ALEXANDER & BALDWIN INC
FORM 10-Q, EXHIBIT 10.A.(XXVI)
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>title_xi.txt
<DESCRIPTION>FORM 10-Q, EXHIBIT 10.A.(XXVI)
<TEXT>

Appendix III to Guarantee Commitment                              Document 9
                                                       Contract No. MA-13897

                               SECURITY AGREEMENT
                               SPECIAL PROVISIONS
                               ------------------

         THIS SECURITY AGREEMENT, Contract No. MA-13897, dated July 29, 2004
(this "Security Agreement"), is made and entered into by MATSON NAVIGATION
COMPANY, INC., a corporation organized under the laws of the State of Hawaii
(the "Shipowner"), and the UNITED STATES OF AMERICA (the "United States"),
represented by the SECRETARY OF TRANSPORTATION, acting by and through the
MARITIME ADMINISTRATOR (the "Secretary"), pursuant to Title XI of the Act.

                                    RECITALS:
                                    --------

         A. The Shipowner has entered into the Construction Contract, dated
May 29, 2002 (the "Construction Contract"), with Kvaerner Philadelphia Shipyard
Inc., a Pennsylvania corporation (the "Shipyard"), with respect to the
Construction of the vessel MAUNAWILI, Official Number 1153166 (the "Vessel").

         B. Kvaerner ASA, a Norwegian company (the "Guarantor"), entered into
that certain Guaranty with the Shipowner, dated May 29, 2002 (the "Guaranty"),
guaranteeing performance by the Shipyard under the Construction Contract,
including, but not limited to, post-delivery warranty obligations.

         D. On the date hereof, the Secretary entered into, and the Shipowner
accepted a Commitment to Guarantee Obligations, Contract No. MA-13895, whereby
the United States has committed itself to guarantee the payment in full of all
the unpaid interest on, and the unpaid principal balance of, Obligations
(as defined herein) in the aggregate principal amount not to exceed eighty-seven
and one-half percent (87-1/2%) of the Actual Cost of the Vessel, which amounts
are set out in Table A.
               -------

         E. The Shipowner has entered into the Bond Purchase Agreement providing
for the sale and delivery, on the Closing Date, of obligations in the aggregate
principal amount of $55,000,000, to be designated "United States Government
Guaranteed Ship Financing Bonds, Maunawili Series" (the "Obligations"), having
the maturity dates and interest rates set forth in the Bond Purchase Agreement,
the Indenture and the Obligations.

         F. On the date hereof, the Shipowner and Wells Fargo Bank, N.A., a
national banking association, as Indenture Trustee, executed and delivered the
Trust Indenture (the "Indenture") pursuant to which the Shipowner will issue the
Obligations.

         G. On the date hereof, the Secretary and the Indenture Trustee executed
the Authorization Agreement, Contract No. MA-13896, which authorizes the
Indenture Trustee to endorse, execute and authenticate the Secretary's Guarantee
on each of the Obligations.

         H. As security for the due and timely payment of the Secretary's Note,
issued this date by the Shipowner, and for the Secretary's issuance of the
Guarantees, the Shipowner has executed and delivered the Security Agreement,
Contract No. MA-13897, and Amendment No. 1 to Title XI Reserve Fund and
Financial Agreement, Contract No. MA-13855, granting the Secretary a security
interest in, among other things, the Construction Contract, and certain other
property, tangible and intangible, which the Shipowner now has or hereafter will
acquire, and all of the proceeds thereof, and on the Delivery Date the Shipowner
will execute and deliver the Mortgage, Contract No. MA-13898, granting the
Secretary a security interest in the Vessel.

         I. As further security to the Secretary and in consideration of the
Secretary agreeing to issue the Guarantees, the Shipyard has executed and
delivered the Consent of Shipyard to the assignment of the Construction Contract
to the Secretary hereunder.

         J. As further security to the Secretary and in consideration of the
Secretary agreeing to issue the Guarantees, the Guarantor has executed and
delivered the Consent of Guarantor to the assignment by Shipowner to the
Secretary hereunder of the Guaranty.

         K. In order to implement certain aspects of the transactions
contemplated by the Security Agreement and the Financial Agreement, the
Secretary and the Shipowner have entered into the Depository Agreement, Contract
No. MA-13899, on the date hereof.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and in order to provide
security to the Secretary for the Secretary's Note provided for herein, the
parties hereto hereby agree as follows:

         1. Concerning These Special and General Provisions. This Security
            -----------------------------------------------
Agreement shall consist of two parts: the Special Provisions and the General
Provisions attached hereto as Exhibit 1 of the Security Agreement and
incorporated herein by reference. In the event of any conflict, or inconsistency
between the Special Provisions of this Security Agreement and Exhibit 1 hereto,
the Special Provisions shall control.

         2. No Construction Period Financing. The parties acknowledge that
            --------------------------------
pursuant to the Construction Contract, the Shipowner has no responsibility for,
or risk in the Vessel under construction, and that its only obligation is to pay
the entire Purchase Price for the Vessel upon acceptance of delivery upon
completion of the Vessel in accordance with that Construction Contract, and that
any and all such responsibility for, or risk in the Vessel shall arise only upon
such delivery and payment. The parties further acknowledge that all proceeds of
the Obligations sold prior to the Delivery Date shall be deposited in the Escrow
Fund, and no withdrawal from the Escrow Fund will be made until such delivery
giving rise to the obligation of payment for the Vessel. In result, neither the
Shipowner nor the Secretary bear any pre-delivery risk of loss or damage to, or
performance by, the Shipyard, and all provisions in the General Provision of
this Agreement regarding Shipowner obligations for pre-delivery insurance, loss
proceeds, performance bonds and security interest against the Shipyard shall not
apply.

         3. Additions, Deletions and Amendments to Exhibit 1. The following
            ------------------------------------------------
additions, deletions and amendments are hereby made to the Security Agreement:

         (a) Concerning Section 1.01. The following is added after the period at
             -----------------------
the end of Section 1.01:

             "Whenever there is a reference to a Vessel, any vessel or
             Vessels signifying more than one Vessel, the reference shall
             be read as applying to the "Vessel" in the singular, except as
             otherwise required by the Financial Agreement or the
             Depository Agreement."

         (b) Concerning Section 1.03.
             -----------------------

             (1)      Granting Clause (3) is amended by adding the words ", all
charters of the Vessel" before the words "any charter hire".

             (2)      Granting Clause (8) is renumbered as Granting Clause (9)
and a new Granting Clause (8) is added as follows:

             "(8) the Guaranty."

             The reference to "paragraphs (1) through (7)" in newly
renumbered Granting Clause (9) is changed to "paragraphs (1) through (8); and
Granting Clause (9) is renumbered as Granting Clause (10), and the words "date
hereof" are deleted from newly renumbered Clause (10) and the words "Delivery
Date" are inserted in lieu thereof.

         (c) Concerning Section 2.01. The following words are added prior to the
             -----------------------
semicolon at the end of Section 2.01(a)(3): ", except that the above
representations and warranties regarding the Mortgage shall be true effective as
of the Delivery Date".

         (d) Concerning Section 2.02. The following changes are made to Section
             -----------------------
2.02:

             (1)      In Section 2.02(a), the words "On the date of this
Security Agreement" are deleted and the words "Effective as of the Delivery
Date" are inserted in lieu thereof.

             (2)      In Section 2.02(b)(1), the word "The" in the first line is
deleted and the following words are inserted in lieu thereof: "Except as
otherwise permitted in the Financial Agreement, the".

             (3)      Section 2.03(a) and (b) are deleted in their entirety and
the following inserted in lieu thereof:

             "On and after the Delivery Date, the Construction Contract
             shall be maintained in full force and effect insofar as it
             relates to post-delivery performance by the Shipowner and the
             Shipyard, and the Shipowner shall not, without the Secretary's
             prior written consent, amend, modify, assign or terminate the
             Construction Contract or consent to any change therein which
             releases the Shipyard from its post-delivery obligations under
             the Construction Contract or any applicable laws, conventions,
             rules and regulations."

         (e) Concerning Section 2.05. The following changes are made to Section
             -----------------------
2.05:

             (1)      In connection with Section 2.05(b)(3), and the last
paragraph of Section 2.05(e) relating to liability insurance, and cargo
insurance, the maximum amount of self-insurance permitted to the Shipowner in
each case is $2,500,000 per occurrence.

             (2)      In connection with subparagraph (ii) of the initial
paragraph of Section 2.05(c), the Secretary shall permit payment of losses up to
an amount of $2,500,000 to be made directly to the Shipowner.

             (3)      In connection with Section 2.05(l), as evidence of
insurance maintained under Section 2.05, the Shipowner may submit a broker's
cover note or comparable certificate of insurance setting forth the terms of the
policies; provided, however, that the Secretary reserves the right at any time
to require the delivery to him of all original policies or copies of policies
pursuant to Section 2.05(l) and all of the provisions of said Section 2.05(l)
shall apply to said policies.

         (f) Concerning Section 2.07. The words ", termination of the
             -----------------------
Construction Contract relating to such Vessel" are deleted from the first
paragraph of Section 2.07, and the word "termination" is deleted from
subparagraph (b) thereof.

         (g) Concerning Section 2.08(c). The words "NOTICE OF FLEET MORTGAGE"
             --------------------------
are deleted and the following words inserted in lieu thereof: "NOTICE OF SHIP
MORTGAGE".

         (h) Concerning Section 5.02. The second sentence of Section 5.02 is
             -----------------------
deleted in its entirety.

         (i) Concerning Section 5.03(b).  Section 5.03(b) is deleted in its
             --------------------------
entirety, and the following inserted in lieu thereof:

             "(b) Any amount, as determined by the Secretary, on deposit in
             the Escrow Fund which represents interest on the principal
             amount deposited, may, unless there is an existing default, be
             disbursed by the Secretary to the Shipowner upon the
             Shipowner's Request made not more than ten (10) Business Days
             prior to the final disbursement of such principal amount on
             the Delivery Date, or made at least sixty (60) days after such
             final disbursement of such principal amount."

         (j) Concerning Section 6.01(b):
             --------------------------

             (1)      Section 6.01(b)(3) is hereby amended by adding the
following prior to the semicolon at the end thereof:

             "provided, however, that, for purposes of Section 6.01(b)(3)
              -----------------
             and Section 6.01(b)(6), in the event of any default pursuant
             to Section 2.01(a)(5) the cure period may exceed thirty (30)
             days after such notice for a period of up to forty-five (45)
             days during which the Shipowner is diligently attempting to
             resolve, stay or adequately provide for such litigation,
             proceeding or investigation referred to in said Section
             2.01(a)(5) in a manner that would not prevent or jeopardize
             the performance by the Shipowner of its Obligations under the
             Documents"

             (2)      Section 6.01(b)(9) is hereby amended by adding the
following prior to the period at the end thereof:

             "continued after the Shipowner receives actual knowledge of such
             default"

         (k) Concerning Section 6.04. Section 6.04(b)(4) is hereby amended by
             -----------------------
inserting the words "with a copy of said notice" between the words "Authorized
Newspaper" and the words "to the Shipowner".

         (l) Concerning Section 8.01(a). The following words are added to
             --------------------------
Section 8.01(a) after the words "provided that,": "except as otherwise permitted
in the Financial Agreement,".

         (m) Concerning Section 9.01. Subject to Section 9.01, any notice,
             -----------------------
request, demand, direction, consent waiver, approval or other communication,
when given to a party hereto, shall be addressed as follows:


<PAGE>


         If to the Secretary:             Secretary of Transportation
                                          U.S. Department of Transportation
                                          c/o Maritime Administrator
                                          Maritime Administration
                                          400 Seventh Street, S.W.
                                          Washington, D.C.  20590
                                          Telephone: 202-366-5882
                                          Facsimile: 202-366-7485
                                          Attention: Richard M. Lorr, Esq.
                                                     Office of Chief Counsel
                                          E-Mail: richard.lorr@marad.dot.gov

         If to the Shipowner:             Matson Navigation Company, Inc.
                                          555 12th Street
                                          Oakland, CA  94607
                                          Telephone: 510-628-4583
                                          Facsimile: 510-628-7331
                                          Attention: Kevin C. O'Rourke, Esq.
                                                     Senior Vice President &
                                                     General Counsel
                                          E-Mail: korourke@matson.com

         If to the Indenture Trustee:     Wells Fargo Bank, N.A.
                                          Corporate Trust Services
                                          555 Montgomery Street, 10th Floor
                                          San Francisco, CA  94111
                                          Telephone: 415-396-6774
                                          Facsimile: 415-395-9064
                                          Attention: Karen T. Mitani
                                                     Vice President-Manager
                                          E-Mail: karen.t.mitani@wellsfargo.com

         4. Governing Law. This Security Agreement and the rights and
            -------------
obligations of the parties hereto shall be governed and construed in accordance
with the United States maritime laws, to the extent applicable, and otherwise in
accordance with the laws of the State of California.

         5. Execution of Counterparts. This Security Agreement may be executed
            -------------------------
in any number of counterparts. All such counterparts shall be deemed to be
originals, and shall constitute but one and the same document.

         6. Inconsistencies. Notwithstanding any provisions herein, in the event
            ---------------
here are inconsistencies between the original of this document held by the
Secretary and the original of this document held by any other party hereto, the
provisions of the original of this document held by the Secretary shall prevail.


                            (SIGNATURE PAGE FOLLOWS)


<PAGE>


         IN WITNESS WHEREOF, this Security Agreement Special Provisions has been
executed by the parties hereto as of the day and year first above written.


                                             SHIPOWNER
                                             ---------

                                             MATSON NAVIGATION COMPANY, INC.


                                             By: /s/ Matthew J. Cox
                                                 ---------------------------
Attest:                                          Name: Matthew J. Cox
------                                           Title: Senior Vice President &
                                                        Chief Financial Officer
By: /s/ Kevin C. O'Rourke
    --------------------------------
    Name: Kevin C. O'Rourke
    Title: Senior Vice President &
           General Counsel

                                             UNITED STATES
                                             -------------

                                             UNITED STATES OF AMERICA,
                                             SECRETARY OF TRANSPORTATION

                                             BY: MARITIME ADMINISTRATOR


                                             By: /s/ Joel C. Richard
                                                 ----------------------------
                                                 Secretary
Attest:                                          Maritime Administration
------

By: /s/ Sarah J. Washington
    -----------------------------------
    Assistant Secretary
    Maritime Administration



<PAGE>


                               EXHIBITS/SCHEDULES
                                     TO THE
                      SECURITY AGREEMENT SPECIAL PROVISIONS
                      -------------------------------------


Schedule X    -   Schedule of Definitions to Security Agreement
Exhibit 1     -   General Provisions Incorporated into the Security Agreement by
                  Reference
Exhibit 2     -   Form of Secretary's Note
Exhibit 3     -   Form of First Preferred Ship Mortgage
Exhibit 4     -   Amendment No. 1 to Financial Agreement
Exhibit 5     -   Construction Contract
Exhibit 6     -   Form of Consent of Shipyard
Exhibit 7     -   Guaranty
Exhibit 8     -   Form of Consent of Guarantor
Exhibit 9     -   Depository Agreement



<PAGE>


                                     TABLE A
                                     TO THE
                      SECURITY AGREEMENT SPECIAL PROVISIONS
                      -------------------------------------

         The aggregate Actual Cost of the Vessel as of the date hereof as
determined by the Secretary, namely, (i) the amounts paid by or for the account
of the Shipowner as of the date hereof for the Construction of the Vessel, plus
(ii) the amount which the Shipowner was on said date obligated under the
Construction Contract to pay for the Construction of the Vessel as of the date
determined by the Secretary, plus (iii) other amounts estimated to be paid by
the Shipowner, is $102,925,340, less foreign items of $22,079,819*, for a net
Actual Cost of $80,845,521.

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------
ITEM                                        AMOUNT                 AMOUNT                TOTAL ($)
                                            PAID ($)              OBLIGATED
                                                                TO BE PAID ($)
-----------------------------------------------------------------------------------------------------------
<S>                                        <C>                     <C>                 <C>
Contract Price                             91,625,000              2,375,000            94,000,000
-----------------------------------------------------------------------------------------------------------
Changes & Extras                            2,388,404                                    2,388,404
-----------------------------------------------------------------------------------------------------------
Spare Parts
-----------------------------------------------------------------------------------------------------------
Owner-Furnished Items**                        18,814              2,455,186             2,474,000
-----------------------------------------------------------------------------------------------------------
Design, Engineering & Inspection**            975,724                599,276             1,575,000
-----------------------------------------------------------------------------------------------------------
Estimated Guarantee Fee                     2,487,936                                    2,487,936
-----------------------------------------------------------------------------------------------------------
Total Actual Cost                          97,495,878              5,429,462           102,925,340*
-----------------------------------------------------------------------------------------------------------

*    Less $22,079,819 of foreign costs shipped on or after November 21, 2002, yielding a total Actual Cost of $80,845,521.

**   "Amount Paid" is through June, 2004.  "Amount Obligated to be Paid" is estimated.

</TABLE>




<PAGE>


Schedule X to the Security Agreement                               Document 10


                             SCHEDULE OF DEFINITIONS
                             -----------------------

         "Act" means the Merchant Marine Act, 1936, as amended and in effect on
the Closing Date.

         "Actual Cost" means the actual cost of a Vessel, as set forth in Table
A of the Security Agreement or as subsequently redetermined by the Secretary
pursuant to the Security Agreement and the Act.

         "Audited Financial Statements" means the annual audit of the
Shipowner's accounts in accordance with generally accepted auditing standards by
independent certified public accountants or independent licensed public
accountants, certified or licensed by a regulatory authority of a state or other
political subdivision of the United States, who may be the Shipowner's regular
auditors.

         "Authorization Agreement" means the Authorization Agreement, Contract
No. MA-13896, dated as of the Closing Date, between the Secretary and the
Indenture Trustee, whereby the Secretary authorizes the Guarantee of the United
States to be endorsed on the Obligations, as the same is originally executed, or
as modified, amended or supplemented therein.

         "Authorized Newspapers" means The Wall Street Journal or if it ceases
to exist, then in such other newspapers as the Secretary may designate.

         "Bond" means each, and "Bonds" means every sinking fund bond in the
aggregate principal amount of $55,000,000, designated "United States Government
Guaranteed Ship Financing Bonds, Maunawili Series," issued by the Shipowner and
bearing a Guarantee that is authenticated and delivered under the Authorization
Agreement and the Indenture having the Stated Maturity and interest rate set
forth in the Bond Purchase Agreement and the Indenture.

         "Bond Purchase Agreement" means the agreement for the purchase of the
Bonds, executed by the Shipowner and the Purchaser named therein, as originally
executed, modified or supplemented.

         "Business Day" means a day which is not a Saturday, Sunday or a bank
holiday under the laws of the United States or the States of California, New
York and the District of Columbia.

         "Chapter 313" means the provisions of 46 United States Code Chapter
313, as amended.

         "Classification Society" means the American Bureau of Shipping or, as
specified in the Special Provisions of the Security Agreement, either a member
of the International Association of Classification Societies ("IACS") that has
been ISO 9000 series registered or an IACS member that meets the requirements of
the International Maritime Organization, is qualified under a Quality Systems
Certificate Scheme and recognized by the United States Coast Guard and the
Secretary as meeting acceptable standards.

         "Closing Date" or "Closing" means the date when the Security Agreement
is executed and delivered by the Shipowner.

         "Commitment to Guarantee Obligations" has the same meaning as the term
Guarantee Commitment.

         "Company" means the entity designated as such under the Financial
Agreement.

         "Consent of Shipyard" means the document evidencing the Shipyard's
consent to assignment of the Construction Contract to the Secretary under the
Security Agreement as originally executed, modified, amended or supplemented.

         "Consent of Guarantor" means the document evidencing the Guarantor's
consent to the assignment of the Guaranty relating to the Construction of the
Vessel to the Secretary under the Security Agreement as originally executed,
modified, amended or supplemented.

         "Construction" means construction of the Vessel, including designing,
inspecting, outfitting and equipping thereof and post-delivery obligations
relating thereto, pursuant to the terms of the Construction Contract.

         "Construction Contract" means the Construction Contract between the
Shipowner and the Shipyard, dated May 29, 2002, relating to the Construction of
the Vessel as originally executed, or as modified or supplemented pursuant to
the applicable provisions thereof.

         "Default" when used in the Security Agreement has the meaning
attributed to it in Article VI thereof.

         "Delivery Date" means the date on which the Vessel is delivered to and
accepted by the Shipowner pursuant to the Construction Contract.

         "Deposit Fund" means the account held pursuant to Section 1109 of the
Act and in accordance with the terms of the Depository Agreement.

         "Depository Agreement" means the Depository Agreement, Contract No.
MA-13899, dated as of the Closing Date, between the Shipowner and the Secretary,
as originally executed, or as modified or supplemented in accordance with the
applicable provisions thereof.

         "Eligible Investment" has the meaning given by Section 5 of the
Financial Agreement.

         "Escrow Fund" means the account held by the Secretary, established
under Section 1108 of the Act and administered pursuant to Article V of the
Security Agreement.

         "Financial Agreement" means the Title XI Reserve Fund and Financial
Agreement, Contract No. MA-13855, executed by the Shipowner and the Secretary,
as originally executed, or as modified, amended or supplemented.

         "Financial Asset" has the meaning given by Article 8-102(a)(9) of the
UCC.

         "Government Use" means the use of a Vessel or requisition of its title
required by a government or governmental body of the United States of America.

         "Guarantee" means each, and the "Guarantees" means every, guarantee of
an Obligation by the United States pursuant to Title XI of the Act, as provided
in the Authorization Agreement.

         "Guarantee Commitment" means the Commitment to Guarantee Obligations,
Contract No. MA-13895, dated as of the Closing Date, executed by the Secretary
and accepted by the Shipowner relating to the Guarantees, as originally executed
or as modified, amended or supplemented.

         "Guarantor" has the meaning ascribed thereto in Recital B of the
Security Agreement.

         "Guaranty" means the Guaranty dated May 29, 2002, between the Guarantor
and the Shipowner.

         "Increased Security" means the Secretary's Note, the Security
Agreement, the Vessel, the Security, the Escrow Fund, the Title XI Reserve Fund,
the Guaranty, the Policies of Insurance, and the proceeds of the foregoing.

         "Indenture" means the Trust Indenture, between the Shipowner and the
Indenture Trustee, as originally executed, or as modified, amended or
supplemented.

         "Indenture Default" has the meaning specified in Article VI of the
Indenture.

         "Indenture Trustee" means Wells Fargo Bank, N.A., a national banking
association, and any successor trustee under the Indenture.

         "Interest Payment Date" means with respect to any Obligation, the date
when any installment of interest on such Obligation is due and payable.

         "Long-Term Debt" means, as of any date, the total notes, bonds,
debentures, equipment obligations and other evidence of indebtedness that would
be included in long term debt in accordance with generally accepted accounting
principles; provided, such term shall not include any non-recourse liability of
            --------
any unconsolidated entity for which the Company has no legal liability. There
shall also be included any guarantee or other liability for the debt of any
other Person, not otherwise included on the balance sheet.

         "Maturity" when used with respect to any Obligation, means the date on
which the principal of such Obligation becomes due and payable as therein
provided, whether at the Stated Maturity or by redemption, declaration of
acceleration or otherwise.

         "Monies Due with Respect to Construction of the Vessels" has the
meaning specified in Section 1.03 of the Security Agreement.

         "Mortgage" means the first preferred ship mortgage on the Vessel,
Contract No. MA-13898, dated as of the Delivery Date, by the Shipowner to the
Secretary, as originally executed, modified, amended or supplemented.

         "Mortgagee" means the Secretary, as Mortgagee under the Mortgage.

         "Mortgagor" means the Shipowner, as Mortgagor under the Mortgage.

         "Net Worth" means, as of any date, the total of paid-in capital stock,
paid-in surplus, earned surplus and appropriated surplus, and all other amounts
that would be included in net worth in accordance with generally accepted
accounting principles, but exclusive of (1) any receivables from any
stockholder, director, Officer or employee of the Company or from any Related
Party (other than current receivables arising out of the ordinary course of
business and not outstanding for more than sixty (60) days), and (2) any
increment resulting from the reappraisal of assets.

         "Obligation" means each, and "Obligations" means every Bond.

         "Obligee" means each, and "Obligees" means every, holder of an
Obligation.

         "Offering Circular" means the Offering Circular relating to the
issuance and sale of each Obligation.

         "Officer's Certificate" means a certificate conforming to Section 1.02
of the Security Agreement or the Indenture as the context may require.

         "Outstanding" when used with reference to the Obligations, shall mean
all Obligations theretofore issued under the Indenture, except: (1) Obligations
Retired or Paid; and (2) Obligations in lieu of which other Obligations have
been issued under the Indenture.

         "Paying Agent" means any bank or trust company meeting the
qualifications in Section 7.02(a) of the Indenture and appointed by the
Shipowner under Section 4.02 of the Indenture to pay the principal of (and
premium, if any) or interest on the Obligations on behalf of the Shipowner.

         "Payment Default" has the meaning specified in Section 6.01 of the
Security Agreement.

         "Person" or "Persons" means any individual, corporation, partnership,
joint venture, association, limited liability company, joint-stock company,
trust, unincorporated organization, government, or any agency or political
subdivision thereof.

         "Policies of Insurance" and "policies" means all cover notes, binders,
policies of insurance and certificates of entry in a protection and indemnity
association, club or syndicate with respect to the Vessel (including all
endorsements and riders thereto), including, but not limited, to all insurance
required under Section 2.05 of the Security Agreement.

         "Redemption Date" means a date fixed for the redemption of an
Obligation by the Indenture.

         "Related Party" means one that can exercise control or significant
influence over the management and/or operating policies of another Person, to
the extent that one of the Persons may be prevented from fully pursuing its own
separate interests. Related Parties consist of all affiliates of an enterprise,
including (1) its management and their immediate families, (2) its principal
owners and their immediate families, (3) its investments accounted for by the
equity method, (4) beneficial employee trusts that are managed by the management
of the enterprise, and (5) any Person that may, or does, deal with the
enterprise and has ownership of, control over, or can significantly influence
the management or operating policies of another Person to the extent that an
arm's-length transaction may not be achieved.

         "Request" means a written request to a Person for the action therein
specified, signed by a Responsible Officer of the Person making such request.

         "Responsible Officer" means (1) in the case of any business entity, the
chairman of the board of directors, the president, any executive or senior vice
president, the secretary, the treasurer, member or partner, (2) in the case of
any commercial bank, the chairman or vice-chairman of the executive committee of
the board of directors or trustees, the president, any executive or senior vice
president, the secretary, the treasurer, any trust officer, and (3) with respect
to the signing or authentication of Obligations and Guarantees by the Indenture
Trustee, any person specifically authorized by the Indenture Trustee to sign or
authenticate Obligations.

         "Retired or Paid" as applied to Obligations and the indebtedness
evidenced thereby means that such Obligations shall be deemed to have been so
retired or paid and shall no longer be entitled to any rights or benefits
provided in the Indenture if: (1) such Obligations shall have been paid in full;
(2) such Obligations shall have been canceled by the Indenture Trustee; or (3)
such Obligations shall have become due and payable at Maturity and funds
sufficient for the payment of such Obligations (including interest to the date
of Maturity, or in the case of a payment after Maturity, to the date of payment,
together with any premium thereon) and available for such payment and are held
by the Indenture Trustee or any Paying Agent with irrevocable directions, to pay
such Obligations; provided that, the foregoing definition is subject to Section
                  -------------
6.08 of the Indenture.

         "Rights Under the Construction Contracts and Related Contracts" shall
have the meaning specified in Section 1.03 of the Security Agreement.

         "Secretary" means the Secretary of Transportation or any officials duly
authorized to perform the functions of the Secretary of Transportation under
Title XI of the Act.

         "Secretary's Note" means a promissory note issued and delivered by the
Shipowner to the Secretary substantially in the form of Exhibit 2 of the
Security Agreement, including any promissory note issued in substitution for, or
any endorsement or supplement thereof.

         "Secretary's Notice" means a notice from the Secretary to the Indenture
Trustee that a Security Default, within the meaning of Section 6.01(b) of the
Security Agreement, has occurred.

         "Security" has the meaning specified in Section 1.03 of the Security
Agreement.

         "Security Agreement" means the Security Agreement, Contract No.
MA-13897, dated as of the Closing Date, consisting of the Special Provisions,
the General Provisions and this Schedule X, executed by the Shipowner as
security for the Secretary, as originally executed, or as modified, amended or
supplemented.

         "Security Default" has the meaning specified in Section 6.01 of the
Security Agreement.

         "Shipowner" means Matson Navigation Company, Inc., a Hawaii
corporation, and shall include its successors and assigns.

         "Shipyard" means Kvaerner Philadelphia Shipyard Inc., a Pennsylvania
corporation, as party to the Construction Contract.

         "Stated Maturity" means the date determinable as set forth in any
Obligation as the final date on which the principal of such Obligation is due
and payable.

         "Successor" means a Person formed by or surviving a consolidation or
merger with the Shipowner or to which the Vessels have been sold.

         "Title XI" means Title XI of the Act.

         "Title XI Reserve Fund" has the meaning specified in the Financial
Agreement.

         "Title XI Reserve Fund and Financial Agreement" means the Financial
Agreement.

         "UCC" means the Uniform Commercial Code as enacted in the States of
California and Hawaii, as applicable.

         "Vessel" means the MAUNAWILI, Official Number 1153166, financed with
the Obligations.

         "Working Capital" shall mean the excess of current assets over current
liabilities, both determined in accordance with generally accepted accounting
principles and adjusted as follows:

         (1) In determining current assets, there shall also be deducted: (A)
Any securities, obligations or evidence of indebtedness of a Related Party or of
any stockholder, director, officer or employee (or any member of his family) of
the Company or of such Related Party, except advances to agents required for the
normal current operation of the Company's vessels and current receivables
arising out of the ordinary course of business and not outstanding for more than
sixty (60) days; and (B) an amount equal to any excess of unterminated voyage
revenue over unterminated voyage expenses; and there will be added to current
assets all accounts receivable that have been deposited in the Company's Capital
Construction Fund (the "CCF") for which deposits the Company has received the
Secretary's approval; provided, such deposits shall not be subject to a pledge
                      --------
for any purpose and shall be at the after-tax value assuming such receivables
are withdrawn from the CCF in a non-qualified CCF withdrawal.

         (2) In determining current liabilities, there shall be deducted any
excess of unterminated voyage expenses over unterminated voyage revenue; and

         (3) In determining current liabilities, there shall be added one half
of all annual charter hire and other lease obligations (having a term of more
than six (6) months) due and payable within the succeeding fiscal year, other
than charter hire and such other lease obligations already included and reported
as a current liability on the Company's balance sheet.



</TEXT>
</DOCUMENT>
