding, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –– TPA] + AA Shopping Center 1 100 = 25% x [375 - (-25)] + 0 Shopping Center 2 75 = 25% x [375 - (-25)] + (-25) Shopping Center 3 100 = 25% x [375 - (-25)] + 0 Shopping Center 4 100 = 25% x [375 - (-25)] + 0 Total Equity Value 375 Here, through the operation of the Equity Value formula, all $25 of Company C’s Entity Specific Debt has been allocated to Shopping Center 2 and has not impacted the Equity Value of the other Target Assets. However, without further adjustment, Company C and Company D, each as a 50% owner of Shopping Center 2, are equally burdened by Company C’s Entity Specific Debt as show below: Company C Company D Allocated Share (unadjusted) of Equity Value before Inclusion of Entity Specific Debt: 50 = 100 x 50% 50 = 100 x 50% Allocated Share (unadjusted) of Equity Value after Inclusion of Entity Specific Debt: 37.5 = 75 x 50% 37.5 = 75 x 50% Decrease in Allocated Share (unadjusted) of Equity Value due to Inclusion of Entity Specific Debt: 12.5 = 50 - 37.5 12.5 = 50 - 37.5 Accordingly, by virtue of the operation of the Equity Value formula, Company C has only been allocated half ($12.5 of $25.0) of the Company C Entity Specific Debt obligation that should be allocated to Company C, and Company D has been allocated the remaining $12.5. In order to address this inequitable allocation of Company C Entity Specific Debt , the definition of “Allocated Share” provides for an adjustment to (i) reduce the amount that would otherwise be payable to Company C by the amount by which the Entity Specific Debt exceeds the amount of such obligation that was previously allocated to Company C and (ii) increase the amount payable to Company D by the amount of the Entity Specific Debt obligation that was previously allocated to Company D, with the following outcome: Company A Company B Allocated Share (adjusted): 25 = 37.5 - 12.5 50 = 37.5 + 12.5 As a result of this adjustment to the Allocated Shares of Company C and Company D, the economic impact of all of Company C’s Entity Specific Debt will be allocated to Company C.

Worked Examples. The figures and calculations included in this Appendix A are for illustrative purposes only and are based on a hypothetical portfolio of properties. Neither the hypothetical Total Formation Transaction Value nor any of the other figures or calculations presented on Appendix A shall be binding on the REIT or the Operating Partnership, and should not be considered an indication of value of the American Assets Entities. The value of the American Assets Entities will ultimately be determined by the REIT in consultation with the underwriters of the IPO based on public investor demand and may be lower or higher than the hypothetical Total Formation Transaction Value shown on Appendix A. In addition, the calculations in Appendix A assume that each of Target Assets in this hypothetical portfolio of properties will be wholly owned, directly or indirectly, by the REIT. Example – - Base Case In the hypothetical examples shown below, the Target Assets that will be acquired by the REIT in the Formation Transactions consist of four shopping centers. The Total Formation Transaction Value, or “TFTV,” for this entire portfolio of properties will be $400, absent the impact of certain potential adjustments described in the subsequent examples. Each Target Asset (i) is subject to a $25 mortgage, (ii) was determined by a third-party valuator to have a relative equity value equal to 25% of the entire portfolio and (iii) has two owners, each of whom has a 50% interest in the property. Target Asset Equity Percentage (“EP”) (determined by 3rd party valuator) Property Holding Companies & Ownership % Shopping Center 1 25% Company A (50%) Company B (50%) Shopping Center 2 25% Company C (50%) Company D (50%) Shopping Center 3 25% Company E (50%) Company F (50%) Shopping Center 4 25% Company G (50%) Company H (50%) Total 100% Applying the Equity Value formula and assuming that there is no Entity Specific Debt and no increase or decrease in mortgage debt outstanding, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –– TPA] + AA Shopping Center 1 100 = 25% x [400 - 0] + 0 Shopping Center 2 100 = 25% x [400 - 0] + 0 Shopping Center 3 100 = 25% x [400 - 0] + 0 Shopping Center 4 100 = 25% x [400 - 0] + 0 Total Equity Value 400 Example 2 – Mortgage Payoff In this example, all of the facts described in the Base Case above are the same, except that prior to the completion of the Formation Transactions, the $25 mortgage on Shopping Center 1 is paid off such that at the time that Shopping Center 1 is acquired by the Operating Partnership it is not subject to any mortgage debt. This results in the following variation of the variable “AA” in the formula as applied to Shopping Center 1: Property Asset Adjustment (“AA”) (i.e., Base Balance - Actual Balance) Shopping Center 1 25 = 25 – 0 Shopping Center 2 0 = 25 – 25 Shopping Center 3 0 = 25 – 25 Shopping Center 4 0 = 25 – 25 Total Portfolio Adjustment (“TPA”) 25 In addition, by virtue of the reduction in the outstanding mortgage debt that will be assumed by the Operating Partnership in connection with the Formation Transactions, the Total Formation Transaction Value will have increased by the $25 value of the mortgage repayment from $400 to $425. Applying the Equity Value formula reflecting these new facts and assuming that there is no Entity Specific Debt, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –– TPA] + AA Shopping Center 1 125 = 25% x [425 - 25] + 25 Shopping Center 2 100 = 25% x [425 - 25] + 0 Shopping Center 3 100 = 25% x [425 - 25] + 0 Shopping Center 4 100 = 25% x [425 - 25] + 0 Total Equity Value 425 Example 3 – Entity Specific Debt In this example, all of the facts described in the Base Case above are the same, except that Company C is subject to $25 of Entity Specific Debt related to Shopping Center 2, which will be assumed by the Operating Partnership upon the completion of the Formation Transactions. This results in the following variation of the variable “AA” in the formula as applied to Shopping Center 2: Property Asset Adjustment (“AA”) (i.e., Base Balance - Actual Balance) Shopping Center 1 0 = 25 – 25 Shopping Center 2 -25 = 25 –– 50 Shopping Center 3 0 = 25 – 25 Shopping Center 4 0 = 25 – 25 Total Portfolio Adjustment (“TPA”) -25 In addition, by virtue of the assumption by the Operating Partnership of this Entity Specific Debt in connection with the Formation Transactions, the Total Formation Transaction Value will have decreased by the $25 value of the Entity Specific Debt from $400 to $375. Applying the Equity Value formula reflecting these new facts and assuming that there is no increase or decrease in mortgage debt outstanding, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –– TPA] + AA Shopping Center 1 100 = 25% x [375 - (-25)] + 0 Shopping Center 2 75 = 25% x [375 - (-25)] + (-25) Shopping Center 3 100 = 25% x [375 - (-25)] + 0 Shopping Center 4 100 = 25% x [375 - (-25)] + 0 Total Equity Value 375 Here, through the operation of the Equity Value formula, all $25 of Company C’s Entity Specific Debt has been allocated to Shopping Center 2 and has not impacted the Equity Value of the other Target Assets. However, without further adjustment, Company C and Company D, each as a 50% owner of Shopping Center 2, are equally burdened by Company C’s Entity Specific Debt as show below: Company C Company D Allocated Share (unadjusted) of Equity Value before Inclusion of Entity Specific Debt: 50 = 100 x 50% 50 = 100 x 50% Allocated Share (unadjusted) of Equity Value after Inclusion of Entity Specific Debt: 37.5 = 75 x 50% 37.5 = 75 x 50% Decrease in Allocated Share (unadjusted) of Equity Value due to Inclusion of Entity Specific Debt: 12.5 = 50 - 37.5 12.5 = 50 - 37.5 Accordingly, by virtue of the operation of the Equity Value formula, Company C has only been allocated half ($12.5 of $25.0) of the Company C Entity Specific Debt obligation that should be allocated to Company C, and Company D has been allocated the remaining $12.5. In order to address this inequitable allocation of Company C Entity Specific Debt , the definition of “Allocated Share” provides for an adjustment to (i) reduce the amount that would otherwise be payable to Company C by the amount by which the Entity Specific Debt exceeds the amount of such obligation that was previously allocated to Company C and (ii) increase the amount payable to Company D by the amount of the Entity Specific Debt obligation that was previously allocated to Company D, with the following outcome: Company A Company B Allocated Share (adjusted): 25 = 37.5 - 12.5 50 = 37.5 + 12.5 As a result of this adjustment to the Allocated Shares of Company C and Company D, the economic impact of all of Company C’s Entity Specific Debt will be allocated to Company C.

Worked Examples. The figures and calculations included in this Appendix A are for illustrative purposes only and are based on a hypothetical portfolio of properties. Neither the hypothetical Total Formation Transaction Value nor any of the other figures or calculations presented on Appendix A shall be binding on the REIT or the Operating Partnership, and should not be considered an indication of value of the American Assets Entities. The value of the American Assets Entities will ultimately be determined by the REIT in consultation with the underwriters of the IPO based on public investor demand and may be lower or higher than the hypothetical Total Formation Transaction Value shown on Appendix A. In addition, the calculations in Appendix A assume that each of Target Assets in this hypothetical portfolio of properties will be wholly owned, directly or indirectly, by the REIT. Example – Example—Base Case In the hypothetical examples shown below, the Target Assets that will be acquired by the REIT in the Formation Transactions consist of four shopping centers. The Total Formation Transaction Value, or “TFTV,” for this entire portfolio of properties will be $400, absent the impact of certain potential adjustments described in the subsequent examples. Each Target Asset (i) is subject to a $25 mortgage, (ii) was determined by a third-party valuator to have a relative equity value equal to 25% of the entire portfolio and (iii) has two owners, each of whom has a 50% interest in the property. Target Asset Equity Percentage (“EP”) (determined by 3rd party valuator) Property Holding Companies & Ownership % Shopping Center 1 25% Company A (50%) Company B (50%) Shopping Center 2 25% Company C (50%) Company D (50%) Shopping Center 3 25% Company E (50%) Company F (50%) Shopping Center 4 25% Company G (50%) Company H (50%) Total 100% Applying the Equity Value formula and assuming that there is no Entity Specific Debt and no increase or decrease in mortgage debt outstanding, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –– TPA] + AA Shopping Center 1 100 = 25% x [400 - 0] + 0 Shopping Center 2 100 = 25% x [400 - 0] + 0 Shopping Center 3 100 = 25% x [400 - 0] + 0 Shopping Center 4 100 = 25% x [400 - 0] + 0 Total Equity Value 400 Example 2 – Mortgage Payoff In this example, all of the facts described in the Base Case above are the same, except that prior to the completion of the Formation Transactions, the $25 mortgage on Shopping Center 1 is paid off such that at the time that Shopping Center 1 is acquired by the Operating Partnership it is not subject to any mortgage debt. This results in the following variation of the variable “AA” in the formula as applied to Shopping Center 1: Property Asset Adjustment (“AA”) (i.e., Base Balance - Actual Balance) Shopping Center 1 25 = 25 – 0 Shopping Center 2 0 = 25 – 25 Shopping Center 3 0 = 25 – 25 Shopping Center 4 0 = 25 – 25 Total Portfolio Adjustment (“TPA”) 25 In addition, by virtue of the reduction in the outstanding mortgage debt that will be assumed by the Operating Partnership in connection with the Formation Transactions, the Total Formation Transaction Value will have increased by the $25 value of the mortgage repayment from $400 to $425. Applying the Equity Value formula reflecting these new facts and assuming that there is no Entity Specific Debt, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –– TPA] + AA Shopping Center 1 125 = 25% x [425 - 25] + 25 Shopping Center 2 100 = 25% x [425 - 25] + 0 Shopping Center 3 100 = 25% x [425 - 25] + 0 Shopping Center 4 100 = 25% x [425 - 25] + 0 Total Equity Value 425 Example 3 – Entity Specific Debt In this example, all of the facts described in the Base Case above are the same, except that Company C is subject to $25 of Entity Specific Debt related to Shopping Center 2, which will be assumed by the Operating Partnership upon the completion of the Formation Transactions. This results in the following variation of the variable “AA” in the formula as applied to Shopping Center 2: Property Asset Adjustment (“AA”) (i.e., Base Balance - Actual Balance) Shopping Center 1 0 = 25 – 25 Shopping Center 2 -25 = 25 –– 50 Shopping Center 3 0 = 25 – 25 Shopping Center 4 0 = 25 – 25 Total Portfolio Adjustment (“TPA”) -25 In addition, by virtue of the assumption by the Operating Partnership of this Entity Specific Debt in connection with the Formation Transactions, the Total Formation Transaction Value will have decreased by the $25 value of the Entity Specific Debt from $400 to $375. Applying the Equity Value formula reflecting these new facts and assuming that there is no increase or decrease in mortgage debt outstanding, the Equity Value of each of the four properties is as set forth below: Property Equity Value = EP x [TFTV –– TPA] + AA Shopping Center 1 100 = 25% x [375 - (-25)] + 0 Shopping Center 2 75 = 25% x [375 - (-25)] + (-25) Shopping Center 3 100 = 25% x [375 - (-25)] + 0 Shopping Center 4 100 = 25% x [375 - (-25)] + 0 Total Equity Value 375 Here, through the operation of the Equity Value formula, all $25 of Company C’s Entity Specific Debt has been allocated to Shopping Center 2 and has not impacted the Equity Value of the other Target Assets. However, without further adjustment, Company C and Company D, each as a 50% owner of Shopping Center 2, are equally burdened by Company C’s Entity Specific Debt as show below: Company C Company D Allocated Share (unadjusted) of Equity Value before Inclusion of Entity Specific Debt: 50 = 100 x 50% 50 = 100 x 50% Allocated Share (unadjusted) of Equity Value after Inclusion of Entity Specific Debt: 37.5 = 75 x 50% 37.5 = 75 x 50% Decrease in Allocated Share (unadjusted) of Equity Value due to Inclusion of Entity Specific Debt: 12.5 = 50 - 37.5 12.5 = 50 - 37.5 Accordingly, by virtue of the operation of the Equity Value formula, Company C has only been allocated half ($12.5 of $25.0) of the Company C Entity Specific Debt obligation that should be allocated to Company C, and Company D has been allocated the remaining $12.5. In order to address this inequitable allocation of Company C Entity Specific Debt , the definition of “Allocated Share” provides for an adjustment to (i) reduce the amount that would otherwise be payable to Company C by the amount by which the Entity Specific Debt exceeds the amount of such obligation that was previously allocated to Company C and (ii) increase the amount payable to Company D by the amount of the Entity Specific Debt obligation that was previously allocated to Company D, with the following outcome: Company A Company B Allocated Share (adjusted): 25 = 37.5 - 12.5 50 = 37.5 + 12.5 As a result of this adjustment to the Allocated Shares of Company C and Company D, the economic impact of all of Company C’s Entity Specific Debt will be allocated to Company C.