Form of Agreement and Plan of Merger



 Exhibit 10.12 

AGREEMENT AND PLAN OF MERGER 

DATED AS OF SEPTEMBER 13, 2010 
  

BY AND AMONG 

AMERICAN ASSETS TRUST, L.P., 

a Maryland limited partnership 

[OP SUB REVERSE MERGER ENTITY MERGER SUB] 

a [                    ] 

 AND 

[OP SUB REVERSE MERGER ENTITY] 

a [                    ] 

  







 TABLE OF CONTENTS 

 

							
	 	 	 	  	 	  	PAGE
		
	 ARTICLE I THE MERGER
	  	3
				
		 	 Section 1.01
	  	THE MERGER	  	3
		 	 Section 1.02
	  	EFFECTIVE TIME	  	3
		 	 Section 1.03
	  	EFFECT OF THE MERGER	  	3
		 	 Section 1.04
	  	ORGANIZATIONAL DOCUMENTS	  	3
		 	 Section 1.05
	  	CONVERSION OF SPE EQUITY INTERESTS	  	4
		 	 Section 1.06
	  	CANCELLATION AND RETIREMENT OF SPE EQUITY INTERESTS	  	5
		 	 Section 1.07
	  	FRACTIONAL INTERESTS	  	5
		 	 Section 1.08
	  	CALCULATION OF MERGER CONSIDERATION	  	5
		 	 Section 1.09
	  	TRANSACTION COSTS	  	5
		
	 ARTICLE II CLOSING; TERM OF AGREEMENT
	  	6
				
		 	 Section 2.01
	  	CLOSING	  	6
		 	 Section 2.02
	  	PAYMENT OF MERGER CONSIDERATION	  	6
		 	 Section 2.03
	  	TAX WITHHOLDING	  	8
		 	 Section 2.04
	  	FURTHER ACTION	  	8
		 	 Section 2.05
	  	TERM OF THE AGREEMENT	  	9
		 	 Section 2.06
	  	EFFECT OF TERMINATION	  	9
		
	 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE OPERATING PARTNERSHIP AND MERGER SUB
	  	9
				
		 	 Section 3.01
	  	ORGANIZATION; AUTHORITY	  	9
		 	 Section 3.02
	  	DUE AUTHORIZATION	  	10
		 	 Section 3.03
	  	CONSENTS AND APPROVALS	  	10
		 	 Section 3.04
	  	NO VIOLATION	  	10
		 	 Section 3.05
	  	VALIDITY OF OP UNITS	  	11
		 	 Section 3.06
	  	OPERATING PARTNERSHIP AGREEMENT	  	11
		 	 Section 3.07
	  	LIMITED ACTIVITIES	  	11
		 	 Section 3.08
	  	LITIGATION	  	11
		 	 Section 3.09
	  	NO BROKER	  	11
		 	 Section 3.10
	  	NO IMPLIED REPRESENTATIONS OR WARRANTIES	  	11
		
	 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SPE
	  	12
				
		 	 Section 4.01
	  	ORGANIZATION; AUTHORITY	  	12
		 	 Section 4.02
	  	DUE AUTHORIZATION	  	12
		 	 Section 4.03
	  	CAPITALIZATION	  	12
		 	 Section 4.04
	  	CONSENTS AND APPROVALS	  	13
		 	 Section 4.05
	  	NO VIOLATION	  	13
		 	 Section 4.06
	  	LICENSES AND PERMITS	  	13

  

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		 	 Section 4.07
	  	COMPLIANCE WITH LAWS	  	14
		 	 Section 4.08
	  	PROPERTIES	  	14
		 	 Section 4.09
	  	INSURANCE	  	15
		 	 Section 4.10
	  	ENVIRONMENTAL MATTERS	  	15
		 	 Section 4.11
	  	EMINENT DOMAIN	  	15
		 	 Section 4.12
	  	EXISTING LOANS	  	15
		 	 Section 4.13
	  	FRANCHISE AGREEMENTS	  	15
		 	 Section 4.14
	  	FINANCIAL STATEMENTS	  	16
		 	 Section 4.15
	  	TAXES	  	16
		 	 Section 4.16
	  	LITIGATION	  	16
		 	 Section 4.17
	  	NO INSOLVENCY PROCEEDINGS	  	16
		 	 Section 4.18
	  	SECURITIES LAW MATTERS	  	16
		 	 Section 4.19
	  	NO BROKER	  	17
		 	 Section 4.20
	  	NO IMPLIED REPRESENTATIONS OR WARRANTIES	  	17
		 	 Section 4.21
	  	OWNERSHIP OF CERTAIN ASSETS	  	17
		 	 Section 4.22
	  	SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SPE	  	17
		 	 Section 4.23
	  	NON-FOREIGN STATUS	  	17
		
	 ARTICLE V COVENANTS AND OTHER AGREEMENTS
	  	17
		 	 Section 5.01
	  	PRE-CLOSING COVENANTS	  	17
		 	 Section 5.02
	  	CONSENT AND WAIVER OF RIGHTS UNDER ORGANIZATIONAL DOCUMENTS	  	19
		 	 Section 5.03
	  	EXCLUDED ASSETS	  	19
		
	 ARTICLE VI ADDITIONAL AGREEMENTS
	  	19
		 	 Section 6.01
	  	COMMERCIALLY REASONABLE EFFORTS BY THE OPERATING PARTNERSHIP AND THE SPE	  	19
		 	 Section 6.02
	  	OBLIGATIONS OF MERGER SUB	  	20
		 	 Section 6.03
	  	TAX MATTERS	  	20
		 	 Section 6.04
	  	WITHHOLDING CERTIFICATE	  	20
		 	 Section 6.05
	  	TAX ADVICE	  	21
		 	 Section 6.06
	  	ALTERNATE TRANSACTION	  	21
		 	 Section 6.07
	  	EXCLUSION OF ENTITIES	  	21
		
	 ARTICLE VII CONDITIONS PRECEDENT
	  	21
		 	 Section 7.01
	  	CONDITION TO EACH PARTY’S OBLIGATIONS	  	21
		 	 Section 7.02
	  	CONDITIONS TO OBLIGATIONS OF THE SPE	  	22
		 	 Section 7.03
	  	CONDITIONS TO OBLIGATION OF THE OPERATING PARTNERSHIP AND MERGER SUB	  	22
		
	 ARTICLE VIII GENERAL PROVISIONS
	  	23
		 	 Section 8.01
	  	NOTICES	  	23
		 	 Section 8.02
	  	DEFINITIONS	  	24

  

 ii 









							
		 	 Section 8.03
	  	COUNTERPARTS	  	29
		 	 Section 8.04
	  	ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES	  	29
		 	 Section 8.05
	  	GOVERNING LAW	  	29
		 	 Section 8.06
	  	ASSIGNMENT	  	29
		 	 Section 8.07
	  	JURISDICTION	  	29
		 	 Section 8.08
	  	DISPUTE RESOLUTION	  	30
		 	 Section 8.09
	  	SEVERABILITY	  	31
		 	 Section 8.10
	  	RULES OF CONSTRUCTION	  	31
		 	 Section 8.11
	  	EQUITABLE REMEDIES	  	31
		 	 Section 8.12
	  	WAIVER OF SECTION 1542 PROTECTIONS	  	32
		 	 Section 8.13
	  	TIME OF THE ESSENCE	  	32
		 	 Section 8.14
	  	DESCRIPTIVE HEADINGS	  	32
		 	 Section 8.15
	  	NO PERSONAL LIABILITY CONFERRED	  	32
		 	 Section 8.16
	  	AMENDMENTS	  	32

  

 iii 








 DEFINED TERMS 

 

			
	 TERM
	  	 SECTION

		
	 Accredited Investor
	  	Section 8.02
	 Affiliate
	  	Section 8.02
	 Agreement
	  	Introduction
	 Allocated Share
	  	Section 8.02
	 Alternate Transaction
	  	Section 8.02
	 American Assets Entity
	  	Section 8.02
	 Business Day
	  	Section 8.02
	 Certificate of Merger
	  	Section 1.02
	 Closing
	  	Section 2.01
	 Closing Date
	  	Section 2.01
	 Code
	  	Section 8.02
	 Consent Form
	  	Section 8.02
	 Consenting Holders
	  	Recitals
	 Contributed Entities
	  	Recitals
	 Contributed Interest
	  	Recitals
	 Contributors
	  	Recitals
	 Decrease
	  	Section 8.02
	 Disclosed Loans
	  	Section 4.12
	 Dispute
	  	Section 8.08
	 Effective Time
	  	Section 1.02
	 Elected OP Unit Percentage
	  	Section 8.02
	 Elected REIT Shares Percentage
	  	Section 8.02
	 Environmental Laws
	  	Section 8.02
	 Equity Value
	  	Section 8.02
	 Escrow Agreement
	  	Section 8.02
	 Excluded Assets
	  	Section 5.03
	 Formation Transaction Documentation
	  	Section 8.02
	 Formation Transactions
	  	Section 8.02
	 Forward OP Merger Entities
	  	Recitals
	 Forward REIT Merger Entities
	  	Recitals
	 Franchise Agreement
	  	Section 4.13
	 Governmental Authority
	  	Section 8.02
	 Intercompany Debt
	  	Section 8.02
	 Intercompany Debt Adjustments
	  	Section 8.02
	 IPO
	  	Recitals
	 IPO Closing Date
	  	Section 8.02
	 IPO Price
	  	Section 8.02
	 JAMS
	  	Section 8.08
	 Joinder Date
	  	Section 6.02
	 Laws
	  	Section 8.02
	 Leases
	  	Section 4.08
	 Liens
	  	Section 8.02

  

 iv 









			
	 Lock-Up Agreement
	  	Section 8.02
	 Merger
	  	Recitals
	 Merger Consideration
	  	Section 1.05
	 Merger Sub
	  	Introduction
	 MLPA
	  	Recitals
	 OP Material Adverse Effect
	  	Section 8.02
	 OP Units
	  	Recitals
	 Operating Partnership
	  	Introduction
	 Operating Partnership Agreement
	  	Section 8.02
	 OP Sub Merger Entities
	  	Recitals
	 Operating Partnership Subsidiary
	  	Section 3.01
	 Organizational Documents
	  	Section 8.02
	 Outside Date
	  	Section 2.05
	 Ownership Limits
	  	Section 1.05
	 Permitted Liens
	  	Section 8.02
	 Person
	  	Section 8.02
	 Pre-Formation Interests
	  	Section 8.02
	 Pre-Formation Participants
	  	Section 8.02
	 Principal
	  	Section 8.02
	 Property
	  	Section 4.01
	 Prospectus
	  	Section 8.02
	 Rady Trust
	  	Section 7.03(a)
	 Registration Statement
	  	Section 2.05
	 REIT
	  	Introduction
	 REIT Shares
	  	Recitals
	 REIT Sub Forward Merger Entities
	  	Recitals
	 Representation, Warranty and Indemnity Agreement
	  	Section 8.02
	 Sale Consent
	  	Section 2.02
	 SEC
	  	Section 2.05
	 Securities Act
	  	Section 8.02
	 SPE
	  	Introduction
	 SPE Equity Interest
	  	Recitals
	 SPE Material Adverse Effect
	  	Section 8.02
	 SPE Subsidiary
	  	Section 4.01
	 Subsidiary
	  	Section 8.02
	 Surviving Entity
	  	Section 1.01
	 Target Asset
	  	Section 8.02
	 Tax
	  	Section 8.02
	 Tax Protection Agreement
	  	Section 8.02
	 Underwriting Agreement
	  	Section 8.02
	 Valid Election
	  	Section 8.02

  

 v 








 AGREEMENT AND PLAN OF MERGER 

This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of September 13,
2010, by and among American Assets Trust, L.P., a Maryland limited partnership (the “Operating Partnership”) and a subsidiary of American Assets Trust, Inc., a Maryland corporation (the “REIT”), [OP Sub Reverse
Merger Entity], a [                    ] (the “SPE”), and [OP Sub Reverse Merger Entity Merger Sub], a
Delaware limited liability company to be formed prior to the Effective Time (defined below) and to be wholly-owned by the Operating Partnership (“Merger Sub”). 

RECITALS 

WHEREAS, the REIT desires to consolidate the ownership of a portfolio of properties currently owned, directly or indirectly, by certain
entities each as described on Schedule I hereto; 
 WHEREAS, concurrently with the execution of this Agreement, each of
the entities identified on Schedule I hereto as “Forward REIT Merger Entities” (the “Forward REIT Merger Entities”) will enter into an agreement and plan of merger with the REIT pursuant to which each such Forward
REIT Merger Entity will merge with and into the REIT and the equity interest in each Forward REIT Merger Entity will be converted automatically into the right to receive cash, without interest, or shares of common stock of the REIT, par value $.01
per share (the “REIT Shares”); 
 WHEREAS, concurrently with the execution of this Agreement, the REIT will
enter into agreements and plans of merger with certain American Assets Entities identified as “REIT Sub Forward Merger Entities” on Schedule I hereto (the “REIT Sub Forward Merger Entities”), pursuant to which,
concurrently with the mergers identified in the preceding paragraph, each of the REIT Sub Forward Merger Entities will merge with and into wholly owned subsidiaries of the REIT; 

WHEREAS, immediately following the completion of the mergers described in the preceding paragraphs, the REIT will contribute to the
Operating Partnership, (i) all of the assets, rights and obligations of the Forward REIT Merger Entities acquired by the REIT as a result of the mergers between it and the Forward REIT Merger Entities and (ii) all of the REIT’s
interests in the surviving entities of the mergers of the REIT Sub Forward Merger Entities with and into wholly owned subsidiaries of the REIT; 

WHEREAS, concurrently with the execution of this Agreement, the Operating Partnership, or a wholly-owned subsidiary of the Operating
Partnership, will enter into a contribution agreement with certain holders (the “Contributors”) of interests in certain American Assets Entities identified as “Contributed Entities” on Schedule I hereto,
pursuant to which, immediately following the completion of the mergers and contributions described in the preceding paragraphs, each Contributor shall contribute to the Operating Partnership, or a wholly-owned subsidiary of the Operating
Partnership, respectively, all of the Contributor’s interests in the applicable American Assets Entity (the “Contributed Interest”), and the Operating Partnership, or such subsidiary, as applicable, shall acquire from each
Contributor all of each Contributor’s right, title and interest as a holder of the Contributed Interests; 
  

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 WHEREAS, concurrently with the execution of this Agreement, the Operating Partnership will
enter into an agreement and plan of merger with certain American Assets Entities identified as “Forward OP Merger Entities” on Schedule I hereto (collectively, the “Forward OP Merger Entities”), pursuant to which,
immediately following the mergers and contributions identified in the preceding paragraphs, each Forward OP Merger Entity will merge with and into the Operating Partnership in the order set forth in the merger agreement for such entities;

 WHEREAS, concurrently with the execution of this Agreement, the Operating Partnership will enter into agreements and plans of
merger with certain American Assets Entities identified as “OP Sub Forward Merger Entities” on Schedule I hereto (collectively, the “OP Sub Forward Merger Entities”), pursuant to which, immediately following the
mergers and contributions identified in the preceding paragraph, each OP Sub Forward Merger Entity will merge with and into a separate wholly owned subsidiary of the Operating Partnership; 

WHEREAS, pursuant to this Agreement, immediately following the mergers identified in the preceding paragraph, the Merger Sub will merge
with and into the SPE, with the SPE as the surviving entity (the “Merger”), pursuant to which each membership interest in the SPE (the “SPE Equity Interest”) will be converted automatically as set forth herein into
the right to receive cash, without interest, common units of partnership interest in the Operating Partnership (the “OP Units”), REIT Shares, or a combination of the foregoing; 

WHEREAS, concurrently with the execution of this Agreement, the Operating Partnership will enter into agreements and plans of merger with
certain other American Assets Entities identified as “OP Sub Reverse Merger Entities” on Schedule I hereto (collectively with the SPE, the “OP Sub Reverse Merger Entities”), pursuant to which, concurrently with the
mergers identified in the preceding paragraph, a separate wholly-owned subsidiary of the Operating Partnership will merge with and into each OP Sub Reverse Merger Entity; 

WHEREAS, in lieu of one or more of the mergers described in the preceding paragraphs and at the same time as such mergers would have
otherwise occurred, certain holders (the “Consenting Holders”) of interests in certain American Assets Entities shall contribute to the Operating Partnership, or a wholly-owned subsidiary of the Operating Partnership, all of their
interests in the applicable American Assets Entity, and the Operating Partnership or such subsidiary shall acquire from each Consenting Holder, all of each Consenting Holder’s right, title and interest as a holder of interests in such American
Assets Entities; 
 WHEREAS, the Formation Transactions relate to the proposed initial public offering (the
“IPO”) of the REIT Shares, following which the REIT will operate as a self-administered and self-managed real estate investment trust within the meaning of Section 856 of the Code; 

WHEREAS, in accordance with applicable Law, the Merger Sub may be merged with another entity, subject to the requisite approval of the
members as required by applicable Law; 
 WHEREAS, the REIT, as the general partner of the Operating Partnership, has approved
and authorized the Merger and the other Formation Transactions in accordance with the Maryland Revised Uniform Limited Partnership Act (the “MLPA”) and the Operating Partnership Agreement; 

 

 2 








 WHEREAS, the managing member, manager, board of directors or general partner, as applicable,
of the SPE has determined that it is advisable and in the best interests of the SPE, and its equity holders to proceed with the Merger and the other Formation Transactions on the terms described in this Agreement; and 

WHEREAS, the SPE has obtained the requisite approval of its equity holders (and lenders, as applicable) to the Merger and the other
Formation Transactions, applicable to the SPE. 
 NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and other terms contained in this Agreement, the parties hereto, intending to be legally bound hereby, agree as follows: 

ARTICLE I 

THE MERGER 

Section 1.01 THE MERGER. At the Effective Time (as defined below) in the order specified in Exhibit F, and subject to and
upon the terms and conditions of this Agreement and in accordance with applicable Laws, Merger Sub shall be merged with and into the SPE, whereby the separate existence of Merger Sub shall cease, and the SPE shall continue its existence under
[            ] law as the surviving entity (hereinafter sometimes referred to as the “Surviving Entity”). 

Section 1.02 EFFECTIVE TIME. Subject to and upon the terms and conditions of this Agreement, concurrently with or as soon as
practicable after (i) the execution by the REIT and the Operating Partnership of the Underwriting Agreement and (ii) the satisfaction or waiver of the conditions set forth in Article VII, the Merger Sub and the SPE shall file a
certificate of merger or similar document with respect to the Merger (the “Certificate of Merger”) as may be required by applicable Law with the Secretary of State of each applicable jurisdiction, providing that the Merger shall
become effective upon filing or at such later date and time set forth in the Certificate of Merger that is not more than thirty (30) days after the acceptance of such Certificate of Merger by the Secretary of State of the applicable
jurisdiction for record (the “Effective Time”), together with any certificates and other filings or recordings related thereto, in such forms as are required by, and executed in accordance with, the relevant provisions of applicable
laws. 
 Section 1.03 EFFECT OF THE MERGER. At the Effective Time, which shall be in the order specified in Exhibit
F, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and applicable Laws. 

Section 1.04 ORGANIZATIONAL DOCUMENTS. At the Effective Time, the Organizational Documents of the Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Organizational Documents of the Surviving Entity until thereafter amended as provided therein or in accordance with applicable Law. 

 

 3 








 Section 1.05 CONVERSION OF SPE EQUITY INTERESTS. 

(a) Under and subject to the terms and conditions of the respective Formation Transaction Documentation, as the result of an irrevocable
election indicated on a Consent Form submitted by a Pre-Formation Participant or as a result of the failure of a Pre-Formation Participant to submit a Consent Form, each Pre-Formation Participant is irrevocably bound to accept and entitled to
receive, as a result of and upon consummation of the Merger or other Formation Transactions, a specified share of the sponsors’ value of the American Assets Entities as a whole in the form of the right to receive cash, REIT Shares and/or OP
Units as calculated in Section 1.05(b). 
 (b) At the Effective Time, by virtue of the Merger and without any action
on the part of the Operating Partnership, the SPE or the holders of any interest in the SPE, except as set forth in Section 1.05(c), each SPE Equity Interest shall be converted automatically into the right to receive cash, OP Units
and/or REIT Shares with an aggregate value equal to the portion of Equity Value represented by such SPE Equity Interest (collectively referred to as the “Merger Consideration”) and each holder that receives OP Units in the Merger
shall upon receipt of such OP Units and the delivery of a Consent Form or a counterpart signature page to the Operating Partnership Agreement and such other documents and instruments as may be required in the sole discretion of the REIT to effect
such holder’s admission as a limited partner of the Operating Partnership, be admitted as a limited partner of the Operating Partnership in accordance with the MLPA and the Operating Partnership Agreement. 

Subject to Section 1.07 and Section 2.02(c), the amount of cash, number of OP Units and/or REIT Shares comprising
the Merger Consideration for each SPE Equity Interest so converted shall be as follows: 
 (i) Cash: One hundred percent
(100%) of the Allocated Share for each SPE Equity Interest held by a Pre-Formation Participant who is not an Accredited Investor shall be paid in cash. 

(ii) OP Units. The Elected OP Unit Percentage of the Allocated Share for each SPE Equity Interest or portion thereof held by a
Pre-Formation Participant who is an Accredited Investor shall be distributed in the form of a number of OP Units equal to the applicable portion of such Allocated Share divided by the IPO Price. 

(iii) REIT Shares. The Elected REIT Shares Percentage of the Allocated Share for each SPE Equity Interest or portion thereof held
by a Pre-Formation Participant who is an Accredited Investor shall be distributed in the form of a number of REIT Shares equal to the applicable portion of such Allocated Share divided by the IPO Price; provided that, to the extent such
distribution of REIT Shares to the holder of the SPE Equity Interests would result in a violation of the restrictions on ownership and transfer set forth in Section 6.3 of the REIT’s charter (the “Ownership Limits”), such
holder shall receive (x) the maximum number of whole REIT Shares that would not result in a violation of the Ownership Limits, and (y) that number of OP Units equal to the remaining number of REIT Shares not distributed as a result of the
application of the foregoing clause (x). 
  

 4 








 (c) Each SPE Equity Interest issued and outstanding immediately prior to the Effective Time
that is owned by the REIT, the Operating Partnership or any of their direct or indirect wholly-owned Subsidiaries (having been previously acquired by the REIT, the Operating Partnership or any such Subsidiary thereof pursuant to the other Formation
Transactions) shall remain issued and outstanding, and no consideration shall be delivered hereunder in exchange therefor. 

Section 1.06 CANCELLATION AND RETIREMENT OF SPE EQUITY INTERESTS. From and after the Effective Time, (i) each SPE Equity
Interest converted into the right to receive the Merger Consideration pursuant to Section 1.05(b) shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of such SPE
Equity Interest so converted shall thereafter cease to have any rights as an equity holder of the SPE, except the right to receive the Merger Consideration applicable thereto, and (ii) each SPE Equity Interest issued and outstanding that is
owned by the REIT, the Operating Partnership or any of their direct or indirect wholly-owned Subsidiaries shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist and no consideration shall be
delivered hereunder in exchange therefor. 
 Section 1.07 FRACTIONAL INTERESTS. No fractional OP Units or REIT Shares shall
be issued in the Merger. All fractional OP Units that a holder of SPE Equity Interests would otherwise be entitled to receive as a result of the Merger and the other Formation Transactions shall be aggregated, and each holder shall receive the
number of whole OP Units resulting from such aggregation and, in lieu of any fractional OP Unit resulting from such aggregation, an amount in cash determined by multiplying that fraction of an OP Unit to which such holder would otherwise have been
entitled, by the IPO Price. All fractional REIT Shares that a holder of SPE Equity Interests would otherwise be entitled to receive as a result of the Mergers and the other Formation Transactions shall be aggregated, and each holder shall receive
the number of whole REIT Shares resulting from such aggregation and, in lieu of any fractional REIT Share resulting from such aggregation, an amount in cash determined by multiplying that fraction of a REIT Share to which such holder would otherwise
have been entitled, by the IPO Price. No interest will be paid or will accrue on any cash paid or payable in lieu of any fractional OP Unit or REIT Share. 

Section 1.08 CALCULATION OF MERGER CONSIDERATION. 

(a) As soon as practicable following the determination of the IPO Price and prior to the Effective Time, all calculations relating to the
Merger Consideration shall be performed in good faith by, or under the direction of, the REIT, and, absent manifest error, shall be final and binding upon the holders of SPE Equity Interests. 

Section 1.09 TRANSACTION COSTS. If the Closing occurs, the REIT and the Operating Partnership shall be solely responsible for all
transaction costs and expenses of the REIT, the Operating Partnership and the American Assets Entities in connection with the Formation Transactions and the IPO, which include, but are not limited to, the underwriting discounts and commissions. In
the event the Closing does not occur, such costs and expenses shall be paid in accordance with the terms of that certain letter agreement entered into by the Property Entities (as defined therein) and American Assets, Inc., a California corporation,
dated as of May 17, 2010. 
  

 5 








 ARTICLE II 

CLOSING; TERM OF AGREEMENT 

Section 2.01 CLOSING. Unless this Agreement shall have been terminated pursuant to Section 2.05, and subject to the
satisfaction or waiver of the conditions in Article VII, the filing of the Certificate of Merger, the Effective Time and the closing of the other transactions contemplated by this Agreement shall occur substantially concurrently with the
receipt by the REIT of the proceeds from the IPO from the underwriters (the “Closing” or the “Closing Date”) in the order set forth on Exhibit F. The Closing shall take place at the offices of
Latham & Watkins LLP, 12636 High Bluff Drive, Suite 400 San Diego, California 92130 or such other place as determined by the REIT in its sole discretion. The Closing hereunder and the closing of the IPO shall be deemed concurrent for all
purposes. 
 Section 2.02 PAYMENT OF MERGER CONSIDERATION. 

(a) As soon as reasonably practicable after the Effective Time, the Surviving Entity (or its successor in interest) shall deliver to each
holder of SPE Equity Interests, whose SPE Equity Interests have been converted into the right to receive the Merger Consideration pursuant to Section 1.05(a) hereof, the Merger Consideration payable to such holder in the amounts and
form provided in Section 1.05(a) hereof. The issuance of the OP Units and admission of the recipients thereof as limited partners of the Operating Partnership pursuant to Section 1.05(a) shall be evidenced by an
amendment to Exhibit A to the Operating Partnership Agreement, and the Operating Partnership shall deliver, or cause to be delivered, an executed copy of such amendment to each Pre-Formation Participant receiving OP Units hereunder. Any certificate
representing REIT Shares issuable as Merger Consideration shall bear the following legend: 
 THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE
TRANSFEROR DELIVERS TO THE CORPORATION AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES OR “BLUE SKY” LAWS. 
 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL
AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE CORPORATION’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN
FURTHER RESTRICTIONS AND 
  

 6 








 
EXCEPT AS EXPRESSLY PROVIDED IN THE CORPORATION’S CHARTER, (I) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION’S COMMON STOCK IN EXCESS OF [__]% (IN
VALUE OR NUMBER OF SHARES) OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE CORPORATION UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY
OWN SHARES OF CAPITAL STOCK OF THE CORPORATION IN EXCESS OF [    ]% OF THE VALUE OF THE TOTAL OUTSTANDING SHARES OF CAPITAL STOCK OF THE CORPORATION, UNLESS SUCH PERSON IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED
HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN CAPITAL STOCK THAT WOULD RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION
TO FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY
OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY
NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP SET FORTH IN (I) THROUGH (III) ABOVE ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE
BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, THE CORPORATION MAY TAKE OTHER ACTIONS, INCLUDING REDEEMING SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE AND ABSOLUTE DISCRETION IF THE BOARD OF
DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB
INITIO. ALL UNDERLINED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO
EACH HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE. 

 

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 (b) The Surviving Entity (or its successor in interest) shall not be liable to any holder of
an SPE Equity Interests for any portion of the Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. 

(c) So long as some portion of the Merger Consideration with respect to an American Assets Entity is in the form of OP Units, the parties
hereto intend and agree that, for United States federal income tax purposes, the Merger of such entity shall constitute an “assets-over” partnership merger within the meaning of Treasury Regulations Section 1.708-1(c)(3)(i), and, as a
result, that (i) any payment of cash or REIT Shares for SPE Equity Interests of such holder in such entity shall be treated as a sale of such SPE Equity Interests by the holder and a purchase of such SPE Equity Interests by the Operating
Partnership for the cash and/or REIT Shares so paid under the terms of this Agreement in accordance with Treasury Regulations Section 1.708-1(c)(4), and (ii) each such holder of SPE Equity Interests who accepts cash and/or REIT Shares
shall explicitly agree and consent (the “Sale Consent”) to such treatment in their Consent Form as a condition to electing such consideration. To the extent the Operating Partnership acquires any SPE Equity Interests as described
above, or previously acquired such interest, for United States federal income tax purposes the receipt by the Operating Partnership of the portion of property attributable to such SPE Equity Interests shall be treated as a distribution by the SPE
Equity in redemption of such SPE Equity Interests. Notwithstanding Section 1.05(a) and any holder’s election as to the form of their Merger Consideration, if any holder (other than a non-accredited investor) fails to execute a Sale
Consent prior to the Closing, such holder’s Merger Consideration shall consist solely of OP Units. Any cash paid as the Merger Consideration to a non-accredited investor for an SPE Equity Interests shall be paid only after the receipt of a Sale
Consent from such holder. 
 Section 2.03 TAX WITHHOLDING. The Operating Partnership, Merger Sub and the SPE, as
applicable, shall be entitled to deduct and withhold from the consideration payable pursuant to this Agreement to any holder of SPE Equity Interests such amounts required to be deducted and withheld with respect to the making of such payment under
the Code or any provision of state, local or foreign tax law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the SPE Equity Interests in
respect of which such deduction and withholding was made. 
 Section 2.04 FURTHER ACTION. If, at any time after the
Effective Time, the Surviving Entity shall determine or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving
Entity the right, title or interest in, to or under any of the rights, properties or assets of the SPE acquired or to be acquired by the Surviving Entity as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the
Surviving Entity shall be authorized to execute and deliver, in the name and on behalf of the SPE or otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of the SPE or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Entity or otherwise to carry out this Agreement.

  

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 Section 2.05 TERM OF THE AGREEMENT. This Agreement shall terminate automatically if
(i) the initial registration statement of the REIT for the IPO (the “Registration Statement”) has not been filed with the Securities and Exchange Commission (“SEC”) by March 31, 2011, or (ii) the
Merger shall not have been consummated on or prior to December 31, 2011 (such date is hereinafter referred to as the “Outside Date”). 

Section 2.06 EFFECT OF TERMINATION. In the event of termination of this Agreement for any reason, all obligations on the part of the
Operating Partnership, the Merger Sub and the SPE under this Agreement shall terminate, except that the obligations set forth in Article VIII shall survive; it being understood and agreed, however, for the avoidance of doubt, that if this
Agreement is terminated because one or more of the conditions to a non-breaching party’s obligations under this Agreement are not satisfied by the Outside Date as a result of the other party’s material breach of a covenant, representation,
warranty or other obligation under this Agreement or any other Formation Transaction Documentation, the non-breaching party’s right to pursue all legal remedies with respect to such breach will survive such termination unimpaired. 

ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF 

THE OPERATING PARTNERSHIP AND MERGER SUB 

Each of the Operating Partnership and Merger Sub hereby represents and warrants to the SPE as follows: 

Section 3.01 ORGANIZATION; AUTHORITY. 

(a) Each of the Operating Partnership and Merger Sub has been duly incorporated or formed and is validly existing and in good standing
under the Laws of its jurisdiction of incorporation or formation, as applicable, and upon the effectiveness of the Operating Partnership Agreement, will have all requisite power and authority to enter into this Agreement and the other Formation
Transaction Documentation and to carry out the transactions contemplated hereby and thereby, and to own, lease and/or operate its property and to carry on its business as presently conducted and each of the Operating Partnership and Merger Sub, to
the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of its property make such qualification necessary, other than such failures to
be so qualified as would not, individually or in the aggregate, reasonably be expected to have an OP Material Adverse Effect. 

(b) Schedule 3.01(b) sets forth as of the date hereof, (i) each Subsidiary of the Operating Partnership (each an
“Operating Partnership Subsidiary”), (ii) the ownership interest therein of the Operating Partnership, and (iii) if not wholly owned by the Operating Partnership, the identity and ownership interest of each of the other
owners of such Operating Partnership Subsidiary. Each Operating Partnership Subsidiary has been duly organized or formed and is validly existing and is in good standing under the Laws of its jurisdiction of organization or formation, as applicable,
has all requisite power and authority to own, lease and/or operate its property and to carry on its business as presently conducted and, to the extent required under applicable Laws, is qualified to do business and is in good standing in each
jurisdiction in which 
  

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the nature of its business or the character of its property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate,
reasonably be expected to have an OP Material Adverse Effect. 
 Section 3.02 DUE AUTHORIZATION. The execution, delivery
and performance of this Agreement and the other Formation Transaction Documentation (including each agreement, document and instrument executed and delivered by or on behalf of the Operating Partnership and Merger Sub pursuant to this Agreement or
the other Formation Transaction Documentation) by the Operating Partnership and Merger Sub, have been duly and validly authorized by all necessary actions required of each of the Operating Partnership and Merger Sub, respectively. This Agreement,
the other Formation Transaction Documentation and each agreement, document and instrument executed and delivered by or on behalf of each of the Operating Partnership and Merger Sub pursuant to this Agreement or the other Formation Transaction
Documentation constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of each of the Operating Partnership and Merger Sub, each enforceable against each of the Operating Partnership and Merger Sub, in
accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity. 

Section 3.03 CONSENTS AND APPROVALS. Except for the filing of the Certificate of Merger in accordance with Section 1.02
hereof or in connection with the IPO and the consummation of the other Formation Transactions, no consent, waiver, approval, authorization, order, license, permit or registration of, qualification, designation, declaration or filing with, any Person
or Governmental Authority or under any applicable Laws is required to be obtained by the Operating Partnership or Merger Sub in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby and
thereby, except for (i) those consents, waivers, approvals, authorizations, orders, licenses, permits, registrations, qualifications, designations, declarations or filings, the failure of which to obtain or to file would not, individually or in
the aggregate, reasonably be expected to have an OP Material Adverse Effect, or (ii) those consents of the Pre-Formation Participants under the organizational documents of the applicable American Assets Entity, the failure of which to obtain
would not, individually or in the aggregate, reasonably be expected to have an OP Material Adverse Effect. 
 Section 3.04
NO VIOLATION. None of the execution, delivery or performance of this Agreement, the other Formation Transaction Documentation, any agreement contemplated hereby between the parties to this Agreement and the transactions contemplated hereby between
the parties to this Agreement does or will, with or without the giving of notice, lapse of time, or both, violate, conflict with, result in a breach of, or constitute a default under or give to others any right of termination, acceleration,
cancellation or other right under, (A) the organizational documents of any of the Operating Partnership or Merger Sub, (B) any agreement, document or instrument to which the Operating Partnership or Merger Sub or any of their respective
assets are bound or (C) any term or provision of any judgment, order, writ, injunction, or decree binding on any of the Operating Partnership or Merger Sub, except for, in the case of clause (B) or (C), any such breaches or defaults that
would not, individually or in the aggregate, reasonably be expected to have an OP Material Adverse Effect. 
  

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 Section 3.05 VALIDITY OF OP UNITS. Any OP Units to be issued pursuant to this Agreement
will have been duly authorized and, when issued against the consideration therefor, will be validly issued by the Operating Partnership, free and clear of all Liens created by the Operating Partnership (other than any Liens created by the Operating
Partnership Agreement). 
 Section 3.06 OPERATING PARTNERSHIP AGREEMENT. Attached as Exhibit C hereto is a true
and correct copy of the Operating Partnership Agreement in substantially final form. 
 Section 3.07 LIMITED ACTIVITIES.
Except for activities in connection with the IPO, the Formation Transactions or in the ordinary course of business, neither the Operating Partnership, the Operating Partnership Subsidiaries nor the Merger Sub has engaged in any material business or
incurred any material obligations. 
 Section 3.08 LITIGATION. Except for actions, suits or proceedings covered by policies
of insurance, there is no action, suit or proceeding pending or, to the knowledge of the Operating Partnership or Merger Sub, threatened against the Operating Partnership or any Operating Partnership Subsidiary, other than actions, suits,
proceedings arising in the ordinary course of business from the ownership and operation of the Operating Partnership, that individually or in the aggregate, would not reasonably be expected, (a) if adversely determined, to have an OP Material
Adverse Effect, or (b) to challenge or impair the ability of the Operating Partnership or Merger Sub to execute or deliver, or materially perform its obligations under, this Agreement and the documents executed by it pursuant to this Agreement
or to consummate the transactions contemplated hereby or thereby to such extents as would result in an OP Material Adverse Effect. 

Section 3.09 NO BROKER. Neither the Operating Partnership nor the Merger Sub has entered into, each of the Operating Partnership and
the Merger Sub covenants that it will not enter into, any agreement, arrangement or understanding with any Person or firm which will result in the obligation of the SPE or any Affiliates thereof to pay any finder’s fee, brokerage commission or
similar payment in connection with the transaction contemplated by this Agreement (other than underwriting discounts, commissions and other fees and expenses to be paid by the REIT in connection with the IPO and any related financing transactions).

 Section 3.10 NO IMPLIED REPRESENTATIONS OR WARRANTIES. Other than the representations and warranties expressly set forth
in this Article III, the Operating Partnership and Merger Sub shall not be deemed to have made any other representation or warranty in connection with this Agreement or the transactions contemplated hereby. All representations, warranties and
covenants of the Operating Partnership and Merger Sub contained in this Agreement shall expire at the Closing. 
  

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 ARTICLE IV 

REPRESENTATIONS AND WARRANTIES OF THE SPE 

Except as disclosed in the Prospectus or the schedules attached hereto, the SPE represents and warrants to the Operating Partnership that
the following statements are true and correct as of the Closing Date: 
 Section 4.01 ORGANIZATION; AUTHORITY. 

(a) The SPE has been duly organized and is validly existing and in good standing under the Laws of its jurisdiction of incorporation or
formation, and has all requisite power and authority to enter into this Agreement, each agreement contemplated hereby and the other Formation Transaction Documentation to which it is a party (including any agreement, document and instrument executed
and delivered by or on behalf of the SPE pursuant to this Agreement or the other Formation Transaction Documentation) and to carry out the transactions contemplated hereby and thereby, and to own, lease and/or operate any Property owned, leased
and/or operated by it and to carry on its business as presently conducted. The SPE, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the
character of a Property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have an SPE Material Adverse Effect. 

(b) Schedule 4.01(b) sets forth as of the date hereof with respect to the SPE (i) each Subsidiary of the SPE (each an
“SPE Subsidiary”), (ii) the ownership interest therein of the SPE, (iii) if not wholly owned by the SPE, the identity and ownership interest of each of the other owners of such Subsidiary, and (iv) each property owned
by the SPE or such Subsidiary or leased pursuant to a ground lease by the SPE of such Subsidiary (each a “Property”). Each SPE Subsidiary has been duly organized and is validly existing and is in good standing under the Laws of its
jurisdiction of organization, and has all requisite power and authority to own, lease and/or operate its Property and to carry on its business as presently conducted. Each SPE Subsidiary, to the extent required under applicable Laws, is qualified to
do business and is in good standing in each jurisdiction in which the nature of its business or the character of its Property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the
aggregate, reasonably be expected to have an SPE Material Adverse Effect. 
 Section 4.02 DUE AUTHORIZATION. The execution,
delivery and performance by the SPE of this Agreement and the other Formation Transaction Documentation (including any agreement, document and instrument executed and delivered by or on behalf of the SPE pursuant to this Agreement or the other
Formation Transaction Documentation) to which it is a party have been duly and validly authorized by all necessary actions required of the SPE. This Agreement, the other Formation Transaction Documentation and each agreement, document and instrument
executed and delivered by or on behalf of the SPE pursuant to this Agreement or the other Formation Transaction Documentation constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of the SPE, each
enforceable against the SPE in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity. 

Section 4.03 CAPITALIZATION. Schedule 4.03 sets forth as of the date hereof the ownership of the SPE. All of the issued and
outstanding equity interests of the SPE and each SPE Subsidiary are duly authorized, validly issued and fully paid; and, to the knowledge of the SPE, are not subject to preemptive rights, transfer restrictions, or appraisal, dissenters’ or
other similar rights under the organizational documents of or any contract to which the SPE is a party or otherwise bound, except for such preemptive rights, transfer restrictions, or appraisal, 

 

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dissenters’ or other similar rights as would not prevent the Merger. There are no outstanding rights to purchase, subscriptions, warrants, options or any other security convertible into or
exchangeable for equity interests in the SPE or its SPE Subsidiaries. 
 Section 4.04 CONSENTS AND APPROVALS. Except as
shall have been obtained or satisfied on or prior to the Closing Date, no consent, waiver, approval, authorization, order, license, permit or registration of, qualification, designation, declaration or filing with, any Person or any Governmental
Authority or under any applicable Laws is required to be obtained by the SPE or any of the SPE Subsidiaries in connection with the execution, delivery and performance of this Agreement, the other Formation Transaction Documentation to which the SPE
or any of the SPE Subsidiaries is a party and the transactions contemplated hereby and thereby, except for those consents, waivers, approvals, authorizations, orders, licenses, permits, registrations, qualifications, designations, declarations or
filings, the failure of which to obtain or to file would not, individually or in the aggregate, reasonably be expected to have an SPE Material Adverse Effect. 

Section 4.05 NO VIOLATION. None of the execution, delivery or performance of this Agreement, any agreement contemplated hereby
between the parties to this Agreement and the transactions contemplated hereby between the parties to this Agreement does or will, with or without the giving of notice, lapse of time, or both, violate, conflict with, result in a breach of, or
constitute a default under or give to others any right of termination, acceleration, cancellation or other right under, (A) the organizational documents of the SPE or any SPE Subsidiary (B) any agreement, document or instrument to which
the SPE or any SPE Subsidiary or any of their respective assets or properties are bound by or (C) any term or provision of any judgment, order, writ, injunction, or decree binding on the SPE or any SPE Subsidiary, except for, in the case of
clause (B) or (C), any such breaches or defaults that would not, individually or in the aggregate, reasonably be expected to have an SPE Material Adverse Effect. 

Section 4.06 LICENSES AND PERMITS. To the knowledge of the SPE, all notices, licenses, permits, certificates and authorizations
required for the continued use, occupancy, management, leasing and operation of the Properties have been obtained or can be obtained without material cost, are in full force and effect, are in good standing and (to the extent required in connection
with the transactions contemplated by the Formation Transaction Documentation) are assignable to the Merger Sub, except in each case for items that, if not so obtained, obtainable and/or transferred, would not, individually or in the aggregate,
reasonably be expected to have an SPE Material Adverse Effect. To the knowledge of the SPE, neither the SPE, nor any SPE Subsidiary, nor any third party has taken any action that (or failed to take any action the omission of which) would result in
the revocation of any such notice, license, permit, certificate or authorization where such revocation or revocations would, individually or in the aggregate, reasonably be expected to have an SPE Material Adverse Effect, nor has any one of them
received any written notice of violation from any Governmental Authority or written notice of the intention of any entity to revoke any such notice, license, permit, certificate or authorization, that in each case has not been cured or otherwise
resolved to the satisfaction of such Governmental Authority or other entity and except as would not, individually or in the aggregate, reasonably be expected to have an SPE Material Adverse Effect. 

 

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 Section 4.07 COMPLIANCE WITH LAWS. To the knowledge of the SPE, the SPE and each SPE
Subsidiary have conducted their respective businesses in compliance with all applicable Laws, except for such failures that would not, individually or in the aggregate, reasonably be expected to have an SPE Material Adverse Effect. To the knowledge
of the SPE, neither the SPE, nor any SPE Subsidiary nor any third party has been informed in writing of any continuing violation of any such Laws or that any investigation has been commenced and is continuing or is contemplated respecting any such
possible violation, except in each case for violations that would not, individually or in the aggregate, reasonably be expected to have an SPE Material Adverse Effect. 

Section 4.08 PROPERTIES. 

(a) Except as set forth in Schedule 4.08(a), the SPE or an SPE Subsidiary is the insured under a policy of title insurance as the
owner of, and, to the knowledge of the SPE, the SPE or an SPE Subsidiary is the owner of, the fee simple estate (or, in the case of certain Properties, the leasehold estate or the tenancy-in-common estate) to the Property owned by the SPE or an SPE
Subsidiary, in each case free and clear of all Liens except for Permitted Liens. Prior to the effective time of the merger contemplated hereby, neither the SPE nor any SPE Subsidiary shall take or omit to take any action to cause any Lien to attach
to any Property, except for Permitted Liens and Liens, if any, given to secure mortgage indebtedness encumbering such Property. 

(b) Except for matters that would not, individually or in the aggregate, reasonably be expected to have an SPE Material Adverse Effect,
to the knowledge of the SPE, (1) neither the SPE, nor any SPE Subsidiary, nor any other party to any material agreement affecting any Property (other than a Lease (as such term is hereinafter defined) for space within such Property), is in
breach or default of any such agreement, (2) no event has occurred or has been threatened in writing, which with or without the passage of time or the giving of notice, or both, would, individually or together with all such other events,
constitute a default under any such agreement, or would, individually or together with all such other events, reasonably be expected to cause the acceleration of any material obligation of any party thereto or the creation of a Lien upon any asset
of the SPE or any SPE Subsidiary, except for Permitted Liens, and (3) all agreements affecting any Property required for the continued use, occupancy, management, leasing and operation of such Property (exclusive of space Leases) are valid and
binding and in full force and effect, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity. 

(c) To the knowledge of the SPE, as presently conducted, none of the operation of the buildings, fixtures and other improvements
comprising a part of the Properties is in violation of any applicable building code, zoning ordinance or other “land use” Law, except for such violations that would not, individually or in the aggregate, reasonably be expected to have an
SPE Material Adverse Effect. 
 (d) Except for matters that would not, individually or in the aggregate, reasonably be expected
to have an SPE Material Adverse Effect, (1) to the knowledge of the SPE, neither the SPE, nor its SPE Subsidiary, nor any other party to any Lease, is in breach or default of any such Lease, (2) to the knowledge of the SPE, no event has
occurred or has been 
  

 14 








 
threatened in writing, which with or without the passage of time or the giving of notice, or both, would, individually or together with all such other events, constitute a default under any
Lease, or would permit termination, modification or acceleration under such Lease, and (3) to the knowledge of the SPE each of the leases (and all amendments thereto or modifications thereof) to which the SPE or any SPE Subsidiary is a party or
by which the SPE or any SPE Subsidiary or any Property is bound or subject (collectively, the “Leases”) is valid and binding and in full force and effect, subject to applicable bankruptcy, insolvency, moratorium or other similar
Laws relating to creditors’ rights and general principles of equity. 
 Section 4.09 INSURANCE. The SPE or an SPE
Subsidiary has in place the public liability, casualty and other insurance coverage with respect to each Property owned, leased and/or managed by it as the SPE reasonably deems necessary and in all cases including such coverage as is required under
the terms of any continuing loan or Lease. Each of the insurance policies with respect to each Property is in full force and effect in all material respects and all premiums due and payable thereunder have been fully paid when due. To the knowledge
of the SPE, neither the SPE nor any SPE Subsidiary has received from any insurance company any notices of cancellation or intent to cancel any insurance. 

Section 4.10 ENVIRONMENTAL MATTERS. Except for matters that would not, individually or in the aggregate, reasonably be expected to
have an SPE Material Adverse Effect, to the knowledge of the SPE, (A) the SPE and the SPE Subsidiaries are in compliance with all Environmental Laws, (B) neither the SPE nor any SPE Subsidiary have received any written notice from any
Governmental Authority or third party alleging that the SPE, any SPE Subsidiary or any Property is not in compliance with applicable Environmental Laws, and (C) there has not been a release of a hazardous substance on any of the Properties that
would require investigation or remediation under applicable Environmental Laws. The representations and warranties contained in this Section 4.10 constitute the sole and exclusive representations and warranties made by the SPE concerning
environmental matters. 
 Section 4.11 EMINENT DOMAIN. There is no existing or, to the knowledge of the SPE, proposed or
threatened condemnation, eminent domain or similar proceeding, or private purchase in lieu of such a proceeding which would affect any of the Properties, except for such proceedings that would not, individually or in the aggregate, reasonably be
expected to have an SPE Material Adverse Effect. 
 Section 4.12 EXISTING LOANS. Schedule 4.12 lists, as of the date
hereof, all secured loans presently encumbering the Properties or any direct or indirect interest in the SPE, and any unsecured loans relating thereto to be assumed by the Operating Partnership or any Subsidiary of the Operating Partnership at
Closing, as of the date hereof (the “Disclosed Loans”). 
 Section 4.13 FRANCHISE AGREEMENTS. To the
knowledge of the SPE, the hotel franchise agreement set forth on Schedule 4.13 (“Franchise Agreement”) is the only hotel franchise agreement in effect for any Property. Except as set forth on Schedule 4.13,
neither the SPE nor any of SPE Subsidiary, nor, to the knowledge of the SPE, any other party to the Franchise Agreement, is in breach or default of the Franchise Agreement, except for such breach or default that would not, individually or in the
aggregate, reasonably be expected to have an SPE Merger Entity Material Adverse Effect. 
  

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 Section 4.14 FINANCIAL STATEMENTS. The financial statements of the SPE included in the
Prospectus have been prepared in all material respects in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), subject, in the case of
unaudited statements, to normal year-end audit adjustments, and fairly present in all material respects the financial condition and results of operations of the SPE as of the dates indicated therein and for the periods ended as indicated therein.

 Section 4.15 TAXES. Except as set forth in Section 4.15, (i) the SPE and each of the SPE Subsidiaries
have timely and properly filed all Tax returns and reports required to be filed by it (after giving effect to any filing extension properly granted by a Governmental Authority having authority to do so) and all such returns and reports are accurate
and complete in all material respects, and has paid (or had paid on its behalf) all Taxes as required to be paid by it, (ii) no income or material non-income Tax returns filed by the SPE or any SPE Subsidiaries are the subject of a pending or
ongoing audit, and (iii) except as would not have an SPE Material Adverse Effect, no deficiencies for any Taxes have been proposed, asserted or assessed against the SPE or any of the SPE Subsidiaries, and no requests for waivers of the time to
assess any such Taxes are pending. Except as set forth in Schedule 4.15, since its formation, for U.S. federal income tax purposes, the SPE has been treated as a partnership, or an entity disregarded from a partnership, and not as a
corporation or an association taxable as a corporation, and each of the SPE Subsidiaries has been treated as a partnership or disregarded entity and not as a corporation or an association taxable as a corporation. 

Section 4.16 LITIGATION. Except for actions, suits or proceedings covered by policies of insurance, to the knowledge of the SPE,
there is no action, suit or proceeding pending or, to the knowledge of the SPE, threatened against or affecting the SPE or any SPE Subsidiary, or any officer, director, principal, managing member, general partner or Affiliate of any of the foregoing
other than actions, suits, proceedings arising in the ordinary course of business from the ownership and operation, which, if adversely determined, would not have an SPE Material Adverse Effect. There is no action, suit, or proceeding pending or, to
the knowledge of the SPE, threatened against or affecting the SPE, any SPE Subsidiary or any officer, director, principal, managing member, general partner or Affiliate of any of the foregoing which challenges or impairs the ability of the SPE to
execute or deliver, or materially perform its obligations under, this Agreement and the documents executed by it pursuant to this Agreement or to consummate the transactions contemplated hereby or thereby. Except for matters covered by insurance,
there is no judgment, decree, injunction, rule or order of a Governmental Authority outstanding against the SPE, any SPE Subsidiary or any officer, director, principal, managing member or general partner of any of the foregoing in their capacity as
such which, would reasonably be expected to have an SPE Material Adverse Effect. 
 Section 4.17 NO INSOLVENCY PROCEEDINGS.
No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or, to the SPE’s knowledge, threatened against the SPE, nor are any such proceedings
contemplated by the SPE. 
 Section 4.18 SECURITIES LAW MATTERS. The SPE acknowledges that: (i) the REIT and Operating
Partnership intend the offer and issuance of any REIT Shares or OP Units to 
  

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any Pre-Formation Participants to be exempt from registration under the Securities Act and applicable state securities laws by virtue of the status of such equity holder as an “accredited
investor” (within the meaning of Rule 501(a) of Regulation D under the Securities Act) acquiring any REIT Shares or OP Units in a transaction exempt from registration pursuant to Rule 506 of Regulation D under the Securities Act, and
(ii) in issuing any REIT Shares or OP Units pursuant to the terms of this Agreement, the REIT and Operating Partnership are relying on the representations made by each equity holder electing to receive REIT Shares or OP Units as consideration
in the Merger, which representations were set forth in Appendix D to the Request for Consent - Accredited Investor Representations Letter. 

Section 4.19 NO BROKER. The SPE has not entered into, and it covenants that it will not enter into, any agreement, arrangement or
understanding with any Person or firm which will result in the obligation of the Operating Partnership or any Affiliate to pay any finder’s fee, brokerage commission or similar payment in connection with the transaction contemplated by this
Agreement (other than underwriting discounts, commissions and other fees and expenses to be paid by the REIT in connection with the IPO and any related financing transactions). 

Section 4.20 NO IMPLIED REPRESENTATIONS OR WARRANTIES. Other than the representations and warranties expressly set forth in this
Article IV and any other agreement entered into in connection with the Formation Transactions to which it is a party, the SPE shall not be deemed to have made any other representation or warranty in connection with this Agreement or the
transactions contemplated hereby. 
 Section 4.21 OWNERSHIP OF CERTAIN ASSETS. Except as set forth in
Section 4.21, neither the SPE nor any SPE Subsidiary owns any loan assets or other securities of any issuer except for equity interests in other American Assets Entities. 

Section 4.22 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SPE. The parties hereto agree and acknowledge that the
representations and warranties set forth in this Article IV (other than Section 4.01, Section 4.02, Section 4.03, Section 4.18 and Section 4.23) shall not survive the Closing.

 Section 4.23 NON-FOREIGN STATUS. Neither the SPE nor any SPE Subsidiary is a foreign person (as defined in the Code).

 ARTICLE V 

COVENANTS AND OTHER AGREEMENTS 

Section 5.01 PRE-CLOSING COVENANTS. During the period from the date hereof to the Closing Date (except as otherwise provided for or
contemplated by this Agreement or in connection with the Formation Transactions), the SPE shall use commercially reasonable efforts to (and shall cause each of the SPE Subsidiaries to) conduct its businesses and operate and maintain the Properties
in the ordinary course of business consistent with past practice, pay its debt obligations as they become due and payable, and use commercially reasonable efforts to preserve intact its current business organizations and preserve its relationships
with customers, tenants, suppliers, advertisers and others having business dealings with it, in each case consistent with past practice. In addition, and without limiting the generality of the foregoing, during the 

 

 17 








 
period from the date hereof to the Closing Date and except in connection with the Formation Transactions, the SPE shall not (and shall not permit any of the SPE Subsidiaries to) without the prior
written consent of the Operating Partnership, which consent may be withheld by the Operating Partnership in its sole discretion: 

(a)(i) other than distributions to the equity holders of the SPE in connection with such holders’ payment of any Taxes related to
their ownership of the equity of the SPE or as otherwise contemplated by this Agreement, declare, set aside or pay any dividends or distributions in respect of any of the SPE Equity Interests, except in the ordinary course of business consistent
with past practice and in accordance with the SPE’s applicable Organizational Documents, (ii) issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any SPE Equity Interests or make any
other changes to the equity capital structure of the SPE or any SPE Subsidiary, or (iii) purchase, redeem or otherwise acquire any SPE Equity Interests or equity interests of any of the SPE Subsidiaries or any other securities thereof;

 (b) issue, deliver, sell, transfer, dispose, mortgage, pledge, assign or otherwise encumber, or cause the issuance, delivery,
sale, transfer, disposition, mortgage, pledge, assignment or otherwise encumbrance of, any limited liability company, partnership interests or other equity interests in the SPE or any of the SPE Subsidiaries or any other assets of the SPE or the SPE
Subsidiaries; 
 (c) amend, modify or terminate any lease, contract or other instruments relating to the Property, except in the
ordinary course of business consistent with past practice; 
 (d) amend its Organizational Documents; 

(e) adopt a plan of liquidation, dissolution, merger, consolidation, restructuring, recapitalization or reorganization; 

(f) materially alter the manner of keeping such SPE or SPE Subsidiary’s books, accounts or records or the accounting practices
therein reflected; 
 (g) file an entity classification election pursuant to Treasury Regulation Section 301.7701-3(c) on
Internal Revenue Service Form 8832 (Entity Classification Election) to treat the SPE or any of its SPE Subsidiaries as an association taxable as a corporation for United States federal income tax purposes; make or change any other Tax elections;
settle or compromise any claim, notice, audit report or assessment in respect of Taxes; change any annual Tax accounting period; adopt or change any method of Tax accounting; file any amended Tax return; enter into any tax allocation agreement, tax
sharing agreement, tax indemnity agreement or closing agreement relating to any Tax; surrender of any right to claim a Tax refund; or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;

 (h) terminate or amend any existing insurance policies affecting any Property that results in a material reduction in
insurance coverage for the Property; 
  

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 (i) knowingly cause or permit the SPE to violate, or fail to use commercially reasonable
efforts to cure any violation of, any applicable Laws; or 
 (j) authorize, commit or agree to take any of the foregoing
actions. 
 Section 5.02 CONSENT AND WAIVER OF RIGHTS UNDER ORGANIZATIONAL DOCUMENTS. As of the Closing, the SPE waives and
relinquishes all rights and benefits otherwise afforded to the SPE (a) under its Organizational Documents including, without limitation, any rights of appraisal, rights of first offer or first refusal, buy/sell agreements, put, option or
similar parallel exit or dissenter rights in connection with the Formation Transactions and the IPO and any right to consent to or approve of the sale or contribution or other transaction undertaken by any equity holder of the SPE of their SPE
Equity Interests to the Operating Partnership or any Affiliate thereof and any and all notice provisions related thereto and (b) for claims against the REIT or the Operating Partnership for breach by any of their respective present or former
officers, directors, managing members, general partners or Affiliates of their fiduciary duties or similar obligations (including duties of disclosure) to any of their respective present or former shareholders, members, partners, equity interest
holders or Affiliates. The SPE acknowledges that the agreements contained herein and the transactions contemplated hereby and any actions taken in contemplation of the transactions contemplated hereby may conflict with, and may not have been
contemplated by, the Organizational Documents of the SPE or other agreements among one or more holders of such SPE Equity Interests or one or more of the equity holders of the SPE. With respect to the SPE and each Property in which an SPE Equity
Interest of the SPE represents a direct or indirect interest, the SPE expressly gives all consents (and any consents necessary to authorize the proper parties in interest to give all consents) and waivers it is entitled to give that are necessary or
desirable to facilitate the contribution or other Formation Transactions relating to the SPE or such Property. In addition, if the transactions contemplated hereby occur, this Agreement shall be deemed to be an amendment to the Organizational
Documents of the SPE to the extent the terms herein conflict with the terms thereof, including without limitation, terms with respect to allocations, distributions and the like. In the event the transactions contemplated by this Agreement do not
occur, nothing in this Agreement shall be deemed to be or construed as an amendment or modification of, or commitment of any kind to amend or modify, the Organizational Documents of the SPE, which shall remain in full force and effect without
modification. 
 Section 5.03 EXCLUDED ASSETS. Prior to or, as specified on Schedule 5.03, as soon as possible
following the Closing and after such amounts are reasonably determinable, the SPE shall distribute or cause to be distributed or paid out the assets identified on Schedule 5.03 (the “Excluded Assets”). 

ARTICLE VI 

ADDITIONAL AGREEMENTS 

Section 6.01 COMMERCIALLY REASONABLE EFFORTS BY THE OPERATING PARTNERSHIP AND THE SPE. Each of the Operating Partnership and the SPE
shall use commercially reasonable efforts and cooperate with each other in (i) promptly determining whether any filings are required to be made or consents, approvals, waivers, permits or authorizations are required to be obtained (under any
applicable Law or regulation or from any 
  

 19 








 
Governmental Authority or third party) in connection with the transactions contemplated by this Agreement, and (ii) promptly making (or causing to be made) any such filings, in furnishing
information required in connection therewith and in timely seeking to obtain any such consents, approvals, waivers, permits and authorizations. 

Section 6.02 OBLIGATIONS OF MERGER SUB. Subject to the terms of this Agreement, the Operating Partnership shall take all reasonable
action necessary to cause Merger Sub (i) to be formed prior to the Effective Time and become a party to this Agreement by executing a counterpart of this Agreement where indicated on the signature page hereof (the date of such execution, the
“Joinder Date”) and (ii) to perform its obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement. All representations, warranties, covenants, agreements, rights and
obligations of Merger Sub herein shall become effective as to Merger Sub as of the Joinder Date. 
 Section 6.03 TAX
MATTERS. 
 (a) The SPE and the SPE Subsidiaries shall timely file or cause to be timely filed when due all Tax returns required
to be filed by or with respect to such Person on or prior to the Closing Date and shall pay or cause to be paid all Taxes shown due thereon. All such Tax returns (including, for the avoidance of doubt, any amended Tax returns) shall be prepared in a
manner consistent with past practice, except as otherwise required by applicable Law. 
 (b) The Operating Partnership shall
prepare or cause to be prepared and file or cause to be filed all income Tax returns of the SPE and any of the SPE Subsidiaries which are due after the Closing Date. All such income Tax returns (including, for the avoidance of doubt, any amended Tax
returns) shall be prepared in a manner consistent with past practice, except as otherwise required by applicable Law. No later than ten (10) days prior to the due date (including extensions) for filing such income Tax returns, the Operating
Partnership shall deliver such income Tax returns to American Assets, Inc. for its review and approval, which shall not be unreasonably withheld. 

(c) The Operating Partnership shall prepare or cause to be prepared all other Tax returns of the SPE and any of its Subsidiaries.

 (d) In accordance with Section 704(c) of the Code, the Operating Partnership shall adopt and use only the so-called
“traditional method” described in Treasury Regulation Section 1.704-3(b) with respect to any properties transferred directly or indirectly by the SPE to the Operating Partnership as a result of the Formation Transactions, and
therefore shall not make any curative or remedial allocations with respect to such properties. 
 Section 6.04 WITHHOLDING
CERTIFICATE. Prior to Closing, the SPE shall deliver to the Operating Partnership such forms and certificates, duly executed and acknowledged, in form and substance reasonably satisfactory to the Operating Partnership (including any relevant forms
or certificates provided to the SPE by the holder of SPE Equity Interests), certifying that the payment of consideration in the Merger is exempt from withholding under Section 1445 of the Code and any similar withholding rules under applicable
state, local or foreign Tax Laws. 
  

 20 








 Section 6.05 TAX ADVICE. The Operating Partnership makes no representations or
warranties to the SPE or any holder of SPE Equity Interests regarding the Tax treatment of the Merger or the other Formation Transactions, or with respect to any other Tax consequences to the SPE or any holder of SPE Equity Interests of this
Agreement, the Merger or the other Formation Transactions. The SPE acknowledges that the SPE and the holders of SPE Equity Interests are relying solely on their own Tax advisors in connection with this Agreement, the Merger and the other Formation
Transactions and agreements contemplated hereby. 
 Section 6.06 ALTERNATE TRANSACTION. In the event that the Operating
Partnership determines that a structure change is necessary, advisable or desirable, the Operating Partnership may elect, in its sole and absolute discretion, to effect the Alternate Transaction, and in such case the SPE hereby agrees and consents
to such election, without the need for the Operating Partnership to seek any further consent or action from the SPE, and agrees that the parties shall undertake the Alternate Transaction and shall, and it shall cause its equity holders and
Subsidiaries to, enter into such agreements as shall be necessary to consummate the Alternate Transaction.
 Section 6.07
EXCLUSION OF ENTITIES. The parties hereby agree that the Operating Partnership shall have the right, in its sole discretion, to exclude the SPE from the Merger after the date hereof until the Effective Time, provided that the Operating Partnership
shall provide prior written notice to the SPE regarding such exclusion. 
 ARTICLE VII 

CONDITIONS PRECEDENT 

Section 7.01 CONDITION TO EACH PARTY’S OBLIGATIONS. The respective obligation of each party to effect the Merger and to
consummate the other transactions contemplated by this Agreement to occur on the Closing Date is subject to the satisfaction or waiver on or prior to the Effective Time, of the following conditions: 

(a) REGISTRATION STATEMENT. The Registration Statement shall have become effective under the Securities Act and shall not be the subject
of any stop order or proceedings by the SEC seeking a stop order. This condition may not be waived by any party. 
 (b) NO
INJUNCTION. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, judgment, injunction, stay or other order (whether temporary, preliminary or permanent), in
any case which is in effect and which prevents or prohibits consummation of any of the transactions contemplated in this Agreement nor shall any of the same brought by a Governmental Authority of competent jurisdiction be pending or threatened that
seeks the foregoing. 
 (c) OPERATING PARTNERSHIP AGREEMENT. The Operating Partnership Agreement, in substantially the form
attached hereto as Exhibit D, shall have been executed and delivered by the partners of the Operating Partnership and shall be in full force and effect and, except as contemplated by Section 2.02 or the other Formation Transaction
Documents, shall not have been amended or modified. 
  

 21 








 (d) TAX PROTECTION AGREEMENT. In the event that the SPE Equity Interests are held by any
Pre-Formation Participant that (1) owns, directly or indirectly, an interest in any property specified in the Tax Protection Agreement or (2) has been provided an opportunity to guarantee debt as set forth in the Tax Protection Agreement,
the REIT and the Operating Partnership shall have entered into the Tax Protection Agreement substantially in the form attached as Exhibit A, where applicable. 

Section 7.02 CONDITIONS TO OBLIGATIONS OF THE SPE. The obligation of the SPE to effect the Merger and to consummate the other
transactions contemplated by this Agreement to occur on the Closing Date are further subject to satisfaction of the following conditions (any of which may be waived by the SPE, in whole or in part): 

(a) REPRESENTATIONS AND WARRANTIES. Except as would not have an OP Material Adverse Effect, each of the representations and warranties of
the Operating Partnership and Merger Sub contained in this Agreement shall be true and correct in all material respects at the Closing as if made again at that time (except to the extent that any representation or warranty speaks as of an earlier
date, in which case it must be true and correct only as of that earlier date). 
 (b) PERFORMANCE BY THE OPERATING PARTNERSHIP
AND MERGER SUB. Except as would not have an OP Material Adverse Effect, each of the Operating Partnership and Merger Sub shall have performed all agreements and covenants required by this Agreement to be performed or complied with by it on or prior
to the Closing Date. 
 (c) REGISTRATION RIGHTS AGREEMENT. The REIT shall have entered into the registration rights agreement
substantially in the form attached as Exhibit C. This condition may not be waived by any party. 
 Section 7.03
CONDITIONS TO OBLIGATION OF THE OPERATING PARTNERSHIP AND MERGER SUB. The obligations of the Operating Partnership and Merger Sub to effect the Merger and to consummate the other transactions contemplated by this Agreement to occur on the Closing
Date are further subject to satisfaction of the following conditions (any of which may be waived by the Operating Partnership and Merger Sub, in whole or in part): 

(a) REPRESENTATIONS AND WARRANTIES. Except as would not have an SPE Material Adverse Effect, each of the representations and warranties
of the SPE contained in this Agreement, as well as those of the Ernest Rady Trust U/D/T March 10, 1983, as amended (the “Rady Trust”), under the Representation, Warranty and Indemnity Agreement, shall be true and correct in all
respects at the Closing as if made again at that time (except to the extent that any representation or warranty speaks as of an earlier date, in which case it must be true and correct only as of that earlier date). 

(b) PERFORMANCE BY THE SPE. The SPE shall have performed in all material respects all agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Closing Date. 
  

 22 








 (c) IPO CLOSING. The closing of the IPO shall occur substantially concurrently with the
Closing. 
 (d) CONSENTS, ETC. All necessary consents or approvals of Governmental Authorities or third parties (including
lenders) for the SPE to consummate the transactions contemplated hereby shall have been obtained. 
 (e) NO MATERIAL ADVERSE
CHANGE. There shall have not occurred between the date hereof and the Closing Date any material adverse change in any of the assets, business, condition (financial or otherwise), results of operation or prospects of the SPE or the SPE Subsidiaries
and the Properties, taken as a whole. 
 (f) REPRESENTATION, WARRANTY AND INDEMNITY AGREEMENT. The Rady Trust shall have entered
into the Representation, Warranty and Indemnity Agreement. 
 (g) ESCROW AGREEMENT. The parties thereto shall have entered into
the Escrow Agreement. 
 (h) LOCK-UP AGREEMENT. Each of the Pre-Formation Participants owning interests in the SPE shall have
entered into the Lock-Up Agreement substantially in the form attached as Exhibit E. 
 (i) TAX PROTECTION AGREEMENT. In
the event that (1) the SPE owns, directly or indirectly, an interest in any property specified in the Tax Protection Agreement or (2) the SPE Equity Interests are held by any Pre-Formation Participant that has been provided an opportunity
to guarantee debt as set forth in the Tax Protection Agreement, the holders of SPE Equity Interests shall have entered into the Tax Protection Agreement, substantially in the form attached as Exhibit A. 

ARTICLE VIII 

GENERAL PROVISIONS 

Section 8.01 NOTICES. All notices and other communications under this Agreement shall be in writing and shall be deemed given when
(i) delivered personally, (ii) five (5) Business Days after being mailed by certified mail, return receipt requested and postage prepaid, (iii) one (1) Business Day after being sent by a nationally recognized overnight
courier or (iv) transmitted by facsimile if confirmed within twenty-four (24) hours thereafter by a signed original sent in the manner provided in clause (i), (ii) or (iii) to the parties at the following addresses (or at such
other address for a party as shall be specified by notice from such party): 
 if to the Operating Partnership or Merger Sub to:

 American Assets Trust, L.P. 

11455 El Camino Real, Suite 200 

San Diego, California 92130 

Facsimile: (858) 350-2620 
  

 23 








 if to the SPE to: 

11455 El Camino Real, Suite 200 

San Diego, California 92130 

Facsimile: (858) 350-2620 

Section 8.02 DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings. 

(a) “Accredited Investor” has the meaning set forth under Regulation D of the Securities Act. 

(b) “Affiliate” means, with respect to any Person, a Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under
common control with”) as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise. 
 (c) “Allocated Share” means the amount that would be allocated to a
Pre-Formation Participant that is the holder of an interest in an American Assets Entity in accordance with the provisions of the existing Organizational Documents of such entity relating to distributions of distributable net proceeds from sales of
directly or indirectly owned properties or assets, and assuming the sale of the relevant Target Asset or Target Assets that are directly or indirectly owned by such entity for a value equal to such Target Asset’s or Target Assets’
respective Equity Value(s). 
 Notwithstanding the foregoing, the Allocated Share of any Pre-Formation Participant shall reflect the following
adjustments: 
  

	 	1.	Intercompany Debt Adjustment. In calculating Allocated Share, all Intercompany Debt shall be taken into account so that the Allocated Shares of the holders of
direct or indirect Pre-Formation Interests in the obligor of Intercompany Debt collectively are reduced, and the Allocated Shares of the holders of direct or indirect Pre-Formation Interests in the obligee of such Intercompany Debt collectively are
increased, in each case by the amount of such Intercompany Debt (such adjustments being referred to as “Intercompany Debt Adjustments”). 

  

	 	2.	Entity Specific Debt Adjustment. To the extent that Entity Specific Debt is allocated to a Target Asset, in calculating Allocated Shares of holders of direct or
indirect Pre-Formation Interests in the American Assets Entity or Entities owning such Target Asset, the amount of the decrease in Equity Value of such Target Asset attributable to the allocation of such Entity Specific Debt to such Target Asset
(through the operation of the formula set forth on Schedule II) (in each case, such decrease being the “Decrease”) shall be taken into account so that: 


 

	 	a.	 the Allocated Shares of the holders of direct or indirect Pre-Formation Interests in any obligor(s) under such Entity Specific Debt collectively shall
be (i) reduced by the amount equal to the excess of (w) the amount of the Entity 


  

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Specific Debt owed by such obligor over (x) the amount of the Decrease allocated pro rata to such obligor as a direct or indirect owner of the Target Asset; or (ii) increased by the
amount equal to the excess of (y) the amount of the Decrease allocated pro rata to such obligor as a direct or indirect owner of the Target Asset over (z) the amount of the Entity Specific Debt owed by such obligor; and



  

	 	b.	the Allocated Shares of the holders of direct or indirect Pre-Formation Interests in American Assets Entities owning such Target Asset that are not obligors under such
Entity Specific Debt collectively shall be increased by the amount equal to the amount of the Decrease allocated pro rata to such holders as direct or indirect owner of the Target Asset; 


with the net effect under the foregoing clauses (a)(i), (a)(ii) and (b) being that the adverse economic impact of the Decrease shall
be borne equitably by the holders of direct or indirect Pre-Formation Interests in the actual obligor(s) under such Entity Specific Debt and not by any other holder of direct or indirect Pre-Formation Interests in the American Assets Entities owning
such Target Asset. 
 Illustrative examples of the application of the foregoing Allocated Share adjustments using hypothetical numbers are
included as Example 3 and Example 4 in Appendix A to Schedule II. 
 (d) “Alternate
Transaction” means (i) a contribution of the assets held by the SPE to the Operating Partnership in exchange for the amount of cash and the number of OP Units and/or REIT Shares that were to be issued pursuant to this Agreement, (ii) a
contribution by each holder of direct or indirect equity interests in the SPE to the Operating Partnership in exchange for the amount of cash and the number of OP Units and/or REIT Shares that would have otherwise been received by such holder of
direct or indirect equity interests pursuant to this Agreement, (iii) the restructuring of the Merger as either (x) a merger of the SPE with and into either the REIT or the Operating Partnership or a wholly owned subsidiary of the REIT or (y) a
merger of a wholly owned subsidiary of the REIT or the Operating Partnership with and into the SPE, in each case in exchange for the amount of cash and the number of OP Units and/or REIT Shares that were to be issued pursuant to this Agreement, or
(iv) any other transaction pursuant to which the REIT, the Operating Partnership or any of their Subsidiaries acquire the assets held by the SPE or each holder of direct or indirect equity interests in such SPE in a transaction pursuant to which
each holder of direct or indirect interests in such SPE receives the amount of cash, the number of OP Units and/or the number of REIT Shares that were to be received by such holder pursuant to this Agreement (or a portion thereof equal in value to
the value of the portion of such assets acquired by the REIT, the Operating Partnership or any of their Subsidiaries pursuant to such Alternate Transaction). 

(e) “American Assets Entity” means a Forward OP Merger Entity, Forward REIT Merger Entity, OP Sub Reverse Merger Entity,
OP Sub Forward Merger Entity, REIT Sub Forward Merger Entity, or Contributed Entity, as applicable. As used herein, “American Assets Entities” refer to each American Assets Entity, collectively. 

(f) “Business Day” means any day that is not a Saturday, Sunday or legal holiday in the State of California. 

(g) “Code” means the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated or
issued thereunder. 
  

 25 








 (h) “Consent Form” means the forms provided to each holder of Pre-Formation
Interests to consent to the Formation Transactions and to make such holder’s irrevocable elections with respect to consideration to be received in the Formation Transactions. 

(i) “Elected OP Unit Percentage” means, for the Merger Consideration to be received with respect to any SPE Equity
Interest, the percentage of the Allocated Share represented by such SPE Equity Interest that the holder thereof has made a Valid Election to receive in the form of OP Units. 

(j) “Elected REIT Shares Percentage” means, for the Merger Consideration to be received with respect to any SPE Equity
Interest, the percentage of the Allocated Share represented by such SPE Equity Entity Interest that the holder thereof has made a Valid Election to receive in the form of REIT Shares. 

(k) “Environmental Laws” means all federal, state and local Laws governing pollution or the protection of human health
or the environment. 
 (l) “Escrow Agreement” means the Indemnity Escrow Agreement, dated as of the date
hereof, by and among the REIT, the Operating Partnership and the Rady Trust. 
 (m) “Equity Value” has the
meaning set forth in Schedule II hereto. 
 (n) “Formation Transaction Documentation” means all of the
agreements and plans of merger (including this Agreement) relating to all target entities and all contribution agreements and related documents and agreements, substantially in the forms accompanying the Request for Consent dated July 31, 2010
and identified in Exhibit B hereto, pursuant to which all of the American Assets Entities and/or the equity interests in the American Assets Entities held by the Pre-Formation Participants are to be acquired by the REIT or the Operating
Partnership, directly or indirectly, as part of the Formation Transactions. 
 (o) “Formation Transactions”
means the transactions contemplated by this Agreement and the other Formation Transaction Documentation. 
 (p)
“Governmental Authority” means any government or agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic
or foreign. 
 (q) “Intercompany Debt” means loans or advances among American Assets Entities and/or their
Subsidiaries or among holders of Pre-Formation Interests on the one hand and American Assets Entities and/or their Subsidiaries on the other hand, other than those promissory notes set forth on Appendix D to Schedule II for
which Del Monte Center is listed as the associated Target Asset, each of which loans or advances are set forth on Schedule III hereto. Intercompany Debt shall not be discharged pursuant to the Formation Transactions except to the extent any
such Intercompany Debt merges out of existence by operation of law as a result of such transactions (e.g., if the Operating Partnership acquires both the obligor and obligee interest in a loan which reflects an Intercompany Debt). After the closing
of the Formation Transactions, and except as provided below, to the extent any such loans are acquired by the REIT, Operating Partnership or their Subsidiaries (e.g., an obligor or obligee with respect to such loans is merged

  

 26 








 
with or into, or acquired by, one of such entities), the REIT, Operating Partnership or their Subsidiaries (as applicable) shall be permitted to take any actions (including repayment) with
respect to such Intercompany Debt as they deem appropriate. Intercompany Debt with respect to which either the obligor or the obligee (but not both such parties) under such Intercompany Debt is acquired, directly or indirectly, by the REIT,
Operating Partnership or their Subsidiaries, shall be deemed to be discharged immediately after the Formation Transactions by (i) the REIT, Operating Partnership or their Subsidiaries (as applicable) as obligor, or (ii) the obligor to the
REIT, Operating Partnership or their Subsidiaries (as applicable) as obligee, in each case in exchange for the consideration payable as set forth in the applicable Formation Transaction Documentation. The amounts payable and receivable with respect
to each item of Intercompany Debt shall be determined by the REIT, for purposes of determining the Intercompany Debt Adjustments, within forty five (45) days prior to the date of the preliminary prospectus used in the IPO roadshow based on its
good faith estimate of what such amounts will be as of the IPO Closing Date. 
 (r) “IPO Closing Date” means
the closing date of the IPO. 
 (s) “IPO Price” means the initial public offering price of a REIT Share in the
IPO. 
 (t) “Laws” means laws, statutes, rules, regulations, codes, orders, ordinances, judgments, injunctions,
decrees and policies of any Governmental Authority, including, without limitation, zoning, land use or other similar rules or ordinances. 

(u) “Liens” means all pledges, claims, liens, charges, restrictions, controls, easements, rights of way, exceptions,
reservations, leases, licenses, grants, covenants and conditions, encumbrances and security interests of any kind or nature whatsoever. 

(v) “Lock-Up Agreement” means that certain Lock-Up Agreement, by and between the underwriters and each investor of the
REIT and/or the Operating Partnership. 
 (w) “OP Material Adverse Effect” means any material adverse change in
any of the assets, business, condition (financial or otherwise), results of operation or prospects of the Operating Partnership and each Operating Partnership Subsidiary, taken as a whole. 

(x) “Operating Partnership Agreement” means the agreement of limited partnership of the Operating Partnership, as
amended and restated and in effect immediately prior to the Effective Time. 
 (y) “Organizational Documents”
means the certificate of formation, certificate of incorporation and bylaws, certificate of limited partnership and limited partnership agreement, limited liability company agreement or operating agreement of the SPE or any SPE Subsidiary, as
applicable. 
 (z) “Permitted Liens” means (i) Liens, or deposits made to secure the release of such
Liens, securing Taxes, the payment of which is not delinquent or the payment of which (including, without limitation, the amount or validity thereof) is being contested in good faith by appropriate proceedings for which adequate reserves have been
made in accordance with GAAP; 
  

 27 








 
(ii) zoning, entitlement, building and other land use Laws imposed by governmental agencies having jurisdiction over the Properties; (iii) covenants, conditions, restrictions, easements for
public utilities, encroachments, rights of access or other non-monetary matters that do not materially impair the use of the Properties for the purposes for which they are currently being used or proposed to be used in connection with the relevant
Person’s business; (iv) Liens securing financing or credit arrangements existing as of the Closing Date; (v) Liens arising under leases in effect as of the Closing Date; (vi) any exceptions contained in any title policy
(including any policy issued to a secured lender) relating to the Properties as of the Closing Date; (vii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the ordinary course of business
that are not yet due and payable and which are not, in the aggregate, material to the business, operations and financial condition of the Properties so encumbered; and (viii) any matters that would not have an SPE Material Adverse Effect.

 (aa) “Person” means an individual, corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity. 
 (bb) “Pre-Formation Interests” means the
interests held by the Pre-Formation Participants in the American Assets Entities. 
 (cc) “Pre-Formation
Participants” means the holders of the direct and indirect equity interests in the relevant American Assets Entities immediately prior to the Formation Transactions. 

(dd) “Prospectus” means the REIT’s final prospectus as filed with the SEC. 

(ee) “Representation, Warranty and Indemnity Agreement” means the Representation, Warranty and Indemnity Agreement,
dated as of the date hereof, by and among the REIT, the Operating Partnership and the Rady Trust. 
 (ff) “Securities
Act” means the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder. 
 (gg)
“SPE Material Adverse Effect” means any material adverse change in any of the assets, business, condition (financial or otherwise), results of operation or prospects of the SPE and each SPE Subsidiary, taken as a whole. 

(hh) “Subsidiary” of any Person means any corporation, partnership, limited liability company, joint venture, trust or
other legal entity of which such Person owns (either directly or through or together with another Subsidiary of such Person) either (i) a general partner, managing member or other similar interest, or (ii)(A) ten percent (10%) or more
of the voting power of the voting capital stock or other equity interests, or (B) ten percent (10%) or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability
company, joint venture or other legal entity. 
 (ii) “Target Asset” has the meaning set forth in Schedule
II hereto. 
 (jj) “Tax” means all federal, state, local and foreign income, gross receipts, license,
property, withholding, sales, franchise, employment, payroll, goods and services, stamp, 
  

 28 








 
environmental, customs duties, capital stock, social security, transfer, alternative minimum, excise and other taxes, tariffs or governmental charges of any nature whatsoever, including estimated
taxes, together with penalties, interest or additions to Tax with respect thereto, whether or not disputed. 
 (kk) “Tax
Protection Agreement” means that certain Tax Protection Agreement by and among the REIT, the Operating Partnership and the parties identified as a signatory on Schedule A thereto. 

(ll) “Underwriting Agreement” means that certain underwriting agreement, by and between the REIT, the Operating
Partnership and certain underwriters set forth therein, pursuant to which the REIT will issue and sell shares in the IPO. 

(mm) “Valid Election” means, with respect to any SPE Equity Interest, an irrevocable election to receive all or a
portion of its Allocated Share in the form of OP Units and/or REIT Shares as indicated on the properly completed and timely received Consent Form of the holder of such SPE Equity Interest or a Consent Form as to which any deficiencies have been
waived by the REIT. 
 Section 8.03 COUNTERPARTS. This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to each other party. 

Section 8.04 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement, the other Formation Transaction Documentation and the
Consent Forms to which the parties hereto are a party, including, without limitation, the exhibits and schedules hereto and thereto, constitute the entire agreement and, except as set forth in Section 1.09, supersede each prior agreement
and understanding, whether written or oral, among the parties regarding the subject matter of this Agreement. This Agreement is not intended to confer any rights or remedies on any Person other than the parties hereto. 

Section 8.05 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of
California, regardless of any Laws that might otherwise govern under applicable principles of conflicts of laws thereof. 

Section 8.06 ASSIGNMENT. This Agreement shall be binding upon, and shall be enforceable by and inure to the benefit of, the parties
hereto and their respective heirs, legal representatives, successors and assigns; provided, however, that this Agreement may not be assigned (except by operation of law) by any party without the prior written consent of the other parties, and
any attempted assignment without such consent shall be null and void and of no force and effect, except that the Operating Partnership may assign its rights and obligations hereunder to an Affiliate. 

Section 8.07 JURISDICTION. The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or federal court
sitting in the County of San Diego, with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such courts would have subject matter jurisdiction with respect to such dispute and
(b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any 
  

 29 








 
claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an
inconvenient forum, or that the venue of the action is improper. 
 Section 8.08 DISPUTE RESOLUTION. The parties intend
that this Section 8.08 will be valid, binding, enforceable, exclusive and irrevocable and that it shall survive any termination of this Agreement. 

(a) Upon any dispute, controversy or claim arising out of or relating to this Agreement or the enforcement, breach, termination or
validity thereof (“Dispute”), the party raising the Dispute will give written notice to the other parties to the Dispute describing the nature of the Dispute following which the parties to such Dispute shall attempt for a period of
ten (10) Business Days from receipt by the parties of notice of such Dispute to resolve such Dispute by negotiation between representatives of the parties hereto who have authority to settle such Dispute. All such negotiations shall be
confidential and any statements or offers made therein shall be treated as compromise and settlement negotiations for purposes of any applicable rules of evidence and shall not be admissible as evidence in any subsequent proceeding for any purpose.
The statute of limitations applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration hereunder, except that no defense based on the running of the statute of limitations will be available based upon the passage of
time during any such negotiation. Regardless of the foregoing, a party shall have the right to seek immediate injunctive relief pursuant to Section 8.08(c) below without regard to any such ten (10) Business Day negotiation period.

 (b) Any Dispute (including the determination of the scope or applicability of this agreement to arbitrate) that is not
resolved pursuant to Section 8.08(a) above shall be submitted to final and binding arbitration in California before one neutral and impartial arbitrator, in accordance with the Laws of the State of California for agreements made in
and to be performed in that State. The arbitration shall be administered by JAMS, Inc. (“JAMS”) pursuant to its Comprehensive Arbitration Rules and Procedures, as in effect on the date hereof. Each of the Operating Partnership and
the SPE shall appoint one arbitrator within fifteen (15) days of a demand for arbitration. If the Operating Partnership and the SPE cannot mutually agree upon an arbitrator within such 15-day period, the arbitrator shall be appointed by JAMS in
accordance with its Comprehensive Arbitration Rules and Procedures, as in effect on the date hereof. The arbitrator shall designate the place and time of the hearing. The hearing shall be scheduled to begin as soon as practicable and no later than
sixty (60) days after the appointment of the arbitrator (unless such period is extended by the arbitrator for good cause shown) and shall be conducted as expeditiously as possible. The award, which shall set forth the arbitrator’s findings
of fact and conclusions of law, shall be filed with JAMS and mailed to the parties no later than thirty (30) days after the close of the arbitration hearing. The arbitration award shall be final and binding on the parties and not subject to
collateral attack. Judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof. 

(c) Notwithstanding the parties’ agreement to submit all Disputes to final and binding arbitration before JAMS, the parties shall
have the right to seek and obtain temporary or preliminary injunctive relief in any court having jurisdiction thereof. Such courts shall have authority to, among other things, grant temporary or provisional injunctive relief in

  

 30 








 
order to protect any party’s rights under this Agreement. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall
have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any party to respect the
arbitral tribunal’s orders to that effect. 
 (d) The prevailing party shall be entitled to recover its costs and
reasonable attorneys’ fees, and the non-prevailing party shall pay all expenses and fees of JAMS, all costs of the stenographic record, all expenses of witnesses or proofs that may have been produced at the direction of the arbitrator, and the
fees, costs, and expenses of the arbitrator. The arbitrator shall allocate such costs and designate the prevailing party or parties for these purposes. 

Section 8.09 SEVERABILITY. Each provision of this Agreement will be interpreted so as to be effective and valid under applicable
law, but if any provision is held invalid, illegal or unenforceable under applicable law in any jurisdiction, then such invalidity, illegality or unenforceability will not affect any other provision, and this Agreement will be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been included herein. 

Section 8.10 RULES OF CONSTRUCTION. 

(a) The parties hereto agree that they have had the opportunity to be represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or
document. 
 (b) The words “hereof,” “herein” and “herewith” and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits
and schedules of this Agreement unless otherwise specified. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without
limitation.” All terms defined in this Agreement shall have the defined meanings contained herein when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Unless explicitly stated otherwise herein, any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time, amended, qualified or supplemented, including (in the case of agreements and instruments) by
waiver or consent and (in the case of statutes) by succession of comparable successor statutes and all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns. 

Section 8.11 EQUITABLE REMEDIES. The parties agree that irreparable damage would occur to the Operating Partnership in the event
that any of the provisions of this 
  

 31 








 
Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Operating Partnership shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement by the SPE and to enforce specifically the terms and provisions hereof in any federal or state court located in California, this being in addition to any other remedy to which the Operating
Partnership is entitled under this Agreement or otherwise at law or in equity. 
 Section 8.12 WAIVER OF SECTION 1542
PROTECTIONS. As of the Closing, the SPE expressly acknowledges that it has had, or has had and waived, the opportunity to be advised by independent legal counsel and hereby waives and relinquishes all rights and benefits afforded by
Section 1542 of the California Civil Code and does so understanding and acknowledging the significance and consequence of such specific waiver of Section 1542 which provides: 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. 

Section 8.13 TIME OF THE ESSENCE. Time is of the essence with respect to all obligations under this Agreement. 

Section 8.14 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for convenience only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement. 
 Section 8.15 NO PERSONAL LIABILITY CONFERRED. This
Agreement shall not create or permit any personal liability or obligation on the part of any officer, director, partner, employee or shareholder of the Operating Partnership, Merger Sub or the SPE. 

Section 8.16 AMENDMENTS. This Agreement may be amended by appropriate instrument, without the consent of the SPE, at any time prior
to the Effective Time; provided, that no such amendment, modification or supplement shall be made that alters the amount or changes the form of the consideration to be delivered to the SPE, without the prior written consent of the SPE in the
event that the SPE would be adversely affected by such proposed amendment, modification or supplement. 
 [SIGNATURE PAGE
FOLLOWS] 
  

 32 








 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their
respective duly authorized officers, all as of the date first written above. 
  

							
	AMERICAN ASSETS TRUST, L.P.,	  	 [OP SUB REVERSE MERGER ENTITY]

	 a Maryland limited partnership
	  	a	 	[                        ]
				
	 By:
	 	AMERICAN ASSETS TRUST, INC.,
a Maryland corporation	  	By:	 	  

	 Its:
	 	General Partner	  	Name:	 	
		 		  	Title:	 	
				
	By:	 	  
	  		 	
	Name:	 	John W. Chamberlain	  		 	
	 Title:
	 	President	  		 	

 [Signature Page to OP Sub Reverse Merger Agreement] 








			
	 AGREED AND ACCEPTED as of

	
	
[                    ],
2010,

	
	 [OP SUB REVERSE MERGER ENTITY
MERGER SUB LLC],

a
[                    ]

		
	 By:
	 	 AMERICAN ASSETS TRUST, L.P.

		 	 a Maryland Limited Partnership

		 	 Its Sole Member



					
			
		 	By:	 	  

		 	Name:	 	  

		 	Title:	 	  



[Signature Page to OP Sub Reverse Merger Agreement] 







 Schedule I 

List of Forward OP Merger Entities: 
  

	 	1.	Solana Beach Towne Centres Investments, L.P. 


	 	2.	Pacific San Jose Holdings, L.P. 


	 	3.	Pacific Sorrento Mesa Holdings, L.P. 


	 	4.	Hillside 104, a California limited partnership 


	 	5.	Hillside 276, a California limited partnership 


	 	6.	Desert Hillside Holdings, LLC 


	 	7.	BWH Holdings, LLC 


	 	8.	Waikele Center Holdings, LP 

 List of Forward
REIT Merger Entities: 
  

	 	1.	Pacific Stonecrest Assets, Inc. 


	 	2.	Pacific National City Assets, Inc. 


	 	3.	Western Assets, Inc. 


	 	4.	Pacific Towne Centre Assets, Inc. 


	 	5.	Pacific Oceanside Assets, Inc. 


	 	6.	Pacific San Jose Assets, Inc. 


	 	7.	KMBC Assets, Inc. 


	 	8.	Hero Retail, Inc. 


	 	9.	Pacific Sorrento Valley Assets I, Inc. 


	 	10.	Pacific Sorrento Mesa Assets, Inc. 


	 	11.	Beach Walk Assets, Inc. 


	 	12.	ICW Plaza, Inc. [d/b/a Delaware ICW Plaza, Inc.] 


	 	13.	ICW Valencia, Inc. 


	 	14.	Pacific Torrey Reserve Assets, Inc. 


	 	15.	Landmark Assets, Inc. 


	 	16.	Landmark One Market, Inc. 


	 	17.	Pacific Novato Assets, Inc. 


	 	18.	Waikele Center Assets, Inc. 

 List of OP Sub
Forward Merger Entities: 
  

	 	1.	Pacific Stonecrest Holdings, L.P. 


	 	2.	Rancho Carmel Plaza, a California limited partnership 


	 	3.	Pacific Oceanside Holdings, L.P. 


	 	4.	Kearny Mesa Business Center, a California limited partnership 


	 	5.	Del Monte Center Holdings, LP 


	 	6.	Beach Walk Holdings, LP 


	 	7.	ICW Plaza, L.P., a California limited partnership 


	 	8.	ICW Valencia, L.P. 


	 	9.	Desert Oceanside Holdings, LLC 


	 	10.	San Diego Loma Palisades, L.P. 

 List of OP
Sub Reverse Merger Entities: 
  

	 	1.	Pacific Waikiki Holdings, L.P. 


	 	2.	ABW Lewers LLC 


	 	3.	King Street Holdings, LP 


	 	4.	Loma Palisades, a California general partnership 








 List of REIT Sub Forward Merger Entities: 

 

	 	1.	Pacific Del Mar Assets, Inc. 


	 	2.	Pacific Carmel Mountain Assets, Inc. 


	 	3.	Pacific Solana Beach Assets, Inc. 


	 	4.	Pacific Waikiki Assets, Inc. 


	 	5.	King Street Assets, Inc. 


	 	6.	Pacific Sorrento Valley Assets II, Inc. 


	 	7.	Pacific Santa Fe Assets, Inc. 

 List of
Contributed Entities: 
  

	 	1.	American Assets Trust Management, LLC 


	 	2.	Winrad Vista Hacienda, a California general partnership 


	 	3.	Vista Hacienda, a California limited partnership 


	 	4.	Pacific American Assets Holdings, L.P., a California limited partnership 


	 	5.	Carmel Country Plaza, L.P. 


	 	6.	Pacific Carmel Mountain Holdings, L.P. 


	 	7.	Pacific National City Holdings, L.P. 


	 	8.	Pacific Solana Beach Holdings, L.P. 


	 	9.	Pacific San Jose Holdings, L.P. 


	 	10.	Winrad Kearny Mesa Business Center, a California general partnership 


	 	11.	Pacific Sorrento Valley Holdings I, L.P. 


	 	12.	Pacific Sorrento Mesa Holdings, L.P. 


	 	13.	Beach Walk Holdings, LP 


	 	14.	ICW Plaza, L.P., a California limited partnership 


	 	15.	ICW Valencia, L.P. 


	 	16.	Pacific Sorrento Valley Holdings II, L.P. 


	 	17.	EBW Hotel LLC 


	 	18.	Imperial Strand, a California limited partnership 


	 	19.	Winrad Imperial Strand, a California general partnership 


	 	20.	San Diego Loma Palisades, L.P. 


	 	21.	Mariner’s Point, LLC 


	 	22.	Pacific Santa Fe Holdings, L.P. 








 Schedule II 

Calculation of Equity Value 

For purposes of all Formation Transaction Documentation, “Equity Value” of any Target Asset directly or indirectly owned
by the American Assets Entity subject to such agreement shall be calculated pursuant to the formula set forth below. Capitalized terms used in this Schedule II shall have the meanings set forth below and capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Agreement. 
 EV = EP x [TFTV-TPA]+AA; 

where: 
 EV = Equity Value; 

EP = Equity Percentage; 
 TFTV= Total Formation
Transaction Value; 
 TPA = Total Portfolio Adjustment; and 

AA = Asset Adjustment; 
 provided, however,
that if the resulting Equity Value for a Target Asset is a negative amount (a “Net Deficit”), then the REIT shall exercise one of the following options, as determined by the REIT in its sole and absolute discretion:
(i) select the Target Asset as an Eliminated Asset or (ii) if one or more entities that are subject to the Formation Transaction Documentation that are the direct or indirect owners of such Target Asset would otherwise possess Excluded
Assets the value of which in the aggregate would equal or exceed the amount of such Net Deficit, increase the Target Net Working Capital with respect to such entity or entities by the absolute value of such Net Deficit; and provided further
that if the REIT shall have exercised option (ii) with respect to any Target Asset, the Equity Value with respect to such Target Asset shall be deemed to be equal to zero; 

provided further, that if the Equity Value for ICW Valencia/Valencia Corporate Center as calculated above would result in the holders of direct or
indirect Pre-Formation Interests in ICW Valencia, L.P. having an amount of Allocated Shares, prior to the application of the Intercompany Debt Adjustments, that is less than the value of the Intercompany Debt owed by ICW Valencia, L.P. to ICW Plaza,
L.P. (such shortfall being referred to as the “Intercompany Debt Shortfall”), then (i) Western Insurance Holdings, Inc. shall issue a promissory note with a term of three years to ICW Valencia, L.P. which shall be treated as an
Asset Adjustment with respect to ICW Valencia/Valencia Corporate Center and such promissory note (the “WIH Note”) shall have such face amount as shall be necessary to increase the Equity Value of ICW Valencia/Valencia Corporate
Center such that the Allocated Shares of holders of direct or indirect Pre-Formation Interests in ICW Valencia, L.P. shall increase by an amount, prior to the application of the Intercompany Debt Adjustments, equal to the Intercompany Debt Shortfall
and (ii) the Equity Value for ICW Valencia/Valencia Corporate Center shall be recalculated to give effect to the Asset Adjustment attributable to the issuance of the WIH Note. 







 Attached as Appendix A to this Schedule II are illustrative calculations of Equity
Value for a hypothetical portfolio of Target Assets. 
 “Actual Balance” shall mean: (i) with respect to each Existing
Loan to be assumed in connection with the IPO, the unpaid principal amount of and past due unpaid interest on such Existing Loan as of the IPO Closing Date and immediately prior to any such assumption and all assumption fees and any related expenses
with respect to such Existing Loan; and (ii) with respect to each Existing Loan to be prepaid, repaid or refinanced in connection with the IPO, the unpaid principal amount of and past due unpaid interest on such Existing Loan as of the IPO
Closing Date and immediately prior to any such prepayment, repayment or refinancing and any related prepayment penalties and any related expenses; provided, however, that in the event a Target Asset is not included in the Formation
Transactions pursuant to a merger (or contribution of all direct or indirect Pre-Formation Interests in such Target Asset) but a portion of the direct or indirect Pre-Formation Interests in such Target Asset is otherwise contributed to the Operating
Partnership or a subsidiary of the Operating Partnership, then the Actual Balance for such Target Asset shall be proportionately adjusted to take into account the portion of the direct or indirect Pre-Formation Interests in such Target Asset that
will not be so contributed. With respect to each Existing Loan to be assumed, prepaid, repaid or refinanced in connection with the Formation Transactions, the Actual Balance as of the Closing Date shall be determined by the REIT within forty five
(45) days prior to the date of the preliminary prospectus used in the IPO roadshow based on its good faith estimate of what such amounts will be as of the IPO Closing Date. 

“Asset Adjustment” shall mean with respect to each Target Asset and any Existing Loan relating to such Target Asset, an amount equal to
the Base Balance minus the Actual Balance (expressed as a positive or negative number, as applicable) with respect to all Existing Loans relating to such Target Asset, and in the case of ICW Valencia/Valencia Corporate Center, the face value of the
WIH Note shall be deemed to reduce the Actual Balance of the Existing Loan relating to ICW Valencia/Valencia Corporate Center. 
 “Base
Balance” shall mean with respect to each Existing Loan, the principal amount of such Existing Loan set forth on Appendix C to this Schedule II; provided, however, that in the event a Target Asset is not included
in the Formation Transactions pursuant to a merger (or contribution of all direct or indirect Pre-Formation Interests in such Target Asset) but a portion of the direct or indirect Pre-Formation Interests in such Target Asset is otherwise contributed
to the Operating Partnership or a subsidiary of the Operating Partnership, then the Base Balance for such Target Asset shall be proportionately adjusted to take into account the portion of the direct or indirect Pre-Formation Interests in such
Target Asset that will not be so contributed. 
 “Eliminated Asset” shall mean any Target Asset subject to the Formation
Transaction Documentation that is excluded pursuant to the terms of the Formation Transaction Documentation from the Formation Transactions. 

“Equity Percentage” shall mean with respect to each Target Asset, the percentage (expressed as a decimal) set forth opposite the name of
such Target Asset on Appendix B to this Schedule II (which percentage is based on the Fairness Opinion of Duff & Phelps, LLC and represents such 







 
Target Asset’s percentage of the net asset values of the Target Assets (other than the Management Company) and the net equity value of the Management Company, taken as a whole); provided,
however, that in the event a Target Asset is selected as or otherwise becomes for any reason an Eliminated Asset, then: (i) the Equity Percentage for each remaining Target Asset shall be recalculated as a fraction, the numerator of which is
the original Equity Percentage for such remaining Target Asset and the denominator of which is (A) 100 minus (B) the original Equity Percentage of the Eliminated Asset; and (ii) the Equity Percentage of the Eliminated Asset shall be
zero; and provided, further, that in the event a Target Asset is not included in the Formation Transactions pursuant to a merger (or contribution of all direct or indirect Pre-Formation Interests in such Target Asset) but a portion of
the direct or indirect Pre-Formation Interests in such Target Asset is otherwise contributed to the Operating Partnership or a subsidiary of the Operating Partnership, then, after giving effect to any Eliminated Assets pursuant to the preceding
proviso, the Equity Percentage for such Target Asset and for each other remaining Target Asset subject directly or indirectly to the Formation Transaction Documentation shall be proportionately adjusted to take into account the portion of the direct
or indirect Pre-Formation Interests in such Target Asset that will not be so contributed. 
 “Excluded Assets” has the meaning
set forth in Section 5.03 to the Agreement. 
 “Existing Loan” shall mean (i) each mortgage or mezzanine loan
secured by a Target Asset listed on Appendix C to this Schedule II and (ii) all unsecured indebtedness of an American Assets Entity or of an entity in which an American Assets Entity has a direct or indirect interest that
will be assumed, prepaid, repaid or refinanced in connection with the IPO and that is set forth on Appendix D to this Schedule II (all indebtedness falling within the scope of this clause (ii) shall be referred to as
“Entity Specific Debt”); for the avoidance of doubt, no Intercompany Debt shall constitute an Existing Loan (in order to avoid double counting, as Intercompany Debt is adjusted for through the definition of “Allocated
Share”). Existing Entity Specific Debt will be deemed to relate to the Target Asset(s) and, if to multiple Target Assets, in the proportions set forth opposite the name of such Entity Specific Debt on Appendix D to this
Schedule II, and all such Entity Specific Debt will be deemed to have a Base Balance of zero (because “Equity Percentage” as determined by Duff & Phelps, LLC was determined at the property level and did not take into
account Entity Specific Debt, Entity Specific Debt is deemed to be zero in order to cause a readjustment of “Equity Value” of all Target Assets after taking into account such Entity Specific Debt). 

“Target Asset” shall mean each property set forth on Appendix B to this Schedule II and the property management business
of American Assets, Inc. (the “Management Company”). 
 “Target Net Working Capital” has the meaning set forth
in Schedule 5.03 to the Agreement. 
 “Total Portfolio Adjustment” shall mean the sum (which may be a positive or
negative number) of all Asset Adjustments for every Target Asset, excluding Eliminated Assets. 
 “Total Formation Transaction
Value” shall mean the aggregate dollar value of (i) the cash, (ii) the REIT Shares and (iii) the OP Units that are issued or issuable to all Pre-Formation Participants in the Formation Transactions as set forth in the
Prospectus. Total Formation Transaction Value will be determined valuing REIT Shares and OP Units at a value per REIT Share or OP Unit equal to the IPO Price. 







 EXHIBITS 

 

			
	Exhibit A:	  	Form of Tax Protection Agreement
		
	Exhibit B:	  	Formation Transaction Documentation
		
	Exhibit C:	  	Operating Partnership Agreement
		
	Exhibit D:	  	Form of Registration Rights Agreement
		
	Exhibit E:	  	Lock-Up Agreement
		
	Exhibit F:	  	Order of Mergers


	








 Exhibit A 

Form of Tax Protection Agreement 

See Attached. 







 Exhibit B 

Formation Transaction Documentation 

Form of Forward REIT Merger Agreement 
 Form of
REIT Sub Forward Merger Agreement 
 Form of Forward OP Merger Agreement 

Form of OP Sub Forward Merger Agreement 
 Form
of OP Sub Reverse Merger Agreement 
 Form of OP Contribution Agreement 

Form of OP Sub Contribution Agreement 
 Form of
Alternate Contribution Agreement 
 Form of Tax Protection Agreement 

Amended and Restated Agreement of Limited Partnership of American Assets Trust, L.P. 

Registration Rights Agreement 
 Representation,
Warranty and Indemnity Agreement 
 Indemnity Escrow Agreement 

Lock-Up Agreement 
 Articles of Amendment and
Restatement of American Assets Trust, Inc. 
 Bylaws of American Assets Trust, Inc. 

Management Business Contribution Agreement 







 Exhibit C 

Operating Partnership Agreement 

See Attached. 







 Exhibit D 

Form of Registration Rights Agreement 

See Attached. 







 Exhibit E 

Lock-Up Agreement 

See Attached. 







 Exhibit F 

Order of Mergers 
 Each
step within each “Transaction Step” below must be completed before the transactions in the following “Transaction Step” may be completed. All transactions within each “Transaction Step” may be completed simultaneously
or in any order. 
 Transaction Step 1 

All Forward REIT Mergers 
 All REIT Sub Forward
Mergers 
 Transaction Step 2 

All Contributions to the OP (including the REIT’s contribution to the OP of the assets acquired in Step 1) 

Transaction Step 3 
 All Contributions to
subsidiaries of the OP (including, where applicable, the OP’s contribution to the applicable subsidiary of assets acquired in Step 2) 

Transaction Step 4 
 All OP Forward
Mergers except the OP Forward Merger set forth in Transaction Step 5 and Transaction Step 7 below 
 Transaction Step 5

 Forward Merger of Desert Hillside Holdings LLC with and into the Operating Partnership 

Transaction Step 6 
 All OP Sub Forward
Mergers except the OP Sub Forward Merger set forth in Transaction Step 7 below 
 Transaction Step 7 

Forward Merger of BWH Holdings LLC with and into the Operating Partnership 

Forward Merger of Desert Oceanside Holdings LLC with and into Pacific Oceanside Holdings LLC. 

Transaction Step 8 
 All OP Sub Reverse
Mergers