ALEXANDER & BALDWIN, INC.
                  1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

                                  AMENDMENT NO. 2
                                  ---------------



         The Alexander & Baldwin,  Inc. 1998  Non-Employee  Director Stock
Option Plan (the "Plan") is hereby amended,  effective as of February 26, 2004,
in the following respects:

         1. Paragraph A of Section III ("STOCK SUBJECT TO THE PLAN") of Article
One of the Plan is hereby amended in its entirety to read as follows:

                  "A. The stock issuable under the Plan shall be shares of the
         Corporation's common stock, without par value ("Common Stock"). Such
         shares may be made available from authorized but unissued shares of
         Common Stock or shares of Common Stock reacquired by the Corporation
         and held as Treasury shares. The aggregate number of issuable shares
         shall not exceed 480,000 shares, subject to adjustment from time to
         time in accordance with subparagraph D. below. Such share reserve
         includes the 350,000 share increase authorized by the Board on February
         26, 2004, subject to stockholder approval at the 2004 Annual Meeting."

         2. Section I ("GRANT DATES") of Article Two of the Plan is hereby
amended in its entirety to read as follows:

                  "Commencing with the 1999 Annual Shareholders Meeting and
         continuing in effect for each subsequent Annual Shareholders Meeting
         prior to the 2004 Annual Meeting, each individual who is at the time
         elected as a non-employee Board member shall automatically be granted,
         on the date of each of such Annual Shareholders Meeting, a
         non-qualified stock option to purchase 3,000 shares of Common Stock.
         Commencing with the 2004 Annual Shareholders Meeting and continuing in
         effect for each subsequent Annual Shareholders Meeting thereafter, each
         individual who is at the time elected as a non-employee Board member
         shall automatically be granted, on the date of each of such Annual
         Shareholders Meeting, a non-qualified stock option to purchase 8,000
         shares of Common Stock."

         3. There is hereby added to Section II ("EFFECTIVE DATE AND TERM OF THE
PLAN") of Article Three of the Plan, a new Paragraph C, to read as follows:

                  "C. No stock options granted under the Plan in respect of the
         350,000 share increase authorized by the Board on February 26, 2004,
         may be exercised in whole or in part prior to approval of such share
         increase by the Corporation's shareholders at the 2004 Annual Meeting.
         In addition, the number of shares of Common Stock subject to each
         automatic option grant made pursuant to Article Two shall not be
         increased from 3,000 shares to 8,000 shares of Common Stock unless such
         increase is approved by the Corporation's shareholders at the 2004
         Annual Meeting."

         4. Except as modified by this Amendment No. 2, all the terms and
provisions of the Alexander & Baldwin, Inc. 1998 Non-Employee Director Stock
Option Plan (as previously amended) shall continue in full force and effect.

         5. If shareholder approval of this Amendment No. 2 is not obtained at
the 2004 Annual Meeting, then this Amendment No. 2 shall terminate and be of no
force or effect, and neither the 350,000-share increase to the Plan nor the
increase to the number of shares of Common Stock subject to each automatic
option grant made pursuant to Article Two of the Plan shall be implemented.

         IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Amendment
No. 2 to be executed on its behalf by its duly-authorized officers on this 26th
day of February, 2004.


                            ALEXANDER & BALDWIN, INC.

                            By /s/ John F. Gasher
                               Its Vice President

                            By /s/ Alyson J. Nakamura
                                  Its Secretary