Document:

2005 Management Incentive Plan

  
 Exhibit 10(v).1

  
 BORDEN CHEMICAL, INC. 
 2005 MANAGEMENT INCENTIVE PLAN 
 Equity Participants 
  
 Eligibility 
  
 Associates are selected annually for participation in the Borden Chemical Management
Incentive Plan based on scope of responsibility and contribution. Participants are senior level contributors with a strategic business focus. 
  
 2005 Target Incentive and Allocation 
  
 Each participant will have a target incentive opportunity stated as a percentage of base salary. As an example, 
  
 Salary: $100,000 
 Target Incentive: 20% 
 Target Incentive Award: $20,000 
  
 The target incentive award will be comprised of the following components: 
  

	 	•	 	70% allocated to financial performance 

  

	 	•	 	30% allocated to a participant’s performance on incentive goals 

  
 The 70% allocated to financial performance will be distributed among a combination that includes BCI Global, Business Group (e.g. Forest Products) and specific business
units or regions (e.g. Resins NA). Participants will have a minimum of 20% of their incentive tied to the BCI Global performance. The remaining 50% will be tied to the appropriate business unit measure(s). An example of a distribution would be:

  

																					
	 	  	Financial Allocation

	 	 	 Incentive
 Goals

	 	 	Total

	 
	 	  	BCI Global

	 	 	Forest Products

	 	 	Resins NA

	 	 	 
	 % of Target Award
	  	 	20	%	 	 	25	%	 	 	25	%	 	 	30	%	 	 	100	%
	 Example
	  	$	4,000	 	 	$	5,000	 	 	$	5,000	 	 	$	6,000	 	 	$	20,000	 

  
 The 50% target allocation for specific
business units or regions may be allocated to a maximum of three business units with a minimum allocation of 15% to any one business unit. 

 Each business unit or region financial measure will have a minimum, target and maximum established for 2005. If the
minimum financial performance is not achieved, then no payment will be made for that unit or region. The relationship of financial performance to incentive payments is as follows: 
  

	•	 	When minimum financial performance is attained, 50% of the target incentive award allocated to that unit will be paid 

  

	•	 	When target financial performance is attained, the financial award will be 100% of target incentive award allocated to that unit 

  

	•	 	When maximum financial performance is attained, the financial award will be 200% of target incentive award allocated to that unit 

  
 For financial performance achieved between minimum and target or between target and maximum,
the incentive award will be determined on a prorata basis. 
  
 When the financial
performance of the unit is sufficient to generate an incentive payment, then a goals pool will be established for the unit and a participant is eligible to receive a payment based on the manager’s assessment of individual performance of goals.
The total payment for goals of all participants in a specific unit will not exceed the established goals pool. The maximum award under the plan for any one participant is 100% of the Target Incentive Award. 
  
 For example, if BCI achieves target financial performance but the unit is below minimum
performance, the participant will receive a payment for the portion of the target incentive award allocated to BCI but no unit or individual goals payment will be made. 
  
 Financial Performance Metrics 
  
 Borden Chemical’s Management Incentive Plan is designed to link rewards with critical financial metrics for the purpose of promoting leadership actions that are most
beneficial to the Company’s short- and long-term value creation. Managing cash and investments is critical for BCI to continue to meet obligations and generate investor value. 
  
 The EBITDA measure reflects the total business unit performance including expenses related to the sales, production and delivery of products
to customers. The ROGI measure reflects the optimum asset utilization of the business compared to target and management’s effective use of investment money. For purposes of the incentive plan, EBITDA and ROGI are calculated as follows:

  

	 	•	 	EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization excluding restructuring and gain/losses from the sale of businesses as approved by the Board

					
	 •      ROGI:
	  	EBIT1 x (1 – Tax Rate) + Depreciation +
Amortization2	  	 
	 	  	Total Assets 3 – Total Liabilities
4	  	 

	1	Excluding restructuring costs and gain/losses from the sale of businesses 

	2	Excluding other post employment benefit amortizations 

	3	Total Assets excluding cash, investments in subsidiaries and accumulated depreciation 

	4	Total Liabilities excluding debt and intracompany accounts 

  
 In 2005, the business units listed below will use both EBITDA and ROGI as financial measures: 
  

			
	 •      Borden Chemical - Global
  
 •      Forest
Products – North America
  
 •      Resins - North America
  
 •      Formaldehyde – North America
  
 •      Specialty
Resins – North America
  
 •      Oilfield
	 	 •      Australia
  
 •      Malaysia
  
 •      Latin America
  
 •      Brazil Consumer
  
 •      Brazil Resins
  
 •      Europe
  

  
 The following sample matrix
illustrates the relationship of EBITDA and ROGI financial performance for BCI Global to the 2005 incentive payment. Each business unit that has an EBITDA and ROGI combination will have a similar matrix. 
  
 BCI Global 
  

																												
	ROGI

	  	 % Of
Target
 Achieved

	 	 	Percentage of Target Paid

	 
	20.0%	  	115	%	 	 	117	%	 	 	133	%	 	 	150	%	 	 	167	%	 	 	184	%	 	 	200	%
	19.3%	  	110	%	 	 	100	%	 	 	117	%	 	 	133	%	 	 	150	%	 	 	167	%	 	 	184	%
	18.5%	  	105	%	 	 	88	%	 	 	100	%	 	 	117	%	 	 	133	%	 	 	150	%	 	 	167	%
	17.8%	  	100	%	 	 	75	%	 	 	88	%	 	 	100	%	 	 	117	%	 	 	133	%	 	 	150	%
	17.0%	  	95	%	 	 	63	%	 	 	75	%	 	 	88	%	 	 	100	%	 	 	117	%	 	 	133	%
	16.2%	  	90	%	 	 	50	%	 	 	63	%	 	 	75	%	 	 	88	%	 	 	100	%	 	 	117	%
	 	  	 	 	 	 	90	%	 	 	95	%	 	 	100	%	 	 	105	%	 	 	110	%	 	 	115	%
	 	  	 	 	 	$	164,610	 	 	$	173,755	 	 	$	182,900	 	 	$	192,045	 	 	$	201,190	 	 	$	210,335	 
	 	  	 	 	 	 	EBITDA Target	 

 When the 2005 audited financial results are available the financial award will be determined by first comparing the
actual EBITDA with the plan. When the actual results are between two of the numbers shown, the award percentage is calculated using a proportional increase or decrease. Once the actual EBITDA column is calculated, then a similar process will be used
to determine the ROGI row on the matrix, again using a proportional increase or decrease when actual results are between two of the numbers shown. 
  
 The business units listed below will have EBITDA only as their financial measure: 
  

			
	 •      Specialty Resins - Global
  
 •      Resins -
Global
  
 •      Formaldehyde – Global
  
 •      Phenol Formaldehyde
  
 •      Urea Formaldehyde
  
 •      Wax
  
 •      Wood Adhesives
  
 •      UV Coatings
	 	 •      Industrial Resins
  
 •      Electronics
  
 •      Laminates & Melamine Derivatives
  
 •      Nonwovens
  
 •      UK
  
 •      France
  
 •      Fentak
  
 •      China

  
 Each business unit that has EBITDA
only as the financial measure will use the following relationship between financial performance and incentive payment. 
  

										
	 	  	Minimum

	 	 	Target

	 	 	Maximum

	 
	 % of EBITDA Target
	  	90	%	 	100	%	 	115	%
	 % of Financial Award
	  	50	%	 	100	%	 	200	%

  
 For actual performance between the
points above, the financial incentive award will be calculated using a proportional increase. 
  
 Incentive Goals 
  
 At the end of the year
a pool will be established for payment of goals in relationship to the overall financial achievement of the business unit. Minimum financial performance must be achieved in order for the unit to establish a pool to pay individual goals. The
participant and the manager will meet to discuss the participant’s performance of the incentive goals. The participant may receive an incentive payment for goals performance based on the relative individual contribution as to other
participants. The total goals payments for the unit will not exceed the established pool.  

 CALCULATION EXAMPLE 
  
 Example Assumptions 
  
 Salary $100,000 
 Target Incentive 20%

 Target Incentive Award $20,000 
  
 The allocation of target incentive award is as follows: 
  

																					
	 	  	Financial Performance

	 	 	Incentive
Goals

	 	 	Total

	 
	 	  	BCI Global

	 	 	Forest Products

	 	 	Resins NA

	 	 	 
	 % of Target Award
	  	 	20	%	 	 	25	%	 	 	25	%	 	 	30	%	 	 	100	%
	 Example
	  	$	4,000	 	 	$	5,000	 	 	$	5,000	 	 	$	6,000	 	 	$	20,000	 

  
 After the calendar year ends and the
financial audits are completed, EBITDA and ROGI will be calculated for each financial target. Assessment of performance compared to the incentive goals will be completed by each participant’s manager. 
  
 The Financial Award 
  
 The participant’s financial award payment will be determined using the actual financial
performance of the combination of BCI Global and Business Group(s) and/or region. Each has its own EBITDA & ROGI matrix. 
  
 Assume the following 2005 actual financial performance and resulting incentive payments based on the matrix on page 3: 
  

										
	 	  	EBITDA% Achieved

	 	 	ROGI % Achieved

	 	 	Incentive Payment%

	 
	 BCI Global
	  	95	%	 	90	%	 	63	%
	 Forest Products
	  	95	%	 	95	%	 	75	%
	 Resins NA
	  	100	%	 	95	%	 	88	%

 Financial award calculation: 
  

																
	 	  	BCI Global

	 	 	Forest Products

	 	 	Resins- NA

	 	 	Total Financial

	 Incentive Target
	  	$	4,000	 	 	$	5,000	 	 	$	5,000	 	 	$	14,000
	 % Payment from Table
	  	 	63	%	 	 	75	%	 	 	88	%	 	 	 
	 Award Payment
	  	$	2,520	 	 	$	3,750	 	 	$	4,400	 	 	$	10,670

  
 At the end of the year, a Plan
participant and the manager will meet to discuss the participant’s performance of the incentive goals. 
  
 The manager will use the participant’s feedback, as well as input from peers to determine the overall effectiveness of the participant’s performance. In addition, leadership judgment will be applied to
determine the degree to which the participant’s efforts and initiative contributed to the Company’s overall success. 
  
 The participants will receive a relative portion of the goal pool based on individual contribution compared to other participants. 
  
 For the purpose of this example assume: 
  
 All goals were met and the manager recommends an award of 100% of the goal
target. Since the Resins business unit did not achieve 100%, the goals award will be adjusted to 88% to be consistent with the established pool. 
  

				
	 Target for incentive goals @ 30%:
	  	$	6,000
	 Goals payment @ 88% Award:
	  	$	5,280

  

				
	 Total incentive award:
	  	 	 
	 Financial award
	  	$	10,670
	 Goals award
	  	$	 5,280
	 	  	
	

	 Total Award
	  	$	15,950

  
 If you have any questions about the
incentive plan please contact your manager or human resources representative. 

 Borden Chemical Inc., 
 2005 Administrative Guidelines 
 For Incentive Plans 
  

	1.	Base Salary for Bonus Calculations 

  
 The December 31, 2005 annual base salary will be used to calculate an incentive award. 
  

	2.	Eligibility 

  
 To be eligible to receive an award under an incentive plan, you must be an active associate as of the date payments are made (typically by mid April). Exceptions to this requirement are detailed below under items 4.

  

	3.	New Hires, Transfers, or Promotions during the Incentive Period 

  
 For new hires or participants added to a plan in the first through third quarters, the bonus will be calculated on a pro-rated basis from the date of
hire, but only in whole months. Associates hired in the fourth quarter are not eligible for participation in the plan. 
  
 For promotions and transfers, the bonus will be prorated from the date of promotion or transfer in whole months. For promotions, this pro-ration will also
apply to changes in target incentive percentage and changes in goals. 
  
 For all pro-rations under this item, effective dates as of the first through the fifteenth of the month will count the full month. Effective dates as of the sixteenth through the last day of the month will not include that month in the
pro-ration calculation. 
  

	4.	Death or Disability During the Incentive Period. 

  
 The incentive earned as of the date of death will be paid, on a pro-rated basis, to the estate of the participant at the same time payments are made to
active associates. 
  
 Disabilities of 30 days or less will not
have an impact on the participant’s ability to continue to be eligible for an incentive. 
  
 If a disability lasts more than 30 days then the incentive will be earned only for the period worked. The period worked will be determined on a pro-rated basis up until the date of disability and from the date of
return to work. The pro-ration will operate in whole months where the first through the fifteenth as the date of disability will not count the month and the sixteenth through the end of the month as the date of disability will count the month; and
where the first through the fifteenth as the date of return to work will count the month and the sixteenth through the end of the month as the date of return to work will not count the month. Incentive payments will be made at the same time as they
are made to active associates. 
  

	5.	Adding Participants to an Incentive Plan 

  
 The criteria for participation in an incentive plan will be based on both similar job classifications as the list of current participants in this program
and a responsibility level commensurate with the participant’s ability to influence goal outcomes. 

 Participation in a local incentive plan requires the approval of the appropriate department, regional or
business Vice-President and the Vice-President, Human Resources. Participation in the Management Incentive Plan requires the approval of the CEO of BCI and the Compensation Committee of Board of Directors of Borden Chemical, Inc. 
  

	6.	Timing of payments 

  
 Bonus awards will be paid as quickly as possible after all final approvals are received. Financial results will need to be finalized as appropriate by
Borden Chemical Inc. and the independent auditors before bonuses can be calculated. The financial results and recommended payments must be submitted to the Borden Chemical Inc. Compensation Committee for review and approval prior to payments being
made. 
  

	7.	Benefits 

  
 Incentive payments made to associates who are active at the time of payment will be considered benefits eligible for purposes of U.S. retirement plans. In other countries, local regulations will prevail. 

 

	8.	Financial Adjustments 

  
 Actual financial results as reported on a GAAP basis will be utilized for incentive award calculations with the following exceptions: 
  

	 	•	 	Special situations, such as a provision for the sale or closing of a plant or business, may be proposed for exclusion if the proposal is presented when the charge is taken.
Exclusions will need to be approved by the Borden Chemical Inc. Board of Directors 

  

	 	•	 	Accounting policy changes dictated by the U.S. Securities and Exchange Commission (SEC), and the U.S. Financial Accountings Standards Board (FASB) or the Borden Chemical, Inc. Chief
Financial Officer, may be proposed for exclusion if the proposal is presented when the change is made. Exclusions will need to be approved by the Borden Chemical, Inc. Board of Directors. 

  

	 	•	 	If earnings were achieved in ways that are considered undesirable (such as reducing budgeted advertising expenditures where this would hurt the business), an adjustment may be made
at the discretion of the Borden Chemical, Inc. Board of Directors. 

  

	9.	Incentive Goals 

  
 Participation in a 2005 incentive plan is conditional on a participant’s performance incentive goals being entered in the incentive section of the
IMPACT database. 
  

	10.	Falling Short on the Incentive Goals 

  
 The Company believes that a participant’s effort towards the attainment of the incentive goals is a critical factor of an incentive plan. As such, if
a plan participant is deemed not to have made the necessary effort towards the attainment of the incentive goals, the Company reserves the right to modify any incentive award generated by the financial results. 

	11.	All Incentive Plan Payments Subject to Discretion 

  
 Notwithstanding the attainment of financial results, or part or all of the goals, all awards under the Plan are subject to the approval of the Borden
Chemical, Inc. Board of Directors. 
  

	12.	Integrity and Honesty 

  
 Borden Chemical values its reputation for integrity and honesty. Achieving business results at the expense of violation of the law, regulations, or
business ethics or allowing individuals under your supervision to behave in this manner is never in the best interest of the Company. Accordingly, if ethical or honesty standards of behavior are violated or if any such behavior of personnel under
your supervision is knowingly condoned, any award earned under an incentive plan, is subject to forfeiture. 
  
 Additionally, in the event that an action is initiated by a State, Federal or other regulatory agency or court which reflects unfavorably upon Borden Chemical or its products because of action or lack thereof on the
part of a plan participant (or an area of responsibility), all or part of the award is subject to forfeiture. All incentive plan payments are subject to discretion. Notwithstanding the attainment of financial results or part or all of performance
objectives, all awards under the incentive plan are subject to the approval of the CEO and the Borden Chemical Inc. Board of Directors. The company reserves the right to end or amend this plan at any time.Form of 5.25% Senior Unsecured Note Due 09/01/2015

 Exhibit 4.2 
  
 THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR
A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND, UNLESS AND UNTIL IT IS EXCHANGED
FOR SECURITIES IN DEFINITIVE FORM AS AFORESAID, MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY
OR ITS NOMINEE TO A SUCCESSOR DEPOSITARY OR ITS NOMINEE. 
  
 UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”), 55 WATER STREET, NEW YORK, NEW YORK TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
SUCH SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
  

			
	 CUSIP NO.: 69806L AF 1
	 	 PRINCIPAL AMOUNT
 $100,000,000

  
 PAN PACIFIC RETAIL
PROPERTIES, INC. 
 5.25% SENIOR UNSECURED NOTES DUE SEPTEMBER 1, 2015 
  
 Pan Pacific Retail Properties, Inc., a Maryland corporation (the “Company,” which term shall include any successor
under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of One Hundred Million Dollars on September 1, 2015, and to pay interest thereon from the date of
issuance, or from the most recent date to which interest has been paid or duly provided for, semiannually in arrears on March 1 and September 1 of each year (the “Interest Payment Dates”), commencing March 1, 2006 at the rate of 5.25% per
annum, until the entire principal amount hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Note (or one or more Predecessor Securities) is registered in the security register applicable to this Note at the close of business on February 15 or August 15 (the “Regular Record Dates”), as the case may be, immediately before
the Interest Payment Date regardless of whether the Regular Record Date is a Business Day. Any such interest not so punctually paid or duly provided for shall forthwith cease to 

  

 1 

 
be payable to the Holder on such Regular Record Date, and may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series (as defined below) not less than 10 days prior to
such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If any principal of or premium, if any, or interest on any of the Notes is not paid when due, then such overdue principal and, to the
extent permitted by law, such overdue premium or interest, as the case may be, shall bear interest, until paid or until such payment is duly provided for, at the rate of 5.25% per annum. 
  
 Payments of principal, premium, if any, and interest in respect of this Note will be made by the Company in Dollars by wire
transfer of immediately available funds in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debt; provided that, in the event that this Note is issued in definitive
certificated form, the Holder hereof shall have given appropriate wire transfer instructions to the Company and, in the event that such wire transfer instructions shall not have been given to the Company by the Holder of any Note issued in
definitive certificated form, payments of interest on such Note may be made by mailing a check for such interest to the address of such Holder as it appears on the Security Register by transfer to an account maintained by the payee located in the
United States. The place where the principal of, premium, if any, and interest on this Note shall be payable, where this Note may be surrendered for the registration of transfer or exchange and where notices or demands to or upon the Company in
respect of the Notes and the Indenture may be served shall be the office or agency maintained by the Company for such purpose, which shall initially be the Corporate Trust Office of the Trustee at 111 Sanders Creek Parkway, East Syracuse, New York
13057. 
  
 This Note is one of a duly authorized issue of
Securities of the Company (herein called the “Notes”), issued as a series of Securities under an indenture dated as of April 6, 2001 (the “Indenture”), between the Company and The Bank of New York Trust Company, N.A. (successor
to The Bank of New York), as trustee (the “Trustee,” which term includes any successor trustee under the Indenture with respect to the Notes), to which Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is
one of the duly authorized series designated as the “5.25% Senior Unsecured Notes due September 1, 2015,” limited (subject to exceptions provided in the Indenture) in aggregate principal amount to $100,000,000. All terms used in this Note
which are defined in the Indenture and not defined herein shall have the meanings assigned to them in the Indenture. 
  
 The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on the Notes and (b) certain restrictive
covenants and the related defaults and Events of Default applicable to the Company, in each case, upon compliance by the Company with certain conditions set forth in the Indenture, which provisions apply to this Note. 

 In addition to the covenants of the Company contained in the Indenture, the Company makes the following
covenants with respect to, and for the benefit of the Holders of, the Notes: 
  
 Limitation on Incurrence of Total Debt. The Company will not, and will not permit any Subsidiary to, incur any Debt, other than Intercompany Debt, if, immediately after giving effect to the incurrence of such
additional Debt and the application of the proceeds therefrom on a pro forma basis, the aggregate principal amount of all outstanding Debt of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is greater than
60% of the sum of (i) the Company’s Total Assets as of the end of the latest fiscal quarter covered in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission
(or, if such filing is not required under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the Trustee) prior to the incurrence of such additional Debt and (ii) the increase, if any, in Total Assets from the end
of such quarter including, without limitation, any increase in Total Assets caused by the application of the proceeds of such additional Debt (such increase together with the Company’s Total Assets is referred to as the “Adjusted Total
Assets”). 
  
 Limitation on Incurrence of Secured
Debt. The Company will not, and will not permit any Subsidiary to, incur any Secured Debt (including, without limitation, Acquired Debt) other than Intercompany Debt, if, immediately after giving effect to the incurrence of such additional
Secured Debt and the application of the proceeds therefrom on a pro forma basis, the aggregate principal amount of all outstanding Secured Debt of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is greater
than 40% of the Company’s Adjusted Total Assets. 
  
 Debt
Service Coverage. The Company will not, and will not permit any Subsidiary to, incur any Debt (including, without limitation, Acquired Debt) other than Intercompany Debt, if the ratio of Consolidated Income Available for Debt Service to the
Annual Debt Service Charge for the period consisting of the four consecutive fiscal quarters most recently ended prior to the date on which such additional Debt is to be incurred is less than 1.5 to 1.0, on a pro forma basis after giving effect to
the incurrence of such Debt and the application of the proceeds therefrom, and calculated on the assumption that (i) such Debt and any other Debt (including, without limitation, Acquired Debt) incurred by the Company or any of its Subsidiaries since
the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other Debt since the first day of such four-quarter period) had occurred on the first day of such period, (ii) the repayment or
retirement of any other Debt of the Company or any of its Subsidiaries since the first day of such four-quarter period had occurred on the first day of such period (except that, in making such computation, the amount of Debt under any revolving
credit facility, line of credit or similar facility shall be computed based upon the average daily balance of such Debt during such period), and (iii) in the case of any acquisition or disposition by the Company or any Subsidiary of any asset or
group of assets since the first day of such four-quarter period, including, without limitation, by merger, stock purchase or sale, or asset purchase or sale or otherwise, such acquisition or disposition had occurred on the first day of such period
with the appropriate adjustments with respect to such acquisition or disposition being included in such pro forma calculation. If the Debt giving rise to the need to make the foregoing calculation or any other Debt incurred after the first day of
the relevant four-quarter period bears interest at a floating rate then, for purposes of calculating the Annual Debt Service Charge, the interest rate on such Debt shall be computed on a pro forma basis as if the average interest rate which would
have been in effect during the entire such four-quarter period had been the applicable rate for the entire such period. 
  
 Maintenance of Total Unencumbered Assets. The Company will maintain at all times Total Unencumbered Assets of not less than 150% of the aggregate
outstanding principal amount of 

 
the Unsecured Debt of the Company and its Subsidiaries, computed on a consolidated basis in accordance with GAAP. 
  
 Certain Definitions. As used herein, the following terms will have the
meanings set forth below: 
  
 “Acquired
Debt” means Debt of a Person (i) existing at the time such Person is merged or consolidated with or into, or becomes a Subsidiary of, the Company or (ii) assumed by the Company or any of its Subsidiaries in connection with the acquisition
of assets from such Person. Acquired Debt shall be deemed to be incurred on the date the acquired Person is merged or consolidated with or into, or becomes a Subsidiary of, the Company or the date of the related acquisition, as the case may be.

  
 “Annual Debt Service Charge”
as of any date means the amount which is expensed in any 12-month period for interest on Debt of the Company and its Subsidiaries. 
  
 “Consolidated Income Available for Debt Service” for any period means Consolidated Net Income plus, without duplication,
amounts which have been deducted in determining Consolidated Net Income during such period for (i) Consolidated Interest Expense, (ii) provisions for taxes of the Company and its Subsidiaries based on income, (iii) amortization (other than
amortization of debt discount) and depreciation, (iv) provisions for losses from sales or joint ventures, (v) provisions for impairment losses, (vi) increases in deferred taxes and other non-cash charges, (vii) charges resulting from a change in
accounting principles, and (viii) charges for early extinguishment of debt, and less, without duplication, amounts which have been added in determining Consolidated Net Income during such period for (a) provisions for gains from sales or joint
ventures, and (b) decreases in deferred taxes and other non-cash items. 
  
 “Consolidated Interest Expense” for any period, and without duplication, means all interest (including the interest component of rentals on capitalized leases, letter of credit fees, commitment fees
and other like financial charges) and all amortization of debt discount on all Debt (including, without limitation, payment-in-kind, zero coupon and other like securities) but excluding legal fees, title insurance charges, other out-of-pocket fees
and expenses incurred in connection with the issuance of Debt and the amortization of any such debt issuance costs that are capitalized, all determined for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP. 

 
 “Consolidated Net Income” for any period
means the amount of consolidated net income (or loss) of the Company and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP. 
  
 “Debt” means any indebtedness of the Company or any Subsidiary, whether or not contingent,
in respect of (i) money borrowed or evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness secured by any mortgage, pledge, lien, charge, encumbrance, trust deed, deed of trust, deed to secure debt, security agreement or any
security interest existing on property owned by the Company or any Subsidiary, (iii) letters of credit or amounts representing the balance deferred and unpaid of the purchase price of any property except any such balance that constitutes an accrued
expense or trade payable or (iv) any lease of property by the Company or any Subsidiary as lessee that is required to be 

 
reflected on the Company’s consolidated balance sheet as a capitalized lease in accordance with GAAP, in the case of items of indebtedness under (i)
through (iii) above to the extent that any such items (other than letters of credit) would appear as liabilities on the Company’s consolidated balance sheet in accordance with GAAP, and also includes, to the extent not otherwise included, any
obligation of the Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary course of business), indebtedness of another person (other than the Company or any
Subsidiary) of the type referred to in (i), (ii), (iii) or (iv) above (it being understood that Debt shall be deemed to be incurred by the Company or any Subsidiary whenever the Company or such Subsidiary shall create, assume, guarantee or otherwise
become liable in respect thereof). 
  
 “GAAP” means generally accepted accounting principles, as in effect from time to time, as used in the United States applied on a consistent basis. 
  
 “Intercompany Debt” means indebtedness owed by the Company or any Subsidiary solely to the
Company or any Subsidiary. 
  
 “Secured
Debt” means Debt secured by any mortgage, lien, charge, encumbrance, trust deed, deed of trust, deed to secure debt, security agreement, pledge, conditional sale or other title retention agreement, capitalized lease or other security
interest or agreement granting or conveying security title to or a security interest in real property or other tangible assets. 
  
 “Total Assets” as of any date means the sum of (i) Undepreciated Real Estate Assets and (ii) all other assets of the
Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP (but excluding accounts receivable and intangibles). 
  
 “Total Unencumbered Assets” as of any date means Total Assets minus the value of any properties of the Company and its
Subsidiaries that are encumbered by any mortgage, charge, pledge, lien, security interest, trust deed, deed of trust, deed to secure debt, security agreement or other encumbrance of any kind (other than those relating to Intercompany Debt),
including the value of any stock of any Subsidiary that is so encumbered determined on a consolidated basis in accordance with GAAP. For purposes of this definition, the value of each property shall be equal to the purchase price or cost of each
such property and the value of any stock subject to any encumbrance shall be determined by reference to the value of the properties owned by the issuer of such stock as aforesaid. 
  
 “Undepreciated Real Estate Assets” as of any date means the amount of real estate assets of
the Company and its Subsidiaries on such date, before depreciation and amortization, determined on a consolidated basis in accordance with GAAP. 
  
 “Unsecured Debt” means Debt of the Company or any Subsidiary that is not Secured Debt. 
  
 The Notes may be redeemed at any time at the option of the Company, in whole
or from time to time in part, at a redemption price equal to the sum of (i) the principal amount of the Notes being redeemed plus accrued interest thereon to the redemption date and (ii) the Make-Whole Amount (as defined below), if any, with respect
to such Notes (the “Redemption Price”); provided 

 
that installments of interest on Notes which are payable on Interest Payment Dates falling on or prior to the relevant redemption dates shall be payable to
the Holders of such Notes (or one or more predecessor Notes) registered as such at the close of business on the relevant Regular Record Dates. 
  
 If notice has been given as provided in the Indenture and funds for the redemption of any Notes called for redemption shall have been made available on
the redemption date referred to in such notice, such Notes will cease to bear interest on the date fixed for such redemption specified in such notice and the only right of the Holders of the Notes will be to receive payment of the Redemption Price.

  
 Notice of any optional redemption of any Notes will be given
to Holders at their addresses, as shown in the security register for the Notes, not more than 60 nor less than 30 days prior to the date fixed for redemption. The notice of redemption will specify, among other items, the Redemption Price and the
principal amount of the Notes held by such Holder to be redeemed. 
  
 If less than all the Notes are to be redeemed at the option of the Company, the Company will notify the Trustee at least 45 days prior to giving notice of redemption (or such shorter notice period as is satisfactory to the Trustee) of the
aggregate principal amount of Notes to be redeemed and their redemption date. The Trustee shall select, in such manner as it shall deem fair and appropriate, Notes to be redeemed in whole or in part. 
  
 Certain Definitions: As used herein, the following terms will have the
meanings set forth below: 
  
 “Comparable
Treasury Price” means with respect to any Redemption Date for the Notes (i) the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations,
or (ii) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. 
  
 “Make-Whole Amount” means, in connection with any optional redemption of any Notes, the excess, if any, of (i) the
aggregate present value as of the date of such redemption of each dollar of principal being redeemed and the amount of interest (exclusive of interest accrued to the date of redemption) that would have been payable in respect of each such dollar if
such redemption had not been made, determined by discounting, on a semi-annual basis, such principal and interest at the Reinvestment Rate (determined on the third Business Day preceding the date such notice of redemption is given) from the
respective dates on which such principal and interest would have been payable if such redemption had not been made to the date of redemption over (ii) the aggregate principal amount of the Notes being redeemed. For purposes of the Indenture, all
references to “premium, if any” on the Notes shall be deemed to refer to the Make-Whole Amount, if any. 
  
 “Reference Treasury Dealer” means Banc of America Securities LLC and Wachovia Capital Markets, LLC and their respective
successors, and two other primary U.S. government securities dealers in New York City (each a “Primary Treasury Dealer”) selected by the Company; provided, however, that if any of the foregoing shall cease to be Primary Treasury Dealer,
the Company will substitute therefor another Primary Treasury Dealer. 

 “Reference Treasury Dealer Quotations” means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the comparable treasury issue (expressed in each case as a percentage of its principal amount) quoted in writing to the
Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date. 
  
 “Reinvestment Rate” means .20% plus the arithmetic mean of the yields under the heading “Week Ending” published
in the most recent Statistical Release under the caption “Treasury Constant Maturities” for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity of the Notes, as of the payment date of the principal
being redeemed. If no maturity exactly corresponds to such maturity, yields for the two published maturities most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate
shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. For the purposes of calculating the Reinvestment Rate, the most recent Statistical Release published
prior to the date of determination of the Make-Whole Amount shall be used. If the Statistical Release (or successor release) is not published during the week preceding the calculation date or does not contain the aforementioned yields, the
Reinvestment Rate shall mean the rate per annum equal to the semi-annual equivalent yield to maturity of the comparable treasury issue, calculated using a price for the comparable treasury issue (expressed as a percentage of its principal amount )
equal to the Comparable Treasury Price for such Redemption Date. 
  
 “Statistical Release” means the statistical release designated “H.15(519)” or any successor publication which is published weekly by the Federal Reserve System and which reports yields on
actively traded U.S. government securities adjusted to constant maturities, or, if such statistical release is not published at the time of any determination under the Indenture, then such other reasonably comparable index which shall be designated
by the Company. 
  
 If an Event of Default with respect to the
Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. 
  
 As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of
not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the
Trustee shall not have received from the Holders of a majority in principal amount of the Notes at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of
such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal of, or premium, if any, or interest on, this Note on or after the respective
due dates therefor. 

 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal
amount of the Outstanding Notes. The Indenture also contains provisions permitting the Holders of not less than a majority in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive compliance by the
Company with certain provisions of the Indenture. Furthermore, provisions in the Indenture permit the Holders of not less than a majority of the aggregate principal amount of the Outstanding Notes to waive, in certain circumstances, on behalf of all
Holders of the Notes, certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. 
  
 No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on, this Note at the times, places and rate, and in the coin or currency, herein prescribed. 
  
 As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any Place of Payment for the Notes, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the Security Registrar for the Notes duly executed by, the Holder hereof or his or her attorney duly authorized in writing, and thereupon one or more new Notes of authorized
denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. 
  
 As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal
amount of Notes of this series of different authorized denominations, as requested by the Holder surrendering the same. 
  
 The Notes of this series are issuable only in registered form without coupons in denominations of $1000 and any integral multiple thereof. No service
charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 
  
 Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary. 
  
 No recourse
shall be had for the payment of the principal of, or premium, if any, or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto,
against any past, present or future stockholder, employee, officer or director, as such, of the Company or of any successor, either directly or through the Company or any successor, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability being, 

 
by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 
  
 THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 
  
 Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made
as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon. 
  
 Unless the certificate of authentication hereon has been executed by the Trustee by manual signature of one of its
authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 
  
 All terms used in this security which are defined in the Indenture shall have the meaning assigned to them in the Indenture. 
  
 The headings included in this Note are for convenience only and shall not
affect the construction hereof. 

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. 
  

			
	PAN PACIFIC RETAIL PROPERTIES, INC.
		
	By:	 	 
	 	 	 Michael Haines

	 	 	 Vice President, Corporate Accounting

  
 Attest: 
  

			
		
	 By:
	 	 
	 	 	 Joseph B. Tyson

	 	 	Executive Vice President, Chief Financial Officer,
	 	 	 Treasurer and Secretary

  

 10 

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION: 
  
 This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. 
  

			
	THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee
		
	 By:
	 	 
	 	 	 Authorized Signatory

  
 Dated:
                            ,
             

 ASSIGNMENT FORM 
  
 FOR VALUE RECEIVED, the undersigned hereby 
 sells, assigns and transfers to 
  
 PLEASE INSERT SOCIAL 
 SECURITY OR OTHER IDENTIFYING 
 NUMBER OF ASSIGNEE 
  
                                       
                                        
                                        
                                        
                                        
                    
  
                                       
                                        
                                        
                                        
                                        
                    
  
                                       
                                        
                                        
                                        
                                        
                    
  
 (Please Print or Typewrite Name and Address 
 including Zip Code of Assignee) 
  

			
	the within Note of PAN PACIFIC RETAIL PROPERTIES, INC., and
	 ___________________________________
	  	 
	hereby does irrevocably constitute and appoint	  	 
	                                       
                                        
                                        
                                        
                                        
                   

	
	Attorney to transfer said Note on the books of the within-named Company with full power of substitution in the premises.

  

									
	 Dated:
	 	 _______________________________
	 	 	 	 	 	                                      
                                        
                 
					
	 	 	 	 	 	 	 	 	                                      
                                        
                 

  
 NOTICE: The signature to this
assignment must correspond with the name as it appears on the first page of the within Note in every particular, without alteration or enlargement or any change whatever. 
  

			
		
	 Signature Guaranty
	 	                                      
                                        
                 
	 	 	 (Signature must be guaranteed by

 a participant in
a signature

 guarantee medallion program)

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