Alexander & Baldwin, Inc. (Form: 10-K, Received: 02/29/2016 08:21:56)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from [_______ to _______]

Commission file number 001-35492

(Exact name of registrant as specified in its charter)



Hawaii		45-4849780
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

822 Bishop Street

Post Office Box 3440, Honolulu, Hawaii 96801

(Address of principal executive offices and zip code)

808 - 525 - 6611

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



	Name of each exchange
Title of each class	on which registered
Common Stock, without par value	NYSE

Securities registered pursuant to Section 12(g) of the Act:

None

Number of shares of Common Stock outstanding at February 15, 2016 :

48,950,736

Aggregate market value of Common Stock held by non-affiliates at June 30, 2015 :

$1,815,784,893

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Documents Incorporated By Reference

Portions of Registrant’s Proxy Statement for the 2016 Annual Meeting of Shareholders (Part III of Form 10-K)

TABLE OF CONTENTS

PART I



			Page

Items 1 & 2.	Business and Properties		1

A.	Real Estate Development and Sales Segment		5
	(1)	Landholdings	5
	(2)	Planning and Zoning	6
	(3)	Development Projects	7

B.	Real Estate Leasing Segment		10

C.	Materials and Construction		13

D.	Agribusiness		15
	(1)	Agribusiness Operations	15
	(2)	Marketing of Sugar	15
	(3)	Land Designations and Water	15
	(4)	Energy	16

	Employees and Labor Relations		16

	Available Information		16

Item 1A.	Risk Factors		17

Item 1B.	Unresolved Staff Comments		30

Item 3.	Legal Proceedings		30

Item 4.	Mine Safety Disclosures		31

PART II



Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32

Item 6.	Selected Financial Data	34

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

Items 7A.	Quantitative and Qualitative Disclosures About Market Risk	55

Item 8.	Financial Statements and Supplementary Data	56



		Page
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	104

Item 9A.	Controls and Procedures	104

A.	Disclosure Controls and Procedures	104

B.	Internal Control over Financial Reporting	104

Item 9B.	Other Information	106

PART III



Item 10.	Directors, Executive Officers and Corporate Governance	106

A.	Directors	106

B.	Executive Officers	106

C.	Corporate Governance	107

D.	Code of Ethics	107

Item 11.	Executive Compensation	108

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	108

Item 13.	Certain Relationships and Related Transactions, and Director Independence	108

Item 14.	Principal Accounting Fees and Services	108

PART IV



Item 15.	Exhibits and Financial Statement Schedules	108

A.	Financial Statements	108

B.	Financial Statement Schedules	109

C.	Exhibits Required by Item 601 of Regulation S-K	112

Signatures		117

Consent of Independent Registered Public Accounting Firm		118

ALEXANDER & BALDWIN, INC.

FORM 10-K

Annual Report for the Fiscal Year

Ended December 31, 2015

PART I

ITEMS 1 & 2. BUSINESS AND PROPERTIES

Overview

Alexander & Baldwin, Inc. (“A&B” or the “Company”), whose history in Hawaii dates back to 1870, is a premier Hawaii company with interests in real estate development, real estate leasing, materials and construction, and agribusiness. A&B’s assets include over 87,700 acres in Hawaii, 4.9 million square feet of high-quality retail, office and industrial properties in Hawaii and on the Mainland, and a real estate development portfolio encompassing residential and commercial projects across Hawaii. A&B's real estate holdings make it the state's fourth largest private landowner (by acreage) and largest owner of grocery-anchored retail properties (by gross leasable area "GLA"). In October 2013, A&B acquired Grace Pacific LLC (“Grace”)―the largest materials and paving company in Hawaii.

A&B is headquartered in Honolulu and operates in four segments―Real Estate Development and Sales, Real Estate Leasing, Materials and Construction, and Agribusiness. A&B's business segments are generally as follows:


A.	Real Estate: The Company's two real estate segments engage in real estate development and ownership activities, including planning, zoning, financing, constructing, purchasing, managing, leasing, selling, exchanging and investing in real property. Real estate activities are conducted through A&B Properties, Inc. and other wholly owned subsidiaries of A&B.


•	Real Estate Development and Sales - generates its revenues and creates value through an active and comprehensive program of land stewardship, planning, entitlement, development, real estate investment and sale of land and commercial and residential properties, principally in Hawaii.

•

Real Estate Leasing - owns, operates, and manages a portfolio of 58 high-quality retail, office and industrial properties in Hawaii and on the Mainland totaling 4.9 million square feet of GLA, including 42 acres on Oahu (improved with 660,000 square feet of commercial space owned by the ground lessees) and 64 acres on the neighbor islands ground leased to tenants. The significant recurring cash flow generated by this portfolio and ground leases serves as an important source of funding for A&B’s Real Estate Development and Sales segment activities.


B.	Materials and Construction: performs asphalt paving as prime contractor and subcontractor; imports and sells liquid asphalt; mines, processes and sells basalt aggregate; produces and sells concrete; provides and sells various construction- and traffic-control-related products; and manufactures and sells precast concrete products.

Agribusiness: produces and sells bulk raw sugar, specialty food grade sugars and molasses; provides general trucking services, mobile equipment maintenance and repair services; leases agricultural land to third parties; and generates and sells electricity to the extent not used in segment operations. In January 2016, the Company announced that it would be transitioning out of farming sugar and instead pursue a diversified agricultural model. The final sugar harvest is expected to be completed by the end of 2016, and the transition to a new model will occur over a multi-year period.

The following table contains key information regarding each of the Company’s segments. Since the purchase and sale of real estate is generally considered an ongoing and recurring activity of its real estate businesses, Real Estate Development and Sales segment revenue includes amounts related to sales of commercial property.



Segment	2015 Revenue (in millions) ¹	Percentage of Total 2015 Revenue	2015 Operating Profit (in millions)	Percentage of Total 2015 Operating Profit	Key Facts
Real Estate Development and Sales ¹	$131.5	22%	$65.0	67%	Hawaii-focused, experienced developer with a large development pipeline encompassing over a dozen projects entitled for over 3,000 residential units. Fourth largest private landowner in Hawaii with over 87,700 acres.
Real Estate Leasing	133.8	22%	53.1	55%	High-quality commercial portfolio consisting of 58 improved properties in Hawaii and five Mainland states, totaling 4.9 million square feet, and 106 acres of urban commercial ground leases to third parties. A&B is the second largest commercial retail property owner in Hawaii.
Materials and Construction	219.0	36%	30.9	32%	Leader in asphalt paving and in the production of asphaltic concrete and is the largest producer of aggregate in Hawaii.
Agribusiness ²	117.2	20%	(51.9)	(54)%	Largest farmer in Hawaii and significant producer of renewable energy on Kauai.
Total	$601.5	100%	$97.1	100%
¹ Includes the sales of an office building in Washington in December 2015, a Colorado retail property in March 2015 and a Texas office building in May 2015 that are classified within cost of sales and development in the Consolidated Statement of Income, but reflected as revenue for segment reporting purposes.
² On December 31, 2015, due to continuing and significant operating losses, the Company determined it would cease its sugar operations upon completing its final harvest in 2016. The Agribusiness results of operations for 2015 include pre-tax charges of $22.6 million resulting from the cessation decision.

Further information about the revenue, operating profits and identifiable assets of A&B’s industry segments for the three years ended December 31, 2015 is contained in Note 19 “Segment Results” to A&B’s financial statements in Item 8 of Part II below.

Competitive Strengths

The Company has significant competitive strengths in Hawaii that it can leverage to create shareholder value.

Premier Hawaii Assets:


•	Extensive, premium landholdings: A&B is the fourth largest private landowner in Hawaii, with over 87,700 acres, primarily on Maui and Kauai, including 837 acres fully entitled for urban use, which includes 190 acres under commercial improved properties.

•

High-quality commercial real estate portfolio and ground leases producing strong free cash flow: A&B owns and manages a high-quality commercial portfolio of 58 properties in Hawaii and five Mainland states, totaling 4.9 million square feet, and has 106 acres of urban land in Hawaii leased to third parties, both of which provide significant, stable recurring cash flows that support A&B’s real estate investment activities. A&B's retail holdings make it the largest owner of grocery-anchored retail properties in Hawaii (by GLA).


•	Diverse pipeline of development projects: A&B’s development pipeline encompasses over a dozen resort residential, primary residential and commercial projects comprising more than 3,000 units throughout the State of Hawaii, which provides for substantial embedded growth opportunities.

•

Prime agricultural real estate in Hawaii: A&B farms approximately 36,000 acres of mostly contiguous lands in Maui’s central valley with extensive infrastructure to meet the water, power and transportation needs of large-scale agronomic activity. Additionally, A&B owns approximately 7,000 acres of high-quality agricultural land on Kauai’s sunny south shore, of which over 4,000 acres are leased to other parties for a variety of agricultural uses, principally for the cultivation of coffee.

•

Infrastructure-related assets: A&B owns over 800 acres in the state related to its quarrying operations, including 541 acres on Oahu's growing west side. A&B's Makakilo, Oahu quarry facility completed a multi-year capital improvement program in September 2015, including three new asphaltic concrete plants, which is expected to result in greater operational efficiencies and lower costs going forward. Due to the high cost of transporting aggregate, A&B's quarry is ideally situated on Oahu's west side, which is expected to see significant growth over the next two decades. In addition to three Oahu plants, A&B also owns strategically placed asphaltic concrete plants located throughout the state in Maui (one location), Kauai (one location), Hawaii Island (one location) and Molokai (two locations).

Leading Hawaii Real Estate Capabilities:

•

Experienced management team with deep local knowledge and expertise: A&B has been in the development business in Hawaii since 1949 when it established Kahului Development Co., Ltd. to develop and market “Dream City,” which today is Kahului, Maui’s principal population center and commercial hub. In the ensuing decades, A&B has expanded and diversified its pipeline of development projects and broadened its development capabilities and expertise. For instance, A&B developed the world famous Wailea master-planned resort community on Maui’s south shore in the 1970s and 1980s and has continued to broaden its development activities since. The Company’s knowledge, expertise and relationships forged through over six decades of Hawaii development activity, combined with disciplined underwriting, enable it to profitably pursue a wide range of long-term commercial and residential developments in a manner that is both responsive to market needs and sensitive to local concerns. This local knowledge and expertise, combined with the Company’s strong financial position, also serves to make A&B an ideal partner for landowners, developers and others seeking to participate in the Hawaii real estate sector.

•

Track record of success: A&B has an extensive track record of investing in Hawaii real estate. Since 2000, A&B has invested approximately $700 million in Hawaii real estate development projects outside of its legacy holdings―including seven high-rise condominiums in urban Honolulu―and over $1.5 billion in the acquisition of Hawaii and Mainland commercial properties, mainly through tax-deferred property exchanges.

Leading Materials and Construction Capabilities:

•

Leading market position: A&B holds a leading market position in asphalt paving and in the production of asphaltic concrete, and also is the largest producer of aggregate in Hawaii. Due to the relatively high capital requirements needed to compete in the market, A&B’s scale provides a cost advantage relative to other competitors in the state. A&B is positioned to benefit from continued strength in the Hawaii economy and the impact that is expected to have on infrastructure spending and private development activity. For example, the condition of Hawaii’s roads, in general, and Oahu’s roads, in particular, is consistently ranked near the bottom as compared to other states and metropolitan areas and, as a result, the City and County of Honolulu administration (the "City") has maintained its annual road maintenance budget in excess of $100 million for the past several years, with $120 million budgeted for the City's fiscal year 2016 (July 1, 2015 to June 30, 2016).


•	Experienced management team: In addition to its unique tangible assets, the segment's management team has extensive expertise in quarry management and operations, asphaltic concrete production, asphalt paving, and precast concrete production.

•

Vertically integrated business model: A&B’s vertically integrated business model, which includes the mining of basalt aggregate and the importation and distribution of liquid asphalt, provides it with cost benefits at higher throughput rates, while also increasing cost certainty due to the ability to manage costs throughout the supply chain. This cost certainty allows A&B to compete effectively as an efficient, high-quality, low-cost provider. In addition, A&B provides and markets various construction- and traffic-control-related products and services.

Strategy

A&B strives to create value by leveraging its extensive asset base, knowledge of and experience in the Hawaii market to make superior investments in real estate in Hawaii. A&B has a long track record of successfully investing in Hawaii real estate and believes that Hawaii has attractive opportunities for growth. Management is focused on strategically positioning the Company to capitalize on this growth.

Additional details regarding A&B’s key strategies follow:

Land:

•

Employ lands at their highest and best use: A&B strives to maximize value in its legacy landholdings by employing land at its highest and best use to the benefit of shareholders, employees, its communities and other key stakeholder groups. For a significant portion of A&B’s substantial Hawaii landholdings, this implies a wide spectrum of non-development uses, ranging from conservation/watershed to pasture to active farming. While a material portion of A&B’s landholdings has limited or no long-term urban development potential, these landholdings remain valuable for farming and other uses, such as providing access to natural resources or hydro-electric generation capability.


•	Entitle and develop core Hawaii lands: A&B continually focuses on entitling and developing a portion of its core landholdings in Hawaii to respond to market demand while meeting community needs.

Commercial Properties:


•	Optimize returns of A&B’s commercial portfolio: A&B seeks to organically grow its commercial portfolio through active management, including repositioning and redevelopment activities, in order to increase occupancy, secure quality tenants and reduce costs, with the ultimate goal of maximizing the financial performance of these properties.


•	Migrate the commercial portfolio to Hawaii from the Mainland: A&B is focused on opportunistically migrating its Mainland portfolio to Hawaii over time, where it believes it can leverage its market knowledge and proximity to generate greater incremental shareholder value over the long run.

Real Estate Investment:


•	Invest in high-returning real estate opportunities in Hawaii: A&B is focused on pursuing and investing in attractive real estate opportunities in Hawaii where it can leverage its market knowledge, experience and financial strength to create significant value and, at the same time, expand and diversify its existing portfolio and pipeline.

•

Build a pipeline of development projects scaled to market opportunities and designed to optimize risk-adjusted returns: A&B owns a valuable pipeline of development projects encompassing a wide-range of product types, from resort residential real estate, to commercial and industrial, to primary residential housing. A&B employs a disciplined approach to its investments and prudently invests capital to position select projects to meet anticipated market demand. A&B pursues joint ventures, where appropriate, to supplement its in-house capabilities, access third-party capital, gain access to new opportunities in the Hawaii market, diversify its pipeline and optimize risk-adjusted returns.

Materials and Construction:

•

Leverage vertically integrated business model to lower costs: A&B maintains cost benefits through a vertically integrated business model that encompasses the production of aggregate and the importation of liquid asphalt and sand. These activities help ensure that A&B has adequate access to raw materials needed to produce asphaltic concrete and, therefore, also provides for a level of cost certainty that allows A&B to compete effectively on sealed-bid contracts. In addition, A&B and its consolidated and non-consolidated affiliated companies provide and market various construction- and traffic-control-related products and services.

•

Capitalize on strategically located quarry adjacent to growing area on Oahu: A&B owns one of two operating quarries on the island of Oahu that has suitable grade A material required for the production of hot mix asphalt. A&B's quarry is also the only quarry located adjacent to the growing region on the west side of Oahu. It is proximate to the first two phases of the Honolulu Rail Project and to more than 15,000 residential units and various commercial projects, which are projected in the future. Due to the high cost of transporting aggregate and the limited shelf life of asphaltic concrete once it is produced, A&B’s quarry and hot mix plant locations in west Oahu are ideally located to service the growth in the area for the foreseeable future.

Agriculture:


•	Grow renewable energy operations: A&B is a leading provider of renewable energy on Kauai, and in recent years, has added high-returning renewable solar generation to its portfolio. A&B continues to evaluate and further capitalize on new renewable energy opportunities in Hawaii to expand its portfolio and support the State of Hawaii's Clean Energy Initiative.

DESCRIPTION OF BUSINESS AND PROPERTIES

Business Segments

A. Real Estate Development and Sales Segment

A&B is actively involved in the entire spectrum of real estate development and ownership, including planning, zoning, financing, constructing, purchasing, managing and leasing, selling and exchanging, and investing in real property.

(1) Landholdings

As of December 31, 2015 , A&B and its subsidiaries owned 87,870 acres, consisting of 87,715 acres in Hawaii and 155 acres on the U.S. Mainland. Hawaii landholdings are primarily used for agriculture, pasture, watershed and conservation purposes. A portion is used for urban purposes or planned for development. The Mainland properties are primarily used or held for commercial purposes.



	Acres
Location	Urban/Entitled *	Agriculture	Conservation	Total
Maui	566	49,289	15,870		65,725
Kauai	81	6,874	13,325		20,280
Oahu	180	615	640		1,435
Molokai	—	265	—		265
Big Island	10	—	—		10
TOTAL HAWAII	837	57,043	29,835		87,715
TOTAL MAINLAND	155	—	—		155
TOTAL LANDHOLDINGS	992	57,043	29,835		87,870


*	Land is designated "fully entitled urban" when all four land use approvals described in the "Planning and Zoning" section have been obtained. The total includes lands available for development and 345 acres under commercial properties.

The table above does not include 1,016 acres under joint venture development that are shown below. An additional 2,900 acres on Maui, Kauai and Oahu are leased from third parties, and are not included in any of the tables.



Joint Venture Projects as of December 31, 2015	Original Acres	Acres at December 31, 2015
Kukui’ula (HI)	1,000	917
California joint ventures	75	75
Ka Milo (HI)	31	14
Keala o Wailea (HI)	7	7
The Collection (HI)	3	3
TOTAL	1,116	1,016

(2) Planning and Zoning

The entitlement process for development of property in Hawaii is complex, lengthy (spanning multiple years) and costly (involving numerous state and county regulatory approvals). For example, conversion of an agriculturally-zoned parcel usually requires the following approvals:


•	County amendment of the County General Plan to reflect residential use;


•	State Land Use Commission approval to reclassify the parcel from the Agricultural district to the Urban district;


•	County amendment of the County Community Plan to reflect land use; and


•	County approval to rezone the property to the precise land use desired.

The entitlement process is complicated by the conditions, restrictions and exactions that are placed on these approvals, including, among others, the requirement to construct infrastructure improvements, payment of impact fees, restrictions on the permitted uses of the land, requirement to provide affordable housing and required phased development of projects.

A&B actively works with regulatory agencies, commissions and legislative bodies at various levels of government to obtain zoning reclassification of land to its highest and best use for both investment and development. A&B designates a parcel as “fully entitled” or “fully zoned” when all of the above-mentioned land use approvals have been obtained.

(3) Development Projects

The following is a sum mary of the Company’s real estate development and investment portfolio as of December 31, 2015:



Project	Location	Product type	Acres at 12/31/15		Original planned units, saleable acres or gross leasable square feet	Estimated project cost (1) ($mil)	A&B capital invested	A&B net investment as of 12/31/15 ($mil; including capitalized interest)	Estimated substantial completion of construction
ACTIVE PLANNING, DEVELOPMENT AND SALES - WHOLLY OWNED
Kahala Avenue Portfolio	Honolulu, Oahu	Residential	6		30 lots	135	134	51	n/a
Kamalani	Kihei, Maui	Primary residential	95		630 units	tbd	3	3	2023
Maui Business Park II	Kahului, Maui	Light industrial lots	125	(2)	136 acres	96	77	45	2021
Mililani Mauka South	Mililani, Oahu	Retail/office developed for commercial portfolio	1		18,500 sf	8	7	7	2016
The Ridge at Wailea (MF-19)	Wailea, Maui	Resort residential	6		9 lots	10	9	9	2009
Wailea B-1	Wailea, Maui	Commercial/retail	11		60,000 sf	tbd	5	5	tbd
Total			244



Project	Location	Product type	Acres at 12/31/15	Planned units, saleable acres or gross leasable square feet	Estimated project cost (1) ($mil)	A&B capital invested	A&B net investment as of 12/31/15 ($mil; including capitalized interest)	Estimated substantial completion of construction
ACTIVE PLANNING, DEVELOPMENT AND SALES - JOINT VENTURES
Ka Milo at Mauna Lani	Kona, Hawaii	Resort residential	14	137 units	125	16	10	2018
Keala o Wailea (MF-11)	Wailea, Maui	Resort residential	7	70 units	63	9	9	2018
Kukui'ula	Poipu, Kauai	Resort residential	917	Up to 1,500 units on 640 saleable acres	854	285	276	2030
The Collection	Honolulu, Oahu	Primary residential/ commercial	3	465 units (464 salable)	285	53	49	2016
Total			941


(1)	Includes land cost at book value and capitalized interest, but excludes sales commissions and closing costs.


(2)	Includes 19 acres of roadways and other infrastructure that are not saleable.



Project	Location	Product type	Acres at 12/31/15		A&B net investment as of 12/31/15 ($mil; including capitalized interest)
FUTURE DEVELOPMENT - WHOLLY OWNED
Aina 'O Kane	Kahului, Maui	Primary residential/commercial	4		1
Brydeswood	Kalaheo, Kauai	Agricultural lots	336		3
Haliimaile	Haliimaile, Maui	Primary residential	55	(1)	1
Kai Olino	Port Allen, Kauai	Primary residential	4		11
Wailea SF-8	Kihei, Maui	Primary residential	13		1
Wailea MF-6	Wailea, Maui	Resort residential lots	23		6
Wailea MF-7	Wailea, Maui	Resort residential	13		9
Wailea MF-10	Wailea, Maui	Resort/commercial	7		3
Wailea MF-16	Wailea, Maui	Resort residential lots	7		3
Wailea, other	Wailea, Maui	Various	76		23
Total			538

Joint ventures
Bakersfield	Bakersfield, CA	Retail	57		7
Palmdale Center	Palmdale, CA	Office/industrial	18		5
Total			75


(1)	Eighte en of the 55 acres are designated for parks, open space, drainage and a waste water treatment plant.



Project	Location	Product type	Acres at 12/31/15	Planned units, saleable acres or gross leasable square feet
ENTITLEMENT
Ele'ele Community Phase I	Ele'ele, Kauai	Primary residential	260	tbd
Wai'ale	Kahului, Maui	Primary residential	545	up to 2,550 units
Total			805

A&B’s major active projects include:

Maui:

(a) Maui Business Park II. Maui Business Park II (“MBP II”), 154 acres ( 136 acres salable; 106 acres remain salable at December 31, 2015) in Kahului zoned for light industrial, retail and office use, represents the second phase of the Company’s Maui Business Park project. A 4-acre parcel was sold in 2012 for a Costco gas station. In 2013, a 24-acre parcel adjacent to Maui Business Park was sold for the development of Maui’s first Target-anchored center, which opened in March 2015 and has contributed to strong sales activity at MBP II. In 2014, 7.2 acres were sold to the County of Maui, American Savings Bank, and Shelton Holdings (BMW) for $14.4 million. In 2015, 18.4 acres were sold to Lowe's, Servco Pacific, Pacific Pipe, and Kihei Auto for $33.5 million.

(b) Wailea. In October 2003, A&B reacquired 270 acres of fully-zoned, undeveloped residential and commercial land at the Wailea Resort on Maui for $67.1 million. A&B was the original developer of the Wailea Resort, beginning in the 1970s and continuing until A&B sold the resort to the Shinwa Golf Group in 1989.

Since reacquisition, A&B has sold approximately 110 acres, and currently owns about 160 acres, which are planned for up to 700 units. A&B is in various stages of development or sale for various parcels within Wailea, which include the following projects:


•	At the 7.4-acre MF-11 (Keala o Wailea) project, A&B’s 70 unit multi-family joint venture development with Armstrong Builders, construction commenced in December 2015. Of the 50 units released for pre-sale, 30 units are under binding contracts. Closings are projected to commence in 2017.


•	The 6-acre MF-19 parcel (Ridge at Wailea) was developed into nine residential lots. Eight lots remain available for sale.


•	At the 11-acre B-1 parcel, A&B continues to evaluate bulk sale or development options.

(c) Kamalani. A&B’s Kamalani project is a 630-unit residential project on 95 acres in Kihei, Maui. During 2015, significant progress was made in design work, securing requisite government approvals and marketing of the project. Preliminary subdivision approval was secured in April 2015. Pre-sales and construction are expected to commence in in March 2016.

Kauai:

(d) Kukui`ula. In April 2002, A&B entered into a joint venture with DMB Communities II (“DMBC”), an affiliate of DMB Associates, Inc. ("DMB"), an Arizona-based developer of master-planned communities, for the development of Kukui’ula, a 1,000-acre master planned resort residential community located in Poipu, Kauai, planned for up to 1,500 resort residential units. As of December 31, 2015, total capital contributed to the joint venture by A&B was approximately $280 million, which included $30 million representing the value of land initially contributed by the Company. As of December 31, 2015, DMB has contributed approximately $190 million.

Offsite infrastructure is complete for 500 to 800 units and all resort core amenities were completed and opened for business in 2011, including the Tom Weiskopf-designed championship golf course, an owners' clubhouse, pool and spa facilities, and a golf clubhouse. Increased vertical home construction activity at Kukui’ula continues to generate positive sales momentum, with 22 closings in 2015 and eight additional units under binding contracts as of December 31, 2015. The various vertical construction programs are being pursued in joint ventures with five third-party developers. As of December 31, 2015, a total of 134 units had closed, and 72 lots and 8 houses were available for purchase.

Oahu:

(e) Kahala Avenue Portfolio. In September and December 2013, A&B acquired a total of 30 properties for approximately $128 million in the prestigious Kahala neighborhood of East Honolulu. These properties were in various stages of disrepair and A&B immediately commenced clearing, landscape maintenance, and sales and marketing. Through December 31, 2015, revenue from sales totaled $123 million. As of December 31, 2015, nine lots were available for purchase totaling approximately 245,000 square feet. The nine available properties include four higher-value oceanfront properties totaling approximately 174,000 square feet or 71% of the total square footage available for purchase.

(f) The Collection. In 2012, A&B secured an option agreement with Kamehameha Schools for the development of a 3.3-acre city block near downtown Honolulu. The project includes a 396-unit high-rise condominium tower, 14 three-bedroom townhomes and a 54-unit mid-rise building. In August 2014, a joint venture was formed for the project development. The land was acquired from Kamehameha Schools and construction commenced in October 2014, with completion projected by year-end 2016. As of December 31, 2015, all 396 tower units and 54 mid-rise units and four townhomes were under binding contracts. Construction of all phases is projected to be completed in late 2016.

(g) Waihonua at Kewalo . In 2010, A&B acquired a fully-entitled high-rise condominium development site near the Ala Moana Center in Honolulu. Sales and marketing commenced in December 2011 for a 340 saleable-unit project. In September 2012, the Company formed a joint venture for the development of the project. By July 2013, all 340 units were sold under binding contracts. Construction was completed in November 2014, and 12 units closed in December 2014. The remaining 328 units closed in January 2015.

(h) Keauhou Place. In October 2015, A&B closed its $35 million “B-note” investment in the 423-unit Keauhou Place residential condominium in Kaka’ako. Although construction commenced in October 2015, A&B does not expect to fund its investment until mid-2016. As of December 31, 2015, 349 of the project's 422 units have been sold, with 345 units under binding contracts.

B. Real Estate Leasing Segment

The Company’s commercial portfolio’s Net Operating Income ("NOI") ¹ and GLA summarized by geographic location and property type as of December 31, 2015 is as follows:



NOI ($ in millions)	Hawaii		Mainland		Total
Retail	$	38.7	$	2.5	$	41.2
Industrial	10.8		4.7		15.5
Office	3.7		10.5		14.2
Ground leases	13.0		—		13.0
Total	$	66.2	$	17.7	$	83.9


¹	Refer to page 46 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.



GLA (square feet, in millions)	Hawaii	Mainland	Total
Retail	1.7	0.2	1.9
Industrial	0.8	1.2	2.0
Office	0.2	0.8	1.0
Total	2.7	2.2	4.9

(1) Hawaii Commercial Properties

A&B’s Hawaii commercial portfolio consists of retail, industrial and office properties, comprising approximately 2.7 million square feet of GLA as of December 31, 2015. Most of the commercial properties are located on Oahu and Maui, with smaller holdings on Kauai and the Island of Hawaii. The average occupancy for the Hawaii portfolio was 93 percent in 2015, compared to 94 percent in 2014.

In December 2014, A&B acquired Kaka'ako Commerce Center, a 204,400 -square-foot, light-industrial complex in urban Honolulu. The purchase was funded by proceeds from several Maui land sales and the sale of three mainland properties in 2015.

The Hawaii commercial properties owned as of year-end 2015 were as follows:



Property	Location	Type	Leasable Area (sq. ft.)

Pearl Highlands Center	Pearl City, Oahu	Retail	415,400
Kailua-Retail (16 properties)	Kailua, Oahu	Retail	414,300
Komohana Industrial Park	Kapolei, Oahu	Industrial	238,300
Kaka'ako Commerce Center	Honolulu, Oahu	Industrial	204,400
Waianae Mall	Waianae, Oahu	Retail	170,300
Waipio Industrial	Waipahu, Oahu	Industrial	158,400
Kaneohe Bay Shopping Center	Kaneohe, Oahu	Retail	125,100
Waipio Shopping Center	Waipahu, Oahu	Retail	113,800
P&L Building	Kahului, Maui	Industrial	104,100
The Shops at Kukui'ula	Poipu, Kauai	Retail	89,000
Lanihau Marketplace	Kailua-Kona, Hawaii	Retail	88,300
Port Allen (4 buildings)	Port Allen, Kauai	Industrial/Retail	87,400
Kailua-Industrial (6 properties)	Kailua, Oahu	Industrial	68,800
Kunia Shopping Center	Waipahu, Oahu	Retail	60,400
Kahului Office Building	Kahului, Maui	Office	59,600
Lahaina Square	Lahaina, Maui	Retail	50,200
Kahului Shopping Center	Kahului, Maui	Retail	49,700
Napili Plaza	Napili, Maui	Retail	45,700
Kahului Office Center	Kahului, Maui	Office	33,400
Stangenwald Building	Honolulu, Oahu	Office	27,100
Judd Building	Honolulu, Oahu	Office	20,200
Gateway at Mililani Mauka	Mililani, Oahu	Retail	34,900
Gateway at Mililani Mauka South	Mililani, Oahu	Office	18,700
Maui Clinic Building	Kahului, Maui	Office	16,600
Lono Center	Kahului, Maui	Office	13,700
Total			2,707,800

(2) U.S. Mainland Commercial Properties

On the Mainland, A&B owns a portfolio of 10 commercial properties, acquired primarily by way of tax-deferred 1031 exchanges, consisting of retail, industrial and office properties, comprising approximately 2.2 million square feet of leasable space as of December 31, 2015. A&B’s Mainland commercial properties’ occupancy rate was 95 percent in 2015 as compared to 93 percent in 2014.

A&B’s Mainland commercial properties owned as of December 31, 2015 were as follows:



Property	Location	Type	Leasable Area (sq. ft.)

Midstate Hayes	Visalia, CA	Industrial	790,200
Sparks Business Center	Sparks, NV	Industrial	396,100
1800 and 1820 Preston Park	Plano, TX	Office	198,800
Ninigret Office Park	Salt Lake City, UT	Office	185,500
2868 Prospect Park	Sacramento, CA	Office	163,300
Little Cottonwood Center	Sandy, UT	Retail	141,500
Concorde Commerce Center	Phoenix, AZ	Office	138,700
Deer Valley Financial Center	Phoenix, AZ	Office	126,600
Gateway Oaks	Sacramento, CA	Office	59,700
Royal MacArthur Center	Dallas, TX	Retail	44,800
Total			2,245,200

(3) Lease Expirations

The Company’s schedule of lease expirations for its Hawaii and U.S. Mainland commercial portfolio is as follows:



Year of expiration	Sq. ft. of expiring leases	Percentage of total leased GLA		Annual gross rent expiring ⁽¹⁾ ($ in millions)	Percentage of total annual gross rent

2016	930,566	20.8	%	11.0	14.1	%
2017	815,619	18.2	%	13.6	17.4	%
2018	803,809	18.0	%	9.6	12.3	%
2019	431,936	9.7	%	10.9	13.9	%
2020	523,026	11.7	%	11.0	14.1	%
2021	261,561	5.8	%	5.9	7.5	%
2022	87,335	2.0	%	2.4	3.1	%
2023	204,199	4.6	%	3.4	4.3	%
2024	122,625	2.7	%	3.2	4.1	%
2025	64,817	1.4	%	2.8	3.6	%
Thereafter	229,415	5.1	%	4.4	5.6	%
Total	4,474,908	100.0	%	78.2	100.0	%


(1)	Annual gross rent means the annualized base rent amounts of expiring leases and includes improved properties only and excludes 0.2 million square feet of month-to-month leases.

The Company’s schedule of lease expirations for its ground leases is as follows:



Year of expiration	Annual gross rent expiring ($ in millions)	Percentage of total annual gross rent ⁽¹⁾
Month-to-month	0.9	6.3	%
2016	1.2	8.5	%
2017	0.7	4.9	%
2018	0.3	2.1	%
2019	0.3	2.1	%
2020	0.8	5.7	%
2021	0.7	4.9	%
2022	0.3	2.1	%
2023	1.2	8.5	%
2024	—	—	%
2025	—	—	%
Thereafter	7.8	54.9	%
Total	14.2	100.0	%


(1)	Annual gross rent means the annualized base rent amounts of expiring leases.

C. Materials and Construction

(1) Business

Major activities of the Materials and Construction segment include asphalt paving as prime contractor and subcontractor; importing and selling liquid asphalt; mining, processing and selling rock and sand aggregate; producing and selling asphaltic and ready-mix concrete; providing and selling various construction- and traffic-control-related products and manufacturing and selling precast concrete products. Segment activities are conducted through Grace and its consolidated and non-consolidated affiliates.

The market for Grace’s business can be generally divided into the public sector market and the private sector market. The public sector construction market includes spending by federal, state and county governments for road and highway paving, aggregate materials, and highway-related maintenance and management services. In general, public sector spending is less cyclical than private sector construction projects. Approximately 90 percent of Grace’s paving revenue in 2015 was directly or indirectly attributable to public sector contracts. The private sector construction market includes spending for commercial and residential asphalt paving and material sales. Private sector spending is generally more cyclical than public sector spending and is primarily driven by economic conditions in Hawaii.

Aggregate: Aggregate production involves drilling and blasting rock from quarries, crushing the rock to appropriate sizes and screening materials after extraction to separate aggregate into two grades with more than 20 gradations with varying specifications. Basalt aggregate is used in the construction industry for residential and commercial developments, highways, roads, asphaltic concrete and ready-mix concrete products. Based on production in 2015, Grace was the largest producer of basalt aggregate in the state. Grace also has a recycling plant that accepts demolition concrete and reclaimed aggregate material from job sites for a fee and recycles them into salable aggregate products. Aggregate can also be imported into Hawaii from abroad to meet the state’s needs. Due to the high cost of handling and transporting aggregate, location is an important driver in determining a customer’s preferred source.

Asphaltic Concrete (hot mix asphalt): Grace imports liquid asphalt through its 70 percent-owned consolidated subsidiary, GLP Asphalt, LLC (GLP), for use in the manufacture of asphaltic concrete. Asphaltic concrete is produced by heating asphalt to a liquid consistency, drying the aggregate to remove moisture, and mixing the liquid asphalt with the aggregate in "hot mix plants." Asphaltic concrete consists of approximately 94 percent aggregate and 6 percent asphalt. Due to the high cost of transporting rock, Grace will generally utilize aggregate sources nearest to its hot mix asphalt plant and/or locate its hot mix plant next to the aggregate resource. Grace sources liquid asphalt through GLP, which purchases asphalt from Venezuela, Canada, and other foreign locations, typically several times a year, depending on demand and the size of the available shipments. GLP is currently the only local distributor of liquid asphalt in the state, and approximately 65 percent of GLP asphalt sales are to Grace and a non-consolidated affiliate. Liquid asphalt can also be imported in 20-ton transit tankers

from refineries on the U.S. West Coast. Approximately 20 percent of asphaltic concrete produced by Grace is sold to third parties and the remainder is used on construction jobs by Grace's asphalt paving division or a non-consolidated affiliate.

Asphalt Paving: The asphalt paving market is predominately composed of paving projects contracted by federal, state and county agencies. The contracts are based on competitive sealed bids, with the bid awarded to a qualified contractor with the lowest bid. Approximately 90 percent of all asphalt paving work performed by Grace in 2015 was for federal, state and county governmental entities. The remainder of the work consists of private contracts, such as residential and commercial developments.

Grace’s primary paving competitors include Jas A. Glover, Ltd.; Roads and Highways, LLC (a division of Sterling Construction-NASDAQ: STRL); Road Builders Corp.; and Maui Kupono Builders, LLC/Maui Master Builders, Inc.

Construction- and Traffic-Control-Related Products: Through various consolidated subsidiaries, Grace provides a range of construction-related products. Grace’s wholly owned subsidiary, GP Roadway Solutions, Inc. (“GPRS”) operates as a subcontractor and prime contractor and provides guardrail, fencing and sign installation, and maintenance; rents and sells safety and traffic control equipment and supplies; provides traffic control services; provides road and parking lot striping, seal coating and crack sealing, and security services; and performs application of maintenance-related encapsulation product. Grace’s 51 percent-owned GP/RM Prestress, LLC (“GP/RM”) is a manufacturer and supplier in the prestressed and precast concrete industry. GP/RM fabricates architectural concrete products such as exterior columns, walls and spandrels in a variety of colors with varying finishes and features used in the construction of parking structures, buildings and high rises. GP/RM is also a major supplier of structural concrete products such as rectangular, hexagonal and octagonal columns; various types of beams, double tees, walls, spandrels, stairs, flat slabs, bridge girders, planks; and stadium bleachers used to support various types of structures. In addition, other construction materials and products are sold by non-consolidated affiliates.

As of December 31, 2015, total backlog, which consists of signed contracts and awarded contracts not yet executed, including the backlog of Grace, GPRS, GP/RM and Maui Paving, LLC, a 50-percent-owned non-consolidated affiliate, totaled approximately $226.5 million , compared to $219.4 million at December 31, 2014. For purposes of calculating backlog, the entire estimated revenue attributable to Grace's consolidated subsidiaries and all of the backlog of Maui Paving, which was approximately $13.9 million and $38.1 million at December 31, 2015 and 2014, respectively, was included. Backlog represents the amount of revenue that Grace and Maui Paving expect to realize on contracts awarded primarily related to asphalt paving and, to a lesser extent, Grace’s consolidated revenue from GPRS and GP/RM.

The length of time that projects remain in backlog can span from a few days for a small volume of work to approximately 36 months for large paving contracts and contracts performed in phases. Backlog includes estimated revenue from the remaining portion of contracts not yet completed, as well as revenue from approved change orders.

(2) Assets

Quarries: Grace owns 541 acres in Makakilo, Oahu, approximately 200 acres of which are used for its quarrying operations. Approximately 800,000 tons of rock were mined and processed by Grace in 2015. The operation of the quarry is governed by special and conditional use permits, which allow Grace to extract aggregate through 2032. Grace also owns approximately 265 acres on Molokai, which are licensed to a third-party operator for quarrying operations.

Grace began the infrastructure work for new crushing plants, which are used to reduce large rocks down to salable grade aggregate, at the Makakilo quarry in April 2012. Primary and secondary crushing plants are used to reduce quarried rock to a 4” to 5” “surge” material. The surge is then processed at the finish plants, where the rock is further reduced and screened to exact product specifications. The erection of the new “A” grade finish plant began in January 2013, and was online at the end of September 2013. The existing “B” grade finish plant upgrade was completed in December 2014. The new primary and secondary crushing plants were completed in 2015. The new facilities are expected to increase the productivity and efficiency of the operations, resulting in lower production costs. Through December 31, 2015, approximately $43.0 million has been incurred related to the quarry improvements ($33.8 million was incurred by Grace prior to its acquisition by A&B in 2013).

Equipment: Grace owns approximately 530 pieces of on- and off-highway rolling stock, which consists of heavy duty trucks, passenger vehicles and various road paving, quarrying and operations equipment. Additionally, Grace owns approximately 550 pieces of non-rolling stock items used in its operations, such as generators, transit tankers, light towers, message boards and nuclear gauges. The Materials and Construction segment has six rock crushing plants and eight asphaltic concrete plants (three on Oahu, one on Maui, one on Kauai, one on Hawaii island, and two on Molokai).

D. Agribusiness

(1) Agribusiness Operations

A&B’s current Agribusiness and related operations consist of: (1) a sugar plantation on the island of Maui, operated by its Hawaiian Commercial & Sugar Company (“HC&S”) division, (2) renewable energy operations on the island of Kauai, operated by McBryde Resources, Inc. (“McBryde”), (3) Kahului Trucking & Storage, Inc. (“KT&S”), which provides several types of trucking services, including sugar and molasses hauling on Maui, mobile equipment maintenance and repair services on Maui, Kauai, and the Big Island, and self-service storage facilities on Maui and Kauai, and (4) Hawaiian Sugar & Transportation Cooperative (“HS&TC”), an agricultural cooperative that provides raw sugar marketing and transportation services solely to HC&S. HS&TC owns the MV Moku Pahu, a Jones Act-qualified integrated tug barge bulk dry carrier, which is used to transport raw sugar and molasses from Hawaii to the U.S. West Coast and coal from the U.S. West Coast to Hawaii.

On December 31, 2015, the Company determined that it would cease its sugar operations at HC&S (the "Cessation"), which will result in the eventual layoff of over 650 employees. The sugar operation is expected to be phased out by the end of 2016, and the transition to a new diversified agriculture model will occur over a multi-year period.

The Company currently projects recording total pre-tax book charges related to the Cessation in the range of $112 million to $133 million ($68 million to $81 million, net of taxes), which consists of $23 million to $28 million of employee severance and related benefit charges, $69 million to $76 million of accelerated depreciation and asset write-offs, and $20 million to $29 million of property removal, restoration and other exit-related costs. Of the $112 million to $133 million of total pre-tax book charges mentioned above, approximately $69 million to $76 million will be non-cash charges and approximately $43 million to $57 million will be cash outlays, primarily related to employee severance and compensation benefits and property removal, restoration and other exit-related costs. Net of tax benefits, the cash outlays related to the Cessation will range from approximately $11 million to $21 million. However, the total net cash outlays related to the Cessation are projected to be offset by cash proceeds generated from the final harvest, based on current production estimates and sugar prices.

(2) Marketing of Sugar

Approximately 92 percent of the sugar produced by HC&S in 2015 was bulk raw sugar purchased by C&H Sugar Company, Inc. (“C&H”), based in Crockett, California. C&H processes the raw cane sugar at its refinery at Crockett, California and markets the refined products primarily in the western and central United States. Pursuant to a supply contract with HS&TC, the raw sugar is sold to C&H at forward price contracts equal to the New York No. 16 Contract settlement price at the time of executed market trades, or mutually agreed upon pricing also based on current New York No. 16 Contract prices.

The remaining sugar produced by HC&S was specialty food-grade sugars, which are sold by HC&S to food and beverage producers and to retail stores under its Maui Brand ^® label, and to distributors that license our trademarks or repackage the sugars under their own labels. HC&S’s largest food-grade sugar customers are Cumberland Packing Corp., which repackages HC&S’s turbinado sugar for its “Sugar in the Raw” product line, and Sugar Foods Corporation, which licenses HC&S’s Maui Brand ^® label for exclusive use outside of Hawaii.

(3) Land Designations and Water

The HC&S sugar plantation consists of 43,300 acres, with approximately 36,000 acres under active sugar cane cultivation.

On Kauai, approximately 3,000 acres are cultivated in coffee by Massimo Zanetti Beverage USA, Inc., which leases the land from A&B. Additional acreage is cultivated in seed corn and used for pasture purposes.

The Hawaii Legislature, in 2005, passed Important Agricultural Lands (“IAL”) legislation to fulfill the state constitutional mandate to protect agricultural lands, promote diversified agriculture, increase the state’s agricultural self-sufficiency, and assure the long-term availability of agriculturally suitable lands. In 2008, the Legislature passed a package of incentives, which is necessary to trigger the IAL system of land designation. In 2009, A&B received approval from the State Land Use Commission for the designation of over 27,000 acres on Maui and over 3,700 acres on Kauai as IAL. These designations were the result of voluntary petitions filed by A&B.

A&B holds rights to an irrigation system in West Maui, which provided approximately 13 percent of the irrigation water used by HC&S over the last ten years. A&B also owns 16,000 acres of watershed lands in East Maui, which supply a portion of the irrigation water used by HC&S. A&B also held four water licenses to another 30,000 acres owned by the State of Hawaii in East Maui, which over the last ten years have supplied approximately 56 percent of the irrigation water used by HC&S. The last of these water license agreements expired in 1986, and all four agreements were then extended as revocable

permits that were renewed annually. In 2001, a request was made to the State Board of Land and Natural Resources (the “BLNR”) to replace these revocable permits with a long-term water lease. Pending the conclusion by the BLNR of this contested case hearing on the request for the long-term lease, the BLNR has renewed the existing permits on a holdover basis, which has been the subject of litigation. In January 2016, the state court ruled that the BLNR lacked legal authority to keep the revocable permits in holdover status beyond one year. The court has allowed for an immediate appeal of this ruling. For information regarding legal proceedings involving A&B’s irrigation systems, see “Legal Proceedings” below.

(4) Energy

HC&S uses bagasse, the residual fiber of the sugar cane plant, as a fuel to generate steam for the production of most of the electrical power for sugar milling and irrigation pumping operations. In addition to bagasse, HC&S uses coal, diesel, fuel oil and recycled motor oil to generate power during factory shutdown periods when bagasse is not being produced or during periods when bagasse is not produced in sufficient quantities. HC&S also generates a limited amount of hydroelectric power. To the extent it is not used in A&B’s factory and farming operations, HC&S sells electricity under a power purchase agreement ("PPA") with Maui Electric. Beginning on January 1, 2015, Maui Electric and HC&S mutually agreed to reduce the maximum amount of firm generation capacity to be supplied by HC&S during peak hours from 12 megawatts to 8 megawatts. In the fourth quarter of 2015, the PPA was further amended and significantly reduced the firm power provided by HC&S, but HC&S will continue to provide emergency backup power. In 2015, HC&S produced and sold, respectively, approximately 150,300 megawatt hours (MWH) and 51,100 MWH of electric power (compared with 181,300 MWH produced and 67,900 MWH sold in 2014). The decrease in power sold was due to the amendment to the PPA that eliminated regularly scheduled dispatched power. Hydroelectric generation increased to 25,200 MWH in 2015 (compared with 18,800 MWH in 2014) from an increase in rainfall during the year. Coal used for power generation was 51,100 short tons, about 6,000 tons less than that used in 2014. Less coal was required because of the lower power commitment to Maui Electric.

In 2015, McBryde produced approximately 27,600 MWH of hydroelectric power (compared with approximately 27,900 MWH in 2014) and approximately 11,400 MWH of solar power from its Port Allen Solar Facility (compared with approximately 11,700 MWH in 2014). To the extent it is not used in A&B-related operations, McBryde sells electricity to Kauai Island Utility Cooperative (“KIUC”). Power sales in 2015 amounted to approximately 30,800 MWH (compared with 32,800 MWH in 2014). The decrease in power sold was primarily due to higher internal power consumption.

Employees and Labor Relations

As of December 31, 2015, A&B and its subsidiaries had 1,496 regular full-time employees. The Agribusiness segment employed 773 regular full-time employees, the Real Estate segment employed 53 regular full-time employees, the Materials and Construction segment employed 601 regular full-time employees, and the remaining full-time employees were employed in administration. Approximately 69 percent of A&B's employees are covered by collective bargaining agreements with unions.

Bargaining unit employees of HC&S are covered by two collective bargaining agreements with the International Longshore and Warehouse Union ("ILWU"). The agreements with the HC&S production unit employees and clerical and technical employees bargaining units cover 593 workers and will terminate upon cessation of the HC&S sugar operations. The 31 bargaining unit employees at KT&S also are covered by two collective bargaining agreements with the ILWU. The agreement for bulk sugar employees expires on June 30, 2019, while the agreement for hourly employees expires on March 31, 2016. There are two collective bargaining agreements with 23 A&B Fleet Services employees, on the Big Island and Kauai, represented by the ILWU. Both the Kauai and Big Island agreements expire on August 31, 2017.

A collective bargaining agreement with the International Union of Operating Engineers AFL-CIO, Local Union 3 (“IUOE”) covers 195 of Grace’s employees, who are primarily classified as heavy duty equipment operators, paving construction site workers, quarry workers, truck drivers and mechanics. The agreement expires on September 2, 2019.

Collective bargaining agreements with Laborers International Union of North America Local 368 (“Laborers”) cover 201 Grace employees who engage in various types of work. The Laborers' agreement with fence, guardrail and sign installation workers expires on September 30, 2019; the traffic and rentals Laborers’ agreement expires on August 31, 2018; and the precast/prestressed Laborers’ agreement expires on August 31, 2019.

Available Information

A&B files reports with the Securities and Exchange Commission (the “SEC”). The reports and other information filed include: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports and information filed under the Securities Exchange Act of 1934 (the “Exchange Act”).

The public may read and copy any materials A&B files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at www.sec.gov, which contains reports, proxy and information statements, and other information regarding A&B and other issuers that file electronically with the SEC.

A&B makes available, free of charge on or through its Internet website, A&B’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC. A&B’s website address is www.alexanderbaldwin.com.

ITEM 1A. RISK FACTORS

A&B’s business and its common stock are subject to a number of risks and uncertainties. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Form 10-K and the Company’s filings with the U.S. Securities and Exchange Commission. Based on information currently known, A&B believes that the following information identifies the most significant risk factors affecting A&B’s business and its common stock. However, the risks and uncertainties faced by A&B are not limited to those described below, nor are they listed in order of significance. Additional risks and uncertainties not presently known to A&B or that it currently believes to be immaterial may also materially adversely affect A&B’s business, liquidity, financial condition, results of operation and cash flows. This Form 10-K also contains forward-looking statements that involve risks and uncertainties.

If any of the following events occur, A&B’s business, liquidity, financial condition, results of operations and cash flows could be materially adversely affected, and the trading price of A&B common stock could materially decline.

Risks Relating to A&B’s Business

Note: All references to “A&B” and "the Company" in this section refer to, and includes, each segment and line of business comprising A&B, and any reference to any particular segment or line of business does not limit the foregoing.

Changes in economic conditions may result in a decrease in market demand for A&B’s real estate assets in Hawaii and the Mainland and its material and construction products.

The Company's business, including its assets and operations, are concentrated in Hawaii. A weakening of economic drivers in Hawaii, which include tourism, military and consumer spending, public and private construction starts and spending, personal income growth, and employment, or the weakening of consumer confidence, market demand, or economic conditions on the Mainland, may adversely affect the demand for or sale of Hawaii real estate, the level of real estate leasing activity in Hawaii and on the Mainland, and demand for the Company's materials and construction products. In addition, an increase in interest rates or other factors could reduce the market value of the Company's real estate holdings, as well as increase the cost of buyer financing that may reduce the demand for A&B's real estate assets.

A&B may face new or increased competition.

There are numerous other developers, buyers, managers and owners of commercial and residential real estate and undeveloped land that compete or may compete with A&B for management and leasing revenues, land for development, properties for acquisition and disposition, and for tenants and purchasers for properties. Intense competition could lead to increased vacancies, decreased rents, sales prices or sales volume, or lack of development opportunities.

Grace competes in an industry that favors the lowest bid. An increase in competition, including out-of-state contractors, competing for a limited number of projects available, could lead to lost bids and lower prices and volume. Grace also mines aggregate and imports asphalt for sale. Grace's customers or its competitors could seek alternative sources of supply, such as imported liquid asphalt and aggregate.

A&B may face potential difficulties in obtaining operating and development capital.

The successful execution of A&B’s strategy requires substantial amounts of operating and development capital. Sources of such capital could include banks, life insurance companies, public and private offerings of debt or equity, including rights offerings, sale of certain assets and joint venture partners. If A&B’s credit profile deteriorates significantly, its access to the debt capital markets or its ability to renew its committed lines of credit may become restricted, the cost to borrow may increase, or A&B may not be able to refinance debt at the same levels or on the same terms. Further, A&B relies on its ability to

obtain and draw on a revolving credit facility to support its operations. Volatility in the credit and financial markets or deterioration in A&B’s credit profile may prevent A&B from accessing funds. There is no assurance that any capital will be available on terms acceptable to A&B or at all to satisfy A&B’s short or long-term cash needs.

A&B may raise additional capital in the future on terms that are more stringent to A&B, that could provide holders of new issuances rights, preferences and privileges that are senior to those currently held by A&B common stockholders, or that could result in dilution of common stock ownership.

To execute its business strategy, A&B may require additional capital. If A&B incurs additional debt or raises equity, the terms of the debt or equity issued may give the holders rights, preferences and privileges senior to those of holders of A&B common stock, particularly in the event of liquidation. The terms of any new debt may also impose additional and more stringent restrictions on A&B’s operations than currently in place. If A&B issues additional common equity, either through public or private offerings or rights offerings, your percentage ownership in A&B would decline if you do not participate on a ratable basis.

Failure to comply with certain restrictive financial covenants contained in A&B’s credit facilities could impose restrictions on A&B’s business segments, capital availability or the ability to pursue other activities.

A&B’s credit facilities contain certain restrictive financial covenants. If A&B breaches any of the covenants and such breach is not cured timely or waived by the lenders, and results in default, A&B’s access to credit may be limited or terminated and the lenders could declare any outstanding amounts immediately due and payable.

Increasing interest rates would increase A&B’s overall interest expense.

Interest expense on A&B's floating-rate debt ( $141.8 million at December 31, 2015) would increase if interest rates rise.

A&B’s significant operating agreements and leases could be replaced on less favorable terms or may not be replaced.

The significant operating agreements and leases of A&B in its various businesses expire at various points in the future and may not be replaced or could be replaced on less favorable terms.

An increase in fuel prices may adversely affect A&B’s operating environment and costs.

Fuel prices have a significant direct impact on the health of the Hawaii economy. Increases in the price of fuel may result in higher transportation costs to Hawaii and adversely affect visitor counts and the cost of goods shipped to Hawaii, thereby affecting the strength of the Hawaii economy and its consumers. Increases in fuel costs also can lead to other non-recoverable, direct expense increases to A&B through, for example, increased costs of energy and petroleum-based raw materials used in the production and transportation of sugar, the production of aggregate, and the manufacture, transportation, and placement of hot mix asphalt. Increases in energy costs for A&B’s leased real estate portfolio are typically recovered from lessees, although A&B’s share of energy costs increases as a result of lower occupancies, and higher operating cost reimbursements impact the ability to increase underlying rents. Rising fuel prices also may increase the cost of construction, including delivery costs to Hawaii, and the cost of materials that are petroleum-based, thus affecting A&B’s real estate development projects.

Noncompliance with, or changes to, federal, state or local law or regulations may adversely affect A&B’s business.

A&B is subject to federal, state and local laws and regulations, including government rate regulations, land use regulations, environmental regulations, tax regulations and federal government administration of the U.S. sugar program. Noncompliance with, or changes to, the laws and regulations governing A&B’s business could impose significant additional costs on A&B and adversely affect A&B’s financial condition and results of operations. For example, the real estate segments are subject to numerous federal, state and local laws and regulations, which, if changed, or not complied with may adversely affect A&B’s business. The Company frequently utilizes Section 1031 of the IRS Code to defer taxes when selling qualifying real estate and reinvesting the proceeds in replacement properties. This often occurs when the Company sells bulk parcels of land in Hawaii or commercial properties in Hawaii or on the Mainland, all of which typically have a very low tax basis. A repeal of or adverse amendment to Section 1031, which has often been considered by Congress, could impose significant additional costs on A&B. A&B is subject to Occupational Safety and Health Administration regulations, Environmental Protection Agency regulations, and state and county permits related to its operations. The Materials and Construction segment is additionally subject to Mine Safety and Health Administration regulations. The Agribusiness segment is subject to the federal government’s administration of the U.S. sugar program, such as the 2014 Farm Bill, the Hawaii Public Utilities Commission’s

regulation of agreements between A&B and Hawaii’s utilities regarding the sale of electric power, and various county, state and federal environmental laws, regulations and permits governing farming operations and generation of electricity (including, for example, the use of pesticides and the burning of cane, bagasse and coal).

Changes to, or A&B’s violation of or inability to comply with any of the laws, regulations and permits mentioned above could increase A&B’s operating costs or ability to operate the affected line of business. Climate change legislation, such as limiting and reducing greenhouse gas emissions through a “cap and trade” system of allowances and credits, if enacted, may also increase A&B's operating costs or ability to operate the affected line of business.

Work stoppages or other labor disruptions by the unionized employees of A&B or other companies in related industries may increase operating costs or adversely affect A&B's ability to conduct business.

As of December 31, 2015, approximately 69 percent of A&B's 1,496 regular full-time employees were covered by collective bargaining agreements with unions. A&B may be adversely affected by actions taken by employees of A&B or other companies in related industries against efforts by management to control labor costs, restrain wage or benefits increases or modify work practices. Strikes and disruptions may occur as a result of the failure of A&B or other companies in its industry to negotiate collective bargaining agreements with such unions successfully. For example, in its Real Estate Development and Sales segment, A&B may be unable to complete construction of its projects if building materials or labor are unavailable due to labor disruptions in the relevant trade groups.

The loss of or damage to key vendor and customer relationships may adversely affect A&B’s ability to conduct business and its profitability.

A&B’s business is dependent on its relationships with key vendors, customers and tenants. The loss of or damage to any of these key relationships may adversely affect A&B’s ability to conduct business and its profitability.

Interruption, breaches or failure of A&B’s information technology and communications systems could impair A&B’s ability to operate, adversely affect its profitability and damage its reputation.

A&B is highly dependent on information technology systems. All information technology and communication systems are subject to reliability issues, integration and compatibility concerns and security-threatening intrusions. Further, A&B may experience failures caused by the occurrence of a natural disaster or other unanticipated problems at A&B’s facilities. Any failure, or security breaches of, A&B’s systems could result in interruptions in its service or production, lower profitability and damage to its reputation.

A&B is susceptible to weather and natural disasters.

A&B’s real estate operations are vulnerable to natural disasters, such as hurricanes, earthquakes, tsunamis, floods, fires, tornadoes and unusually heavy or prolonged rain, which could damage its real estate holdings and which could result in substantial repair or replacement costs to the extent not covered by insurance, a reduction in property values, or a loss of revenue, and could have an adverse effect on its ability to develop, lease and sell properties. The occurrence of natural disasters could also cause increases in property insurance rates and deductibles, which could reduce demand for, or increase the cost of owning or developing A&B’s properties.

For the Agribusiness segment, drought, greater than normal rainfall, hurricanes, low-wind conditions, earthquakes, tsunamis, floods, fires, other natural disasters, agricultural pestilence, or negligence or intentional malfeasance by individuals, may have an adverse effect on the sugar planting, growing, harvesting and production, electricity generation and sales, and the Agribusiness segment’s facilities, including dams and reservoirs.

For the Materials and Construction segment, because nearly all of the segment's activities are performed outdoors, its operations are substantially dependent on weather conditions. For example, periods of wet or other adverse weather conditions could interrupt paving activities, resulting in delayed or loss of revenue, under-utilization of crews and equipment and less efficient rates of overhead recovery. Adverse weather conditions also restrict the demand for aggregate products, increase aggregate production costs and impede its ability to efficiently transport material.

A&B maintains casualty insurance under policies it believes to be adequate and appropriate. These policies are generally subject to large retentions and deductibles. Some types of losses, such as losses resulting from physical damage to dams or crop damage, generally are not insured. In some cases A&B retains the entire risk of loss because it is not economically prudent to purchase insurance coverage or because of the perceived remoteness of the risk. Other risks are uninsured because insurance coverage may not be commercially available. Finally, A&B retains all risk of loss that exceeds the limits of its insurance.

Heightened security measures, war, actual or threatened terrorist attacks, efforts to combat terrorism and other acts of violence may adversely impact A&B’s operations and profitability.

War, terrorist attacks and other acts of violence may cause consumer confidence and spending to decrease, or may affect the ability or willingness of tourists to travel to Hawaii, thereby adversely affecting Hawaii’s economy and A&B. Additionally, future terrorist attacks could increase the volatility in the U.S. and worldwide financial markets.

Loss of A&B’s key personnel could adversely affect its business.

A&B’s future success will depend, in significant part, upon the continued services of its key personnel, including its senior management and skilled employees. The loss of the services of key personnel could adversely affect its future operating results because of such employee’s experience, knowledge of its business and relationships. If key employees depart, A&B may have to incur significant costs to replace them, and A&B’s ability to execute its business model could be impaired if it cannot replace them in a timely manner. A&B does not maintain key person insurance on any of its personnel.

A&B is subject to, and may in the future be subject to, disputes, legal or other proceedings, or government inquiries or investigations, that could have an adverse effect on A&B.

The nature of A&B’s business exposes it to the potential for disputes, legal or other proceedings, or government inquiries or investigations, relating to labor and employment matters, contractual disputes, personal injury and property damage, environmental matters, construction litigation, business practices, and other matters, as discussed in the other risk factors disclosed in this section. These disputes, individually or collectively, could harm A&B’s business by distracting its management from the operation of its business. If these disputes develop into proceedings, these proceedings, individually or collectively, could involve or result in significant expenditures or losses by A&B. For more information, see Item 3 entitled “Legal Proceedings.” As a real estate developer, A&B may face warranty and construction defect claims, as described below under “Risks Related to A&B’s Real Estate Segments.”

Changes in the value of pension assets, or a change in pension law or key assumptions, may result in increased expenses or plan contributions.

The amount of A&B’s employee pension and postretirement benefit costs and obligations are calculated on assumptions used in the relevant actuarial calculations. Adverse changes in any of these assumptions due to economic or other factors, changes in discount rates, higher health care costs, or lower actual or expected returns on plan assets, may result in increased cost or required plan contributions. In addition, a change in federal law, including changes to the Employee Retirement Income Security Act and Pension Benefit Guaranty Corporation premiums, may adversely affect A&B’s single-employer pension plans and plan funding. These factors, as well as a decline in the fair value of pension plan assets, may put upward pressure on the cost of providing pension and medical benefits and may increase future pension expense and required funding contributions. Although A&B has actively sought to control increases in these costs, there can be no assurance that it will be successful in limiting future cost and expense increases.

Risks Relating to A&B’s Real Estate Segments

A&B is subject to risks associated with real estate construction and development.

A&B’s development projects are subject to risks relating to A&B’s ability to complete its projects on time and on budget. Factors that may result in a development project exceeding budget or being prevented from completion include, but are not limited to:


•	an inability of A&B or buyers to secure sufficient financing or insurance on favorable terms, or at all;


•	construction delays, defects, or cost overruns, which may increase project development costs;


•	an increase in commodity or construction costs, including labor costs;


•	the discovery of hazardous or toxic substances, or other environmental, culturally-sensitive, or related issues;


•	an inability to obtain, or a significant delay in obtaining, zoning, construction, occupancy and other required governmental permits and authorizations;


•	difficulty in complying with local, city, county and state rules and regulations regarding permitting, zoning, subdivision, utilities, affordable housing and water quality, as well as federal rules and regulations regarding air and water quality and protection of endangered species and their habitats;


•	an inability to have access to sufficient and reliable sources of water or to secure water service or meters for its projects;


•	an inability to secure tenants or buyers necessary to support the project or maintain compliance with debt covenants;


•	failure to achieve or sustain anticipated occupancy or sales levels;


•	buyer defaults, including defaults under executed or binding contracts;


•	condemnation of all or parts of development or operating properties, which could adversely affect the value or viability of such projects; and


•	an inability to sell A&B’s constructed inventory.

Instability in the financial industry could reduce the availability of financing.

Significant instability in the financial industry like that experienced during the financial crisis of 2008-2009, may result in, among other things, declining property values and increasing defaults on loans. This, in turn, could lead to increased regulations, tightened credit requirements, reduced liquidity and increased credit risk premiums for virtually all borrowers. Fewer loan products and strict loan qualifications make it more difficult for borrowers to finance the purchase of units in A&B’s projects. Additionally, more stringent requirements to obtain financing for buyers of commercial properties make it significantly more difficult for A&B to sell commercial properties and may negatively impact the sales prices and other terms of such sales. Deterioration in the credit environment may also impact A&B in other ways, including the credit or solvency of customers, vendors, tenants, or joint venture partners, the ability of partners to fund their financial obligations to joint ventures and A&B's access to mortgage financing for its own properties.

A&B is subject to a number of factors that could cause leasing rental income to decline.

A&B owns a portfolio of commercial income properties. Factors that may adversely affect the portfolio’s profitability include, but are not limited to:


•	a significant number of A&B’s tenants are unable to meet their obligations;


•	increases in non-recoverable operating and ownership costs;


•	A&B is unable to lease space at its properties when the space becomes available;


•	the rental rates upon a renewal or a new lease are significantly lower than prior rents or do not increase sufficiently to cover increases in operating and ownership costs;


•	the providing of lease concessions, such as free or discounted rents and tenant improvement allowances; and


•	the discovery of hazardous or toxic substances, or other environmental, culturally-sensitive, or related issues at the property.

The bankruptcy of key tenants may adversely affect A&B’s cash flows and profitability.

A&B may derive significant cash flows and earnings from certain key tenants. If one or more of these tenants declare bankruptcy or voluntarily vacates from the leased premise and A&B is unable to re-lease such space or to re-lease it on comparable or more favorable terms, A&B may be adversely impacted. Additionally, A&B may be further adversely impacted by an impairment or “write-down” of intangible assets, such as lease-in-place value, favorable lease asset, or a deferred asset related to straight-line lease rent, associated with a tenant bankruptcy or vacancy.

Governmental entities have adopted or may adopt regulatory requirements that may restrict A&B’s development activity.

A&B is subject to extensive and complex laws and regulations that affect the land development process, including laws and regulations related to zoning and permitted land uses. Government entities have adopted or may approve regulations or laws that could negatively impact the availability of land and development opportunities within those areas. It is possible that increasingly stringent requirements will be imposed on developers in the future that could adversely affect A&B’s ability to develop projects in the affected markets or could require that A&B satisfy additional administrative and regulatory requirements, which could delay development progress or increase the development costs to A&B.

Real estate development projects are subject to warranty and construction defect claims in the ordinary course of business that can be significant.

As a developer, A&B is subject to warranty and construction defect claims arising in the ordinary course of business. The amounts payable under these claims, both in legal fees and remedying any construction defects, can be significant and could exceed the profits made from the project. As a consequence, A&B may maintain liability insurance, obtain indemnities and certificates of insurance from contractors generally covering claims related to workmanship and materials, and create warranty and other reserves for projects based on historical experience and qualitative risks associated with the type of project built. Because of the uncertainties inherent in these matters, A&B cannot provide any assurance that its insurance coverage, contractor arrangements and reserves will be adequate to address some or all of A&B’s warranty and construction defect claims in the future. For example, contractual indemnities may be difficult to enforce, A&B may be responsible for applicable self-insured retentions, and certain claims may not be covered by insurance or may exceed applicable coverage limits. Additionally, the coverage offered and the availability of liability insurance for construction defects could be limited or costly. Accordingly, A&B cannot provide any assurance that such coverage will be adequate, available at an acceptable cost, or available at all.

A&B is involved in joint ventures and is subject to risks associated with joint venture relationships.

A&B is involved in joint venture relationships and may initiate future joint venture projects. A joint venture involves certain risks such as, among others:


•	A&B may not have voting control over the joint venture;


•	A&B may not be able to maintain good relationships with its venture partners;


•	the venture partner at any time may have economic or business interests that are inconsistent with A&B’s economic or business interests;


•	the venture partner may fail to fund its share of capital for operations and development activities or to fulfill its other commitments, including providing accurate and timely accounting and financial information to A&B;


•	the joint venture or venture partner could lose key personnel


•	the venture partner could become insolvent, requiring A&B to assume all risks and capital requirements related to the joint venture project, and any resulting bankruptcy proceedings could have an adverse impact on the operation of the project or the joint venture; and


•	A&B may be required to perform on guarantees it has provided or agrees to provide in the future related to the completion of a joint venture's construction and development of a project, joint venture indebtedness, or on indemnification of a third party serving as surety for a joint venture's bonds for such completion.

A&B’s financial results are significantly influenced by the economic growth and strength of Hawaii.

Virtually all of A&B’s real estate development activity is conducted in Hawaii. Consequently, the growth and strength of Hawaii’s economy has a significant impact on the demand for A&B’s real estate development projects. As a result, any adverse change to the growth or health of Hawaii’s economy could have an adverse effect on A&B’s real estate business.

The value of A&B’s development projects and its commercial properties are affected by a number of factors.

The Company has significant investments in various commercial real estate properties, development projects, and joint venture investments. Weakness in the real estate sector, especially in Hawaii, difficulty in obtaining or renewing project-level financing, and changes in A&B’s investment and development strategy, among other factors, may affect the fair value of these

real estate assets owned by A&B or by its joint ventures. If the fair value of A&B’s joint venture development projects were to decline below the carrying value of those assets, and that decline was other-than-temporary, A&B would be required to recognize an impairment loss. Additionally, if the undiscounted cash flows of its commercial properties or development projects were to decline below the carrying value of those assets, A&B would be required to recognize an impairment loss if the fair value of those assets were below their carrying value.

Risks Relating to A&B’s Materials and Construction Segment

A&B's Materials and Construction segment's revenue growth and profitability are dependent on factors outside of its control.

A&B's Materials and Construction segment's ability to grow its revenues and improve profitability are dependent on factors outside of its control, which include, but are not limited to:


•	decreased government funding for infrastructure projects (see the "Economic downturns or reductions in government funding of infrastructure projects could reduce A&B's revenues and profits from its materials and construction businesses." risk factor below);


•	reduced spending by private sector customers resulting from poor economic conditions in Hawaii;


•	an increased number of competitors;


•	less success in competitive bidding for contracts;


•	a decline in transportation and logistical costs, which may result in customers purchasing material from sources located outside of Hawaii in a more cost-efficient manner;


•	limitations on access to necessary working capital and investment capital to sustain growth;


•	inability to hire and retain essential personnel and to acquire equipment to support growth; and


•	inability to identify acquisition candidates and successfully acquire and integrate them into A&B's materials and construction businesses.

Economic downturns or reductions in government funding of infrastructure projects could reduce A&B's revenues and profits from its materials and construction businesses.

The segment's products are used in public infrastructure projects, which include the construction, maintenance and improvement of highways, streets, roads, airport runways and similar projects. A&B's materials and construction businesses, including its aggregates business, are highly dependent on the amount and timing of infrastructure work funded by various governmental entities, which, in turn, depends on the overall condition of the economy, the need for new or replacement infrastructure, the priorities placed on various projects funded by governmental entities and federal, state or local government spending levels. A&B cannot be assured of the existence, amount and timing of appropriations for spending on these and other future projects, including state and federal spending on roads and highways. Spending on infrastructure could decline for numerous reasons, including decreased revenues received by state and local governments for spending on such projects (including federal funding), and other competing priorities for available state, local and federal funds. State spending on highway and other projects can be adversely affected by decreases or delays in, or uncertainties regarding, federal highway funding. The segment is reliant upon contracts with the City and County of Honolulu, the State of Hawaii and the Federal Government for a significant portion of its revenues.

A&B may face community opposition to the operation or expansion of quarries or other facilities.

Quarries and other segment facilities require special and conditional use permits to operate. Permitting and licensing applications and proceedings and regulatory enforcement proceedings are all matters open to public scrutiny and comment. In addition, the Makakilo quarry is adjacent to residential areas and heavy equipment and explosives are used in the mining process. As a result, from time to time, A&B's Materials and Construction segment operations may be subject to community opposition and adverse publicity that may have a negative effect on operations and delay or limit any future expansion or development of segment operations.

A&B's materials and construction businesses operate only in Hawaii, and adverse changes to the economy and business environment in Hawaii could adversely affect operations and profitability.

Because of its operations are concentrated in a specific geographic location, A&B's materials and construction businesses are susceptible to fluctuations in operations and profitability caused by changes in economic or other conditions in Hawaii.

Significant contracts may be canceled or A&B may be disqualified from bidding for new contracts.

Governmental entities typically have the right to cancel their contracts with A&B's construction businesses at any time with payment generally only for the work already completed plus a negotiated compensatory overhead recovery amount. In addition, A&B's construction businesses could be prohibited from bidding on certain governmental contracts if it fails to maintain qualifications required by those entities, such as maintaining an acceptable safety record.

If A&B's materials and construction businesses are unable to accurately estimate the overall risks, requirements or costs when bidding on or negotiating a contract that it is ultimately awarded, the segment may achieve a lower than anticipated profit or incur a loss on the contract.

The majority of the Materials and Construction segment's revenues are derived from “quantity pricing” (fixed unit price) contracts. Approximately 20 percent of 2015 segment revenues and backlog are derived from “lump sum” (fixed total price) contracts. Quantity pricing contracts require the provision of line-item materials at a fixed unit price based on approved quantities irrespective of actual per unit costs. Lump sum contracts require that the total amount of work be performed for a single price irrespective of actual quantities or actual costs. Expected profits on contracts are realized only if costs are accurately estimated and then successfully controlled. If cost estimates for a contract are inaccurate, or if the contract is not performed within cost estimates, then cost overruns may result in losses or cause the contract not to be as profitable as expected.

If A&B's materials and construction businesses are unable to attract and retain key personnel and skilled labor, or encounter labor difficulties, the ability to bid for and successfully complete contracts may be negatively impacted.

The ability to attract and retain reliable, qualified personnel is a significant factor that enables A&B's materials and construction businesses to successfully bid for and profitably complete its work. This includes members of management, project managers, estimators, supervisors, and foremen. The segment's future success will also depend on its ability to hire, train and retain, or to attract, when needed, highly skilled management personnel. If competition for these employees is intense, it could be difficult to hire and retain the personnel necessary to support operations. If A&B does not succeed in retaining its current employees and attracting, developing and retaining new highly skilled employees, segment operations and future earnings may be negatively impacted.

A majority of segment personnel are unionized. Any work stoppage or other labor dispute involving unionized workforce, or inability to renew contracts with the unions, could have an adverse effect on operations.

A&B's construction and construction-related businesses may fail to meet schedule or performance requirements of its paving contracts.

Asphalt paving contracts have penalties for late completion. In most instances, projects must be completed within an allotted number of business or calendar days from the time the notice to proceed is received, subject to allowances for additional days due to weather delays or additional work requested by the customer. If A&B's construction businesses subsequently fail to complete the project as scheduled, A&B may be responsible for contractually agreed-upon liquidated damages, an amount assessed per day beyond the contractually allotted days, at the discretion of the customer. Under these circumstances, the total project cost could exceed original estimates and could result in a loss of profit or a loss on the project. Additionally, A&B's construction businesses enter into lump sum and quantity pricing contracts where profits can be adversely affected by a number of factors beyond its control, which can cause actual costs to materially exceed the costs estimated at the time of its original bid.

Timing of the award and performance of new contracts could have an adverse effect on Materials and Construction segment operating results and cash flow.

It is generally very difficult to predict whether and when bids for new projects will be offered for tender, as these projects frequently involve a lengthy and complex design and bidding process, which is affected by a number of factors, such as market conditions, funding arrangements and governmental approvals. Because of these factors, segment results of operations and cash flows may fluctuate from quarter to quarter and year to year, and the fluctuation may be substantial.

The uncertainty of the timing of contract awards after a winning bid is submitted may also present difficulties in matching the size of equipment fleet and work crews with contract needs. In some cases, A&B's materials and construction businesses may maintain and bear the cost of more equipment than is currently required, in anticipation of future needs for existing contracts or expected future contracts.

In addition, the timing of the revenues, earnings and cash flows from contracts can be delayed by a number of factors, including delays in receiving material and equipment from suppliers and services from subcontractors and changes in the scope of work to be performed.

Dependence on a limited number of customers could adversely affect A&B's materials and construction businesses and results of operations.

Due to the size and nature of the segment's construction contracts, one or a few customers have in the past and may in the future represent a substantial portion of consolidated segment revenues and gross profits in any one year or over a period of several consecutive years. For example, in 2015, approximately 90 percent of Grace's construction related revenue was generated from projects administered by the State of Hawaii or the various counties in Hawaii where Grace served as general contractor or subcontractor. Similarly, segment backlog frequently reflects multiple contracts for certain customers; therefore, one customer may comprise a significant percentage of backlog at a certain point in time. For example, the State of Hawaii comprised approximately 33 percent of Grace’s construction backlog at December 31, 2015. The loss of business from any such customer, or a default or delay in payment on a significant scale by a customer, could have an adverse effect on A&B's materials and construction businesses or results of operations.

A&B's materials and construction businesses are likely to require more capital over the longer term.

The property and machinery needed to produce aggregate products and perform asphaltic concrete paving contracts are expensive. Although capital needs over the next five years are expected to be relatively modest, over the longer term, A&B's materials and construction businesses may require increasing annual capital expenditures. The segment's ability to generate sufficient cash flow to fund these expenditures depends on future performance, which will be subject to general economic conditions, industry cycles and financial, business, and other factors affecting operations, many of which are beyond A&B's control. If the segment is unable to generate sufficient cash to operate its business, it may be required, among other things, to further reduce or delay planned capital or operating expenditures.

An inability to obtain bonding could limit the aggregate dollar amount of contracts that A&B's materials and construction businesses are able to pursue.

As is customary in the construction industry, A&B may be required to provide surety bonds to its customers to secure its performance under construction contracts. A&B's ability to obtain surety bonds primarily depends upon its capitalization, working capital, past performance, management expertise and reputation and certain external factors, including the overall capacity of the surety market. Surety companies consider such factors in relationship to the amount of backlog and their underwriting standards, which may change from time to time. Events that adversely affect the insurance and bonding markets generally may result in bonding becoming more difficult to obtain in the future, or being available only at a significantly greater cost. The inability to obtain adequate bonding would limit the amount that A&B's construction businesses are to able bid on new contracts and could have an adverse effect on the segment's future revenues and business prospects.

A&B's Materials and Construction segment operations are subject to hazards that may cause personal injury or property damage, thereby subjecting A&B to liabilities and possible losses, which may not be covered by insurance.

Segment employees are subject to the usual hazards associated with performing construction activities on road construction sites, plants and quarries. Operating hazards can cause personal injury and loss of life, damage to or destruction of property, plant and equipment and environmental damage. A&B maintains general liability and excess liability insurance, workers’ compensation insurance, auto insurance and other types of insurance, all in amounts consistent with A&B’s materials and construction businesses' risk of loss and industry practice, but this insurance may not be adequate to cover all losses or liabilities incurred in operations.

Insurance liabilities are difficult to assess and quantify due to unknown factors, including the severity of an injury, the determination of liability in proportion to other parties, the number of incidents not reported and the effectiveness of the segment's safety program. If insurance claims or costs were above its estimates, A&B's materials and construction businesses might be required to use working capital to satisfy these claims, which could impact its ability to maintain or expand its operations.

Environmental and other regulatory matters could adversely affect A&B's materials and construction businesses' ability to conduct its business and could require significant expenditures.

Segment operations are subject to various environmental laws and regulations relating to the management, disposal and remediation of hazardous substances, climate change and the emission and discharge of pollutants into the air and water. A&B's materials and construction businesses could be held liable for such contamination created not only from their own activities but also from the historical activities of others on properties that the segment acquires or leases. Segment operations are also subject to laws and regulations relating to workplace safety and worker health, which, among other things, regulate employee exposure to hazardous substances. Violations of such laws and regulations could subject A&B to substantial fines and penalties, cleanup costs, third-party property damage or personal injury claims. In addition, these laws and regulations have become, and enforcement practices and compliance standards are becoming, increasingly stringent. Moreover, A&B cannot predict the nature, scope or effect of legislation or regulatory requirements that could be imposed, or how existing or future laws or regulations will be administered or interpreted, with respect to products or activities to which they have not been previously applied. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could require substantial expenditures for, among other things, equipment not currently possessed, or the acquisition or modification of permits applicable to segment activities.

Short supplies and volatility in the costs of fuel, energy and raw materials may adversely affect A&B's materials and construction businesses.

A&B's materials and construction businesses require a continued supply of diesel fuel, electricity and other energy sources for production and transportation. The financial results of these businesses have at times been affected by the high costs of these energy sources. Significant increases in costs or reduced availability of these energy sources have and may in the future reduce financial results. Moreover, fluctuations in the supply and costs of these energy sources can make planning business operations more difficult. A&B does not hedge its fuel price risk, but instead focuses on volume-related price reductions, fuel efficiency, alternative fuel sources, consumption and the natural hedge created by the ability to increase aggregates prices.

Similarly, segment operations also require a continued supply of liquid asphalt, which serves as a key raw material in the production of asphaltic concrete. Liquid asphalt is subject to potential supply constraints and significant price fluctuations, which are generally correlated to the price of crude oil, though not as closely as diesel or gasoline, and are beyond the control of A&B's materials and construction business. Accordingly, significant increases in the price of crude oil will have an adverse impact on the financial results of the materials and construction segment due to higher costs of production of asphaltic concrete. Conversely, significant declines in the price of oil had, and in the future, may have an adverse impact on A&B's material and construction sales of liquid asphalt concrete, due to lower costs of importing asphalt to Hawaii, which may result in customers sourcing liquid asphalt from competition located outside of Hawaii.

Risks Relating to A&B’s Agribusiness Segment

The lack of water for agricultural irrigation could adversely affect Agribusiness operations and profitability.

It is crucial for the Agribusiness segment to have access to sufficient, reliable and affordable sources of water for the irrigation of sugar cane. As further described in “Legal Proceedings,” there are regulatory and legal challenges to the segment’s ability to divert water from streams in Maui. In addition, access to water is subject to weather patterns that cannot be reliably predicted. If the segment is limited in its ability to divert stream waters for its use or there is insufficient rainfall on an extended basis, it would have an adverse effect on existing sugar operations, as well as the ability to employ the land in active agricultural use.

Low raw sugar prices adversely affect the profitability of A&B's sugar business.

The operations and profitability of the Agribusiness segment are substantially affected by market factors, particularly the domestic prices for raw cane sugar. These market factors are influenced by a variety of forces, including prices of competing crops and suppliers, weather conditions and United States farm and trade policies.

Wet weather during the harvesting season may significantly affect sugar production and yields.

Wet weather during the harvesting season creates muddy field conditions, which reduces the efficiency of harvesting operations and lowers the amount of cane that can be harvested from the fields in a given period of time. Additionally, wet weather also increases the amount of mud and other debris that must be removed in the processing of the cane into sugar, which results in decreased yields.

A&B is subject to risks associated with raw sugar production.

A&B's production of raw sugar is subject to numerous risks that could adversely affect the volume and quality of sugar produced. Any of these risks has the potential to adversely impact the final sugar harvest, including by causing significant losses and possibly stopping the HC&S sugar operations earlier than anticipated. These risks include, but are not limited to:


•	equipment accidents or failures in the factory or the power plant, particularly where equipment is old and difficult to repair or replace;


•	government restrictions on farming practices, including cane burning and pesticide use;


•	loss of A&B's major customer;


•	weather and natural disasters, such as excessive rain, which impacts the efficiency of harvesting operations, and vog, which leads to inefficient and costly no-burn cane harvesting;


•	increases in costs, including, but not limited to fuel, fertilizer, herbicide and drip tubing;


•	labor, including labor availability (see risk factor above regarding labor disruptions) and loss of qualified personnel;


•	lack of demand for sugar production;


•	failure to comply with food quality and safety requirements;


•	disease;


•	uncontrolled fires, including arson; and


•	weed control.

A&B’s ability to use or lease agricultural lands for agricultural purposes may be limited by government regulation.

Given the large scale of its agricultural landholdings on Maui and Kauai, many of the third parties to whom A&B leases land for agricultural purposes may be characterized as large scale commercial agricultural operations. Recent legislation passed on Kauai places restrictions on the ability of such operations to use land within specified distances of highways, schools, oceans, streams, residences, parks, care homes, hospitals and other similar uses, to grow crops other than ground cover. This legislation also puts significant restrictions regarding, and public notification obligations concerning, pesticide use on such operations and limits their ability to use genetically modified organism (GMO) crops. On Maui, similar legislation passed by a voter initiative places a moratorium on the ability to farm GMO crops. The Kauai and Maui legislation is in the process of being challenged in the courts and, if such legislation is upheld by the courts, or additional legislative agricultural restrictions are passed, such as restrictions on the use of pesticides, the ability of A&B to use or lease its lands for large scale agricultural purposes, and any rents that it can achieve for those lands, may be adversely affected by this and similar legislation.

The transition to a diversified agricultural model is subject to both the risks affecting the business generally and the inherent difficulties associated with implementing a new strategy.

The ability to transition to a new diversified model and improve the operating results depends upon a number of factors, including:


•	the extent to which management has properly understood and is able to manage the dynamics and demands of the various farming operations comprising the diversified agricultural model, in which the Company may have limited or no prior experience;


•	the ability to successfully complete the final harvest and transition from the sugar operations in an orderly and efficient manner;


•	the time required to prepare the land currently under sugar cane cultivation and ready it for a new purpose under the diversified model;


•	the ability to respond to any unanticipated changes in expected cash flows, liquidity, cash needs and cash expenditures with respect to the new diversified model, including the Company's ability to obtain any additional financing or other liquidity enhancing transactions, if and when needed;


•	the ability to execute strategic initiatives in a cost-effective manner, including identifying business partners to explore potential opportunities;


•	The Company's ability to access adequate, affordable and uninterrupted sources of water (see the " The lack of water for agricultural irrigation could adversely affect Agribusiness operations and profitability" risk factor above);

There is no assurance that the Company will be able to transition to and implement a new diversified agricultural model, which could have an adverse impact on the Company's results of operations.

The diversified agricultural model may not achieve the financial results expected.

The Company is currently evaluating several categories of replacement agricultural activities in the transition to the diversified model, including but not limited to energy crops, agroforestry, grass finished livestock operations, diversified food crops/agricultural park, and orchard crops. There is no assurance that the Company's replacement agricultural activities will be economically feasible or improve the Agribusiness segment's operating results.

A&B’s power sales contracts could be replaced on less favorable terms or may not be replaced.

A&B’s power sales contracts expire at various points in the future and may not be replaced or could be replaced on less favorable terms, which could adversely affect Agribusiness profitability. For example, during 2015, the Company's power supply contract with Maui Electric Co. ("MECO") was amended pursuant to which, among other items, MECO's minimum power purchase obligation was eliminated.

The market for power sales in Hawaii is limited.

The power distribution systems in Hawaii are small and island-specific; currently, there is no ability to move power generated on one island to any other island. In addition, Hawaii law limits the ability of independent power producers, such as A&B, to sell their output to firms other than the respective utilities on each island, without themselves becoming utilities and subject to the State’s Public Utilities Commission (PUC) regulation. Further, any sales of electricity by A&B to the utilities on each island are subject to the approval of the PUC. Unlike some areas in the Mainland, Hawaii’s independent power producers have no ability to use utility infrastructure to transfer power to other locations.

A&B has limited options for carriage of sugar to domestic markets.

In order to directly ship bulk or partially processed food-grade sugar from Maui to markets on the U.S. West Coast, or any alternate U.S. domestic port, A&B must utilize vessels that are subject to the restrictions delineated in Section 27 of the Merchant Marine Act, 1920, commonly referred to as the Jones Act. A&B currently owns a bulk sugar transportation vessel, the MV Moku Pahu, and therefore, A&B is also subject to the restrictions of the Jones Act. Under the Jones Act, all vessels transporting cargo between covered U.S. ports must, subject to limited exceptions, be built in the U.S., registered under the U.S. flag, manned by predominantly U.S. crews, and owned and operated by U.S.-organized companies that are controlled and 75 percent owned by U.S. citizens. U.S.-flagged vessels are generally required to be maintained at higher standards than foreign-flagged vessels and are supervised by, as well as subject to rigorous inspections by, or on behalf of, the U.S. Coast Guard, which requires appropriate certifications and background checks of the crew members. Because of these restrictions, A&B would have limited options for carriage of sugar to domestic markets if the MV Moku Pahu no longer qualified under the Jones Act or were taken out of service due to its age.

A&B has limited options and strict time constraints for carriage of molasses to domestic markets.

All of the molasses produced by A&B is shipped out of Kahului Harbor. A&B currently has the ability to store approximately 20 percent of annual molasses production before having to cease harvest and milling operations, which cessation would result in significant additional operating costs. The frequency and timing of vessel arrivals to ship molasses off island are therefore important to A&B's ability to continue its sugar operations without interruption, and there is no assurance that such interruptions will not occur. Additionally, if domestic Jones Act shipping capacity is not available in the market when required, A&B may be forced to sell its molasses to foreign buyers, which would result in lower profitability.

A&B has aging infrastructure in its sugar factory, irrigation and power facilities.

A&B maintains critical spares for primary factory equipment in the event of a breakdown or failure. However, due to the extensive age and complexity of the mill, factory and power plant, it is possible that damage to equipment may not be repaired in a timely manner or at an acceptable cost, which may adversely affect the final sugar harvest, including incurring significant losses and possibly ceasing the HC&S sugar operations earlier than anticipated. A&B also operates renewable energy facilities, some of which are located on conservation-zoned land, which is subject to restrictions on activities conducted on the land. It therefore may not be feasible to expediently repair damage to such facilities should it occur. A&B has property, boiler and machinery, and business interruption insurance for most of such events; however, it is possible that A&B’s insurance coverage may not cover all risk of loss.

Risks Relating to the Separation from Matson Navigation Company

If the Separation were to fail to qualify as tax-free for U.S. federal income tax purposes, then A&B, Matson, Inc.("Matson") and the shareholders who received their shares of A&B common stock in the Separation could be subject to significant tax liability or tax indemnity obligations.

Prior to June 29, 2012, A&B’s businesses included Matson Navigation Company , a wholly owned subsidiary that provided ocean transportation, truck brokerage and intermodal services. As part of a strategic initiative designed to allow A&B to independently execute its strategies and to best enhance and maximize its earnings, growth prospects and shareholder value, A&B made a decision to separate the transportation businesses from the Hawaii real estate and agriculture businesses. In preparation for the separation, A&B modified its legal-entity structure and became a wholly owned subsidiary of a newly created entity, Alexander & Baldwin Holdings, Inc. (“Holdings”). On June 29, 2012, Holdings distributed to its shareholders all of the shares of A&B stock in a tax-free distribution (the “Separation”). Holders of Holdings common stock continued to own the transportation businesses, but also received one share of A&B common stock for each share of Holdings common stock held at the close of business on June 18, 2012, the record date. Following the Separation, Holdings changed its name to Matson. On July 2, 2012, A&B began regular trading on the New York Stock Exchange under the ticker symbol “ALEX” as an independent, public company.

Matson received a private letter ruling from the Internal Revenue Service ("IRS Ruling") that, for U.S. federal income tax purposes, (i) certain transactions to be effected in connection with the Separation qualify as a reorganization under Sections 355 and/or 368 of the Internal Revenue Code of 1986, as amended ("Code"), or as a complete liquidation under Section 332(a) of the Code and (ii) the Separation qualifies as a transaction under Section 355 of the Code. In addition to obtaining the IRS Ruling, Matson received a tax opinion ("Tax Opinion") from the law firm of Skadden, Arps, Slate, Meagher & Flom LLP (which Tax Opinion relies on the effectiveness of the IRS Ruling) substantially to the effect that, for U.S. federal income tax purposes, the Separation and certain related transactions qualify as a reorganization under Section 368 of the Code. The IRS Ruling and Tax Opinion rely on certain facts and assumptions, and certain representations from A&B and Matson regarding the past and future conduct of their respective businesses and other matters. Notwithstanding the IRS Ruling and Tax Opinion, the Internal Revenue Service ("IRS") could determine on audit that the Separation and related transactions should be treated as a taxable transaction if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated, or that the Separation and related transactions should be taxable for other reasons, including as a result of a significant change in stock or asset ownership after the Separation or if the IRS were to disagree with the conclusions in the Tax Opinion that are not covered by the IRS Ruling. If the Separation and related transactions ultimately were determined to be taxable, the distribution of A&B stock in the Separation could be treated as taxable for U.S. federal income tax purposes to the shareholders who received their shares of A&B common stock in the Separation, and such shareholders could incur significant U.S. federal income tax liabilities. In addition, Matson would recognize a gain in an amount equal to the excess of the fair market value of the shares of A&B common stock distributed to Matson's shareholders on the Separation date over Matson tax basis in such shares.

In addition, under the terms of the Tax Sharing Agreement that A&B entered into with Matson, A&B also generally is responsible for any taxes imposed on Matson that arise from the failure of the Separation and certain related transactions to qualify as tax-free for U.S. federal income tax purposes within the meaning of Sections 355 and 368 of the Code, to the extent such failure to qualify is attributable to actions, events or transactions relating to A&B’s stock, assets or business, or a breach of the relevant representations or covenants made by A&B and its subsidiaries in the Tax Sharing Agreement, the materials submitted to the IRS in connection with the request for the IRS Ruling or the representation letter provided to counsel in connection with the Tax Opinion. The amounts of any such taxes could be significant.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 3. LEGAL PROCEEDINGS

Legal Proceedings and Other Contingencies: A&B owns 16,000 acres of watershed lands in East Maui that supply a significant portion of the irrigation water used by Hawaiian Commercial & Sugar Company ("HC&S"), a division of A&B that produces raw sugar. A&B also held four water licenses to another 30,000 acres owned by the State of Hawaii in East Maui which, over the last ten years, have supplied approximately 56 percent of the irrigation water used by HC&S. The last of these water license agreements expired in 1986, and all four agreements were then extended as revocable permits that were renewed annually. In 2001, a request was made to the State Board of Land and Natural Resources (the "BLNR") to replace these revocable permits with a long-term water lease. Pending the conclusion by the BLNR of this contested case hearing on the request for the long-term lease, the BLNR has kept the existing permits on a holdover basis. Three parties filed a lawsuit on April 10, 2015 (the “4/10/15 Lawsuit”) alleging that the BLNR has been renewing the revocable permits annually rather than keeping them in holdover status. The lawsuit asks the court to void the revocable permits and to declare that the renewals were illegally issued without preparation of an environmental assessment (“EA”). In December 2015, the BLNR decided to re-affirm its prior decisions to keep the permits in holdover status. This decision by the BLNR is being challenged by the three parties. In January 2016, the court in the 4/10/15 Lawsuit ruled that the renewals were not subject to the EA requirement but that the BLNR lacked legal authority to keep the revocable permits in holdover status beyond one year. The court has allowed the parties to take an immediate appeal of this ruling.

In addition, on May 24, 2001, petitions were filed by a third party, requesting that the Commission on Water Resource Management of the State of Hawaii ("Water Commission") establish interim instream flow standards ("IIFS") in 27 East Maui streams that feed the Company's irrigation system. The Water Commission initially took action on the petitions in 2008 and 2010, but the petitioners requested a contested case hearing to challenge the Water Commission's decisions on certain petitions. The Water Commission denied the contested case hearing request, but the petitioners successfully appealed the denial to the Hawaii Intermediate Court of Appeals, which ordered the Water Commission to grant the request. The Commission then authorized the appointment of a hearings officer for the contested case hearing and expanded the scope of the contested case hearing to encompass all 27 petitions for amendment of the IIFS for East Maui streams in 23 hydrologic units. The evidentiary phase of the hearing before the Commission-appointed hearings officer was completed on April 2, 2015. On January 15, 2016, the Commission-appointed hearings officer issued his recommended decision on the petitions. The recommended decision would restore water to streams in 11 of the 23 hydrologic units. A final decision on the petitions from the Commission is not expected until at least the second quarter of 2016.

If the Company is not permitted to use sufficient quantities of stream waters, it would have a material adverse effect on the Company’s sugar-growing operations in 2016 and the Company’s pursuit of a diversified agricultural model in subsequent years.

In January 2013, the Environmental Protection Agency (“EPA”) finalized nationwide standards for controlling hazardous air pollutant emissions from industrial, commercial, institutional boilers and process heaters (the “Boiler MACT” rule), which apply to HC&S's three boilers at the Puunene Sugar Mill. The initial deadline for compliance with the Boiler MACT rule was January 2016, with full compliance required by July 2016. The Company anticipates that the Puunene Mill boilers will meet all applicable compliance deadlines and that the remaining compliance costs will be less than $250,000, based on available information. The Company is currently implementing strategies for achieving full compliance with the new regulations and is assessing whether the announced end to sugar operations may impact some compliance requirements. Although the EPA has finalized its reconsideration of the rule, there remains some uncertainty as to final requirements pending the outcome of ongoing litigation. Any resulting changes to the Boiler MACT rule could impact the Company’s compliance requirements.

On June 24, 2014, the Hawaii State Department of Health ("DOH") Clean Air Branch issued a Notice and Finding of Violation and Order ("NFVO") to HC&S alleging various violations relating to the operation of HC&S's three boilers at its sugar mill. The DOH reviewed a five-year period (2009-2013) and alleged violations relating primarily to periods of excess visible emissions and operation of the wet scrubbers installed to control particulate matter emissions from the boiler stacks. All incidents included in the NFVO were self-reported by HC&S to the DOH prior to the DOH's review, and there is no indication that these deviations resulted in any violation of health-based air quality standards. The NFVO includes an administrative penalty of $1.3 million, which HC&S has contested. The Company is unable to predict, at this time, the outcome or financial

impact of the NFVO but does not believe that the financial impact of the NFVO will be material to its financial position, cash flows or results of operations.

On July 1, 2015, a lawsuit was filed against the State of Hawaii and the Director of the Department of Health, alleging that the sugar cane burning permits issued by the State to HC&S were unlawfully issued, and seeking an injunction against the burning of cane. On July 6, 2015, the plaintiffs added the Company as a defendant. If the Company is not permitted or is substantially limited in its ability to burn sugar cane, this would have a material adverse effect on the Company's sugar operations in 2016. The Company will vigorously defend itself in this matter.

A&B is a party to, or may be contingently liable in connection with, other legal actions arising in the normal conduct of its businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not have a material effect on A&B’s consolidated financial statements as a whole.

ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulations S-K (17 CFR 229.104) is included in Exhibit 95 to this Annual Report on Form 10-K.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of February 14, 2016 , there were 2,437 shareholders of record of A&B common stock. In addition, Cede & Co., which appears as a single record holder, represents the holdings of thousands of beneficial owners of A&B common stock.

The following performance graph compares the monthly dollar change in the cumulative shareholder return on the Company’s common stock:

Trading volume averaged 172,542 shares a day in 2015 , 203,642 shares a day in 2014 , and 192,977 shares a day in 2013 .

The quarterly intra-day high and low sales prices and end of quarter closing prices, as reported by the New York Stock Exchange, were as follows:



	Dividends Paid Per Share		Market Price
			High		Low		Close
2014
First Quarter	$	0.04	$	45.16	$	36.98	$	42.56
Second Quarter	$	0.04	$	43.19	$	36.61	$	41.45
Third Quarter	$	0.04	$	42.38	$	35.96	$	35.97
Fourth Quarter	$	0.05	$	40.99	$	33.98	$	39.26

2015
First Quarter	$	0.05	$	43.33	$	36.95	$	43.18
Second Quarter	$	0.05	$	43.68	$	39.12	$	39.40
Third Quarter	$	0.05	$	40.00	$	32.15	$	34.33
Fourth Quarter	$	0.06	$	39.00	$	33.87	$	35.31

A&B increased the dividend rate by $0.01 in the fourth quarters of 2015 and 2014. Although A&B expects to continue paying quarterly cash dividends on its common stock, the declaration and payment of dividends in the future are subject to the discretion of the Board of Directors and will depend upon A&B's financial condition, results of operations, cash requirements and other factors deemed relevant by the Board of Directors.

A&B common stock is included in the Dow Jones U.S. Real Estate Index, the Russell 2000 Index, the Russell 3000 Index, the Dow Jones U.S. Composite Average and the S&P MidCap 400.

In October 2015, A&B's Board of Directors authorized A&B to repurchase up to two million shares of its common stock beginning on January 1, 2016. The authorization expires on December 31, 2017. No shares were repurchased in 2015, 2014, or 2013.

Securities authorized for issuance under equity compensation plans as of December 31, 2015 , included:



Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders	1,098,645	$18.81	1,277,179*
Total	1,098,645	$18.81	1,277,179


*	Under the 2012 Incentive Compensation Plan, 1,277,179 shares may be issued either as restricted stock grants, restricted stock unit grants, or stock option grants.

ITEM 6. SELECTED FINANCIAL DATA

The following should be read in conjunction with Item 8, “Financial Statements and Supplementary Data,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (dollars and shares in millions, except shareholders of record and per-share amounts):



	2015			2014			2013			2012 ¹			2011 ¹
Revenue:
Real Estate:
Leasing	$	133.8		$	125.6		$	110.4		$	100.6		$	99.7
Development and Sales	131.5			150.0			423.0			32.2			59.8
Less amounts reported in discontinued operations ²	—			(70.4		)	(369.2		)	(45.3		)	(81.9		)
Reconciling items ⁴	(31.0		)	—			—			(8.3		)	—
Materials and Construction ³	219.0			234.3			54.9			—			—
Agribusiness	117.2			120.5			146.1			182.3			157.5
Total revenue	$	570.5		$	560.0		$	365.2		$	261.5		$	235.1

Operating Profit (Loss) :
Real Estate:
Leasing	$	53.1		$	47.5		$	43.4		$	41.6		$	39.3
Development and Sales ⁵	65.0			85.7			44.4			(4.4		)	15.5
Less amounts reported in discontinued operations ²	—			(56.2		)	(36.7		)	(21.1		)	(38.8		)
Materials and Construction ³	30.9			25.9			2.9			—			—
Agribusiness Operations	(29.3		)	(11.8		)	10.7			20.8			22.2
Agribusiness Cessation costs ¹²	(22.6		)	—			—			—			—
Total operating profit	97.1			91.1			64.7			36.9			38.2
Interest expense	(26.8		)	(29.0		)	(19.1		)	(14.9		)	(17.1		)
General corporate expenses	(20.1		)	(18.6		)	(17.4		)	(15.1		)	(19.9		)
Reduction in KRS II carrying value, net ⁶	(2.6		)	(14.7		)	—			—			—
Acquisition/Separation costs	—			—			(4.6		)	(6.8		)	—
Income from continuing operations before income taxes	47.6			28.8			23.6			0.1			1.2
Income tax expense (benefit)	16.5			(1.4		)	11.1			(5.9		)	2.8
Income (loss) from continuing operations	31.1			30.2			12.5			6.0			(1.6		)
Income from discontinued operations	—			34.3			22.3			12.8			23.3
Net income	31.1			64.5			34.8			18.8			21.7
Income attributable to noncontrolling interest	(1.5		)	(3.1		)	(0.5		)	—			—
Net income attributable to A&B Shareholders	$	29.6		$	61.4		$	34.3		$	18.8		$	21.7

Identifiable Assets:
Real Estate:
Leasing	$	1,058.8		$	1,121.1		$	1,113.0		$	771.3		$	772.0
Development and Sales ⁸	$	622.0		$	633.9		$	640.4		$	504.8		$	451.5
Agribusiness	$	151.5		$	159.7		$	155.3		$	149.9		$	157.8
Materials and Construction	$	386.6		$	385.9		$	358.7		$	—		$	—
Other ¹³	$	24.6		$	21.0		$	8.4		$	3.7		$	1.6
Total assets	$	2,243.5		$	2,321.6		$	2,275.8		$	1,429.7		$	1,382.9

SELECTED FINANCIAL DATA (CONTINUED)



	2015		2014		2013		2012 ¹		2011 ¹
Capital Expenditures:
Real Estate:
Leasing ⁹	$	23.0	$	51.8	$	488.5	$	23.1	$	43.6
Development and Sales ¹⁰	—		—		0.1		—		5.2
Agribusiness ¹¹	13.1		10.8		11.8		31.7		10.5
Materials and Construction ³	7.2		10.7		4.8		—		—
Other	1.4		1.8		0.1		—		—
Total capital expenditures	$	44.7	$	75.1	$	505.3	$	54.8	$	59.3

Depreciation and Amortization:
Real Estate:
Leasing ²	$	30.3	$	26.9	$	24.3	$	22.0	$	21.6
Development and Sales	0.2		0.2		0.2		0.2		0.2
Agribusiness	12.1		11.5		11.7		11.6		11.9
Materials and Construction ³	11.6		15.2		4.4		—		—
Other	1.5		1.2		1.1		1.3		1.1
Total depreciation and amortization	$	55.7	$	55.0	$	41.7	$	35.1	$	34.8

Earnings (loss) per share ⁷ :
Basic:
Continuing operations attributable to A&B shareholders	$	0.54	$	0.56	$	0.27	$	0.14	$	(0.04	)
Discontinued operations attributable to A&B shareholders	$	—	$	0.70	$	0.50	$	0.30	$	0.55
Basic earnings per share attributable to A&B shareholders	$	0.54	$	1.26	$	0.77	$	0.44	$	0.51
Diluted:
Continuing operations attributable to A&B shareholders	$	0.54	$	0.55	$	0.26	$	0.14	$	(0.04	)
Discontinued operations attributable to A&B shareholders	$	—	$	0.70	$	0.50	$	0.30	$	0.55
Diluted earnings per share attributable to A&B shareholders	$	0.54	$	1.25	$	0.76	$	0.44	$	0.51

Cash dividends declared per common share	$	0.21	$	0.17	$	0.04	$	—	$	—

Balance sheet data (in millions):
Investment in real estate and joint ventures	$	1,564.6	$	1,639.9	$	1,606.8	$	1,203.4	$	1,165.0
Total assets ¹³	$	2,243.5	$	2,321.6	$	2,275.8	$	1,429.7	$	1,382.9
Total liabilities ¹³	$	1,004.8	$	1,106.8	$	1,107.1	$	518.8	$	658.9
Redeemable noncontrolling interest	$	11.6	$	—	$	—	$	—	$	—
Total equity (includes noncontrolling interest)	$	1,227.1	$	1,214.8	$	1,168.7	$	910.9	$	724.0
Long-term debt – non-current	$	497.8	$	631.5	$	605.5	$	220.0	$	327.2

The financial statements and related financial information pertaining to the years ended 2012 and 2011 have been presented on a combined basis and reflect the financial position, results of operations and cash flows of the real estate and agriculture businesses and corporate functions of Alexander & Baldwin, Inc., all of which were under common ownership and common management prior to the Separation. The financial statements for periods prior to the Separation included herein may not necessarily reflect what A&B’s results of operations, financial position and cash flows would have been had A&B been a stand-alone company during the periods presented.


²	Amounts recast to reflect discontinued operations.


³	2013 includes the results, capital expenditures, and depreciation and amortization of Grace from the acquisition date of October 1, 2013 through December 31, 2013.

⁴

2015 amounts represent the sales of an office building in Washington in December 2015, a Colorado retail property in March 2015 and a Texas office building in May 2015 that are classified within cost of sales and development in the Consolidated Statement of Income, but reflected as revenue for segment reporting purposes. The amount in 2012 represent the sale of a 286-acre agricultural parcel in 2012 classified as “Gain on sale of agricultural parcel” in the Consolidated Statements of Income, but reflected as revenue for segment reporting purposes.

⁵

The Real Estate Development and Sales segment includes approximately $30.2 million , $2.0 million, $4.2 million, $(8.3) million, and $(7.9) million in equity in earnings (losses) from its various real estate joint ventures for 2015 , 2014 , 2013 , 2012 , and 2011 , respectively. Included in operating profit are non-cash impairment and equity losses of $0.3 million related to the sale of Crossroads in 2014, $6.3 million related to the consolidation of The Shops at Kukui'ula in 2013, $9.8 million related to the Bakersfield joint venture and Santa Barbara real estate project in 2012, and $6.4 million related to the Waiawa real estate joint venture in 2011.

⁶

Represents a non-cash reduction in the carrying value of a $23.8 million tax equity investment in a 12-megawatt solar farm on Kauai (KRS II) that was made in July 2014. Tax benefits associated with the KRS II investment are accompanied by non-cash reductions of the investment's carrying value. Tax benefits associated with the investment are included in the Income tax expense (benefit) line item in the Consolidated Statements of Income.

⁷

The computation of basic and diluted earnings per common share for all periods prior to Separation is calculated using 42.4 million, the number of shares of A&B common stock outstanding on July 2, 2012, which was the first day of trading following the June 29, 2012 distribution of A&B common stock to Holdings shareholders, as if those shares were outstanding for those periods. For all periods prior to Separation, there were no dilutive shares because no actual A&B shares or share-based awards were outstanding prior to the Separation.


⁸	The Real Estate Development and Sales segment includes approximately $379.7 million , $383.8 million, $335.0 million, $319.7 million and $290.1 million related to its investment in various real estate joint ventures as of December 31, 2015 , 2014 , 2013 , 2012 and 2011 , respectively.


⁹	Represents gross capital additions and acquisitions to the leasing portfolio, including gross tax-deferred property purchases, but excluding the assumption of debt, that are reflected as non-cash transactions in the Consolidated Statements of Cash Flows.

¹⁰

Excludes expenditures for real estate developments held for sale which are classified as Cash Flows from Operating Activities within the Consolidated Statements of Cash Flows and excludes investment in joint ventures classified as Cash Flows from Investing Activities. Operating cash flows for expenditures related to real estate developments were $7.2 million, $41.7 million, $150.6 million, $37.2 million and $13.8 million for 2015 , 2014 , 2013 , 2012 and 2011 , respectively. Investments in real estate joint ventures were $25.8 million, $28.7 million, $22.2 million, $17.4 million and $27.9 million in 2015 , 2014 , 2013 , 2012 and 2011 , respectively.


¹¹	Includes $21.8 million of capital in 2012 related to the Company’s Port Allen solar project before tax credits.


¹²	Costs related to the cessation of HC&S sugar operation.


¹³	Amounts recast to reflect adoption of FASB Accounting Standard Update No. 2015-17, Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

We have made forward-looking statements in this Form 10-K that are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "plan," "intend," "anticipate," "estimate," "predict," "potential," "continue," "may," "might," "should," "could" or the negative of these terms or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements in this Form 10-K. We do not have any intention or obligation to update forward-looking statements after we file this Form 10-K.

The risk factors discussed in "Risk Factors" could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those expressed in forward-looking statements.

Introduction

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information about A&B’s business, recent developments, financial condition, liquidity and capital resources, cash flows, results of operations and how certain accounting principles, policies and estimates affect A&B’s financial statements. MD&A is organized as follows:


•	Basis of Presentation: This section provides a discussion of the basis on which A&B’s consolidated financial statements were prepared, including A&B’s historical results of operations.


•	Business Overview: This section provides a general description of A&B’s business, as well as recent developments that A&B believes are important in understanding its results of operations and financial condition or in understanding anticipated future trends.


•	Critical Accounting Estimates: This section identifies and summarizes those accounting policies that significantly impact A&B’s reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.


•	Consolidated Results of Operations: This section provides an analysis of A&B’s results of operations for the three years ended December 31, 2015 , 2014 and 2013 .


•	Analysis of Operating Revenue and Profit by Segment: This section provides an analysis of A&B’s results of operations by business segment.


•	Liquidity and Capital Resources: This section provides a discussion of A&B’s financial condition and an analysis of A&B’s cash flows for the years ended December 31, 2015 , 2014 and 2013 , as well as a discussion of A&B’s ability to fund its future commitments and ongoing operating activities through internal and external sources of capital.


•	Contractual Obligations, Commitments, Contingencies and Off-Balance-Sheet Arrangements: This section provides a discussion of A&B’s contractual obligations and other commitments and contingencies that existed at December 31, 2015 .


•	Quantitative and Qualitative Disclosures about Market Risk: This section discusses how A&B monitors and manages exposure to potential gains and losses associated with changes in interest rates.


•	Outlook: This section provides a discussion of management’s general outlook about its markets and A&B’s competitive position.

Business Overview

A&B, whose history dates back to 1870, is headquartered in Honolulu and operates four segments, principally in Hawaii: Real Estate Leasing; Real Estate Development and Sales; Agribusiness; and Materials and Construction.

Real Estate Leasing

The Real Estate Leasing segment owns, operates and manages retail, industrial and office properties in Hawaii and on the Mainland. The Real Estate Leasing segment also leases land in Hawaii to third-party lessees.

Real Estate Development and Sales

The Real Estate Development and Sales segment generates its revenues through real estate and real estate-related investment in Hawaii, development and sale of land in Hawaii and through the sale of properties in the Company's Leasing portfolio.

Agribusiness

The Agribusiness segment produces bulk raw sugar, specialty food grade sugars and molasses; markets and distributes specialty food-grade sugars; provides general trucking services, equipment maintenance and repair services; leases agricultural land to third parties; and generates and sells electricity to the extent not used in A&B’s Agribusiness operations.

On December 31, 2015, the Company determined it would cease its HC&S sugar operation on Maui and transition to a diversified agribusiness model. The Company expects that the final harvest and the cessation-related activities will be substantially completed by the end of 2016.

Materials and Construction

The Materials and Construction segment performs asphalt paving as prime contractor and subcontractor; imports and sells liquid asphalt; mines, processes and sells basalt aggregate; produces and sells asphaltic and ready-mix concrete; provides and sells various construction- and traffic-control-related products and manufactures and sells precast concrete products.

Critical Accounting Estimates

A&B’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, upon which the MD&A is based, requires that management exercise judgment when making estimates and assumptions about future events that may affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with certainty and actual results will, inevitably, differ from those critical accounting estimates. These differences could be material.

A&B considers an accounting estimate to be critical if: (i)(a) the accounting estimate requires A&B to make assumptions that are difficult or subjective about matters that were highly uncertain at the time that the accounting estimate was made, (b) changes in the estimate are reasonably likely to occur in periods subsequent to the period in which the estimate was made, or (c) different estimates by A&B could have been used, and (ii) changes in those assumptions or estimates would have had a material impact on the financial condition or results of operations of A&B. The critical accounting estimates inherent in the preparation of A&B’s financial statements are described below.

Principles of Consolidation

The consolidated financial statements include the accounts of Alexander & Baldwin, Inc. and all wholly owned and controlled subsidiaries, after elimination of significant intercompany amounts. Significant investments in businesses, partnerships and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. A controlling financial interest is one in which the Company has a majority voting interest or one in which the Company is the primary beneficiary of a variable interest

entity. In determining whether the Company is the primary beneficiary of a variable interest entity in which it has an interest, the Company is required to make significant judgments with respect to various factors including, but not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance, the rights and ability of other investors to participate in decisions affecting the economic performance of the entity, and kick-out rights, among others. Activities that significantly affect the economic performance of the entities in which the Company has an interest include, but are not limited to, establishing and modifying detailed business, development, marketing and sales plans, approving and modifying the project budget, approving design changes and associated overruns, if any, and approving project financing, among others. The Company has not consolidated any variable interest entity in which the Company does not also have voting control because it has determined that it is not the primary beneficiary since decisions to direct the activities that most significantly impact the entity’s performance are shared by the joint venture partners.

Impairment of Long-Lived Assets and Finite-Lived Intangible Assets

A&B’s long-lived assets, including finite-lived intangible assets, are reviewed for possible impairment when events or circumstances indicate that the carrying value may not be recoverable. In such an evaluation, the estimated future undiscounted cash flows generated by the asset are compared with the amount recorded for the asset to determine if its carrying value is not recoverable. If this review determines that the recorded value will not be recovered, the amount recorded for the asset is reduced to estimated fair value. These asset impairment analyses are highly subjective because they require management to make assumptions and apply considerable judgments to, among others, estimates of the timing and amount of future cash flows, expected useful lives of the assets, uncertainty about future events, including changes in economic conditions, changes in operating performance, changes in the use of the assets, and ongoing costs of maintenance and improvements of the assets and, thus, the accounting estimates may change from period to period. If management uses different assumptions or if different conditions occur in future periods, A&B’s financial condition or its future operating results could be materially impacted. A&B has evaluated certain long-lived assets, including intangible assets, for impairment.

Impairment of Investments

A&B’s investments in unconsolidated affiliates are reviewed for impairment whenever there is evidence that fair value may be below carrying cost. An investment is written down to fair value if fair value is below carrying cost and the impairment is believed to be other-than-temporary. In evaluating the fair value of an investment and whether any identified impairment is other-than-temporary, significant estimates and considerable judgments are involved. These estimates and judgments are based, in part, on A&B’s current and future evaluation of economic conditions in general, as well as a joint venture’s current and future plans. Additionally, these impairment calculations are highly subjective because they also require management to make assumptions and apply judgments to estimates regarding the timing and amount of future cash flows and take into account various factors, including sales prices, development costs, market conditions, and absorption rates, probabilities related to various cash flow scenarios, and appropriate discount rates based on the perceived risks, among others. In evaluating whether an impairment is other-than-temporary, A&B considers all available information, including the length of time and extent of the impairment, the financial condition and near-term prospects of the affiliate, A&B’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value, and projected industry and economic trends, among others. Changes in these and other assumptions could affect the projected operational results and fair value of the unconsolidated affiliates, and accordingly, may require valuation adjustments to A&B’s investments that may materially impact A&B’s financial condition or its future operating results. For example, if current market conditions deteriorate significantly or a joint venture’s plans change materially, impairment charges may be required in future periods, and those charges could be material.

In July 2014, the Company invested $23.8 million in a tax equity investment related to the construction and operation of a 12-megawatt solar farm on Kauai. The Company recovers its investment primarily through tax credits and tax benefits, which are recorded in the Income tax expense (benefit) line item in the Consolidated Statements of Income. As these tax benefits were received and recognized, the Company recorded non-cash reductions of the investment's carrying value. For the years ended December 31, 2015 and 2014, the Company recorded net, non-cash reductions of the investment's carrying value of $2.6 million and $14.7 million , respectively.

In September 2013, the Company entered into an Amended and Restated Limited Liability Company Agreement of Kukui'ula Village ("Agreement") with DMB Kukui'ula Village LLC ("DMB"). Under the Agreement, the Company assumed financial and operational control of Kukui'ula Village LLC ("Village") and consolidated the assets and liabilities of Village at fair value, resulting in a $6.3 million write down of its investment in the joint venture, which is included in Impairment and equity losses related to joint ventures in the Consolidated Statements of Income.

Weakness in particular real estate markets, difficulty in obtaining or renewing project-level financing or development approvals, and changes in A&B’s development strategy, among other factors, may affect the value or feasibility of certain development projects owned by A&B or by its joint ventures and could lead to additional impairment charges in the future.

Goodwill

The Company reviews goodwill for impairment at the reporting unit level annually and whenever events or changes in circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The goodwill impairment test involves a two-step process. Step one of the goodwill impairment test estimates the fair value of a reporting unit using various methodologies, including discounted cash flows and market multiples. The discounted cash flow approach relies on a number of assumptions, including future macroeconomic conditions, market factors specific to the reporting unit, the amount and timing of estimated future cash flows to be generated by the business over an extended period of time, long-term growth rates for the business, and a discount rate that considers the risks related to the amount and timing of the cash flows, among others. Although the assumptions used by the Company in its discounted cash flow model are based on the best available market information and are consistent with the assumptions the Company used to generate its internal strategic plans and forecasts, significant judgment is required to estimate the amount and timing of future cash flows and the risk of achieving those cash flows. Under the market multiple methodology, the estimate of fair value may be based on market multiples of EBITDA (earnings before interest, taxes, depreciation and amortization) or revenues. When using market multiples of EBITDA or revenues, the Company must make judgments about the comparability of those multiples in closed and proposed transactions. Accordingly, changes in assumptions and estimates, including, but not limited to, changes driven by external factors, such as industry and economic trends, and those driven by internal factors, such as changes in business strategy and its internal forecasts, could have a material effect on the reporting unit's business, financial condition and results of operations. Additionally, the foregoing assumptions could be adversely impacted by any of the risks discussed in "Risk Factors."

If the results of the Company's step one test indicate that a reporting unit's estimated fair value is less than its carrying value, a step two analysis is performed. In the step two analysis, the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. The implied value of goodwill is compared to the carrying value of goodwill. If the implied value of the goodwill exceeds the carrying value of goodwill, then goodwill is not considered to be impaired, and impaired if the implied value of goodwill is less than the carrying value of goodwill.

At December 31, 2015 , the Company's goodwill totaled $102.3 million , primarily related to the 2013 acquisition of Grace Pacific. Of the total goodwill, $93.6 million relates to three reporting units in the Materials and Construction segment. The valuation of each reporting unit assumes that each is an unrelated business to be sold separately and independently from the other reporting units. As of the date of the last impairment test in the fourth quarter of 2015 , the weighted average percentage (using reporting units’ carrying value) by which the fair values of the reporting units exceeded their carrying values was estimated to be between 9 and 10 percent. The Company's fair value estimate for reporting units include a number of assumptions, including increased levels of road infrastructure spending by governmental and private entities, expectations about the Company's share of governmental contracts, and material input and labor costs, among others. If actual revenues are lower (for example, due to a lower level of government or private contracts bid or won by the reporting units), or costs are higher than anticipated and cannot be recovered as part of the price of the work performed, as well as other factors that result in adverse changes in the key assumptions used in the fair value estimates mentioned above, the fair value of the Company's reporting units could be negatively impacted.

Revenue Recognition for Certain Long-Term Real Estate Developments

As discussed in Note 2 to the Consolidated Financial Statements, revenues from real estate sales are generally recognized when sales are closed and title, risks and rewards pass to the buyer. For certain real estate sales, A&B and its joint venture partners account for revenues on long-term real estate development projects that have continuing post-closing involvement, such as Kukui’ula, using the percentage-of-completion method. Following this method, the amount of revenue recognized is based on the percentage of development costs that have been incurred through the reporting period in relation to total expected development cost associated with the subject property. Accordingly, if material changes to total expected development costs or revenues occur, A&B’s financial condition or its future operating results could be materially impacted.

Pension and Post-Retirement Estimates

The estimation of A&B’s pension and post-retirement expenses and liabilities requires that A&B make various assumptions. These assumptions include the following factors:


•	Discount rates


•	Expected long-term rate of return on pension plan assets


•	Health care cost trend rates


•	Salary growth


•	Inflation


•	Retirement rates


•	Mortality rates


•	Expected contributions

Actual results that differ from the assumptions made with respect to the above factors could materially affect A&B’s financial condition or its future operating results. The effects of changing assumptions are included in unamortized net gains and losses, which directly affect accumulated other comprehensive income. Additionally, these unamortized gains and losses are amortized and reclassified to income (loss) over future periods.

The benefit obligations for qualified pension and post-retirement plans, as of December 31, 2015 , were determined using a discount rate of 4.50 percent . For A&B’s non-qualified benefit plans, the December 31, 2015 obligation was determined using a discount rate of 3.90 percent. The discount rate used for determining the year-end benefit plan obligation was generally calculated using a weighting of expected benefit payments and rates associated with high-quality U.S. corporate bonds for each year of expected payment to derive a single estimated rate at which the benefits could be effectively settled at December 31, 2015 .

The expected return on plan assets assumption of 7.10 percent is principally based on the long-term outlook for various asset class returns, asset mix, the historical performance of the plan assets under the liability-driven investment strategy and a comparison of the estimated long-term return calculated to the distribution of assumptions adopted by other plans.

As of December 31, 2015 , A&B’s post-retirement obligations were measured using an initial 7.0 percent health care cost trend rate in 2016, decreasing to 6.8 percent in 2017, and further decreasing by approximately 0.2-0.3 percent each year through 2028, with an ultimate rate of 4.5 percent in 2037.

Lowering the expected long-term rate of return on A&B’s qualified plan assets by one-half of one percent would have increased pre-tax pension expense for 2015 by approximately $0.8 million. Lowering the discount rate assumption by one-half of one percentage point would have increased pre-tax pension expense by approximately $1.0 million. Additional information about A&B’s benefit plans is included in Note 11 to the Consolidated Financial Statements.

As of December 31, 2015 , the market value of A&B’s defined benefit plan assets totaled approximately $146.2 million, compared with $160.8 million as of December 31, 2014 . The recorded net pension liability was approximately $48.4 million as of December 31, 2015 and approximately $43.6 million as of December 31, 2014 . A&B’s contributions to its pension plans were approximately $2.6 million in 2015 and $5.7 million in 2014 .

Income Taxes

A&B makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are applied in the calculation of tax credits, tax benefits and deductions, and in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. Significant changes to these estimates may result in an increase or decrease to A&B’s tax provision in a subsequent period.

In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertain tax positions taken or expected to be taken with respect to the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with management’s expectations could materially affect A&B’s financial condition or its future operating results.

Recent Accounting Pronouncements

See Note 2 to the Consolidated Financial Statements for a full description of the impact of recently issued accounting standards, which is incorporated herein by reference, including the expected dates of adoption and estimated effects on A&B’s results of operations and financial condition.

CONSOLIDATED RESULTS OF OPERATIONS

The following analysis of the consolidated financial condition and results of operations of Alexander & Baldwin, Inc. and its subsidiaries (collectively, the “Company”) should be read in conjunction with the consolidated financial statements and related notes thereto. Amounts in this narrative are rounded to millions, but per-share calculations and percentages were calculated based on thousands. Accordingly, a recalculation of some per-share amounts and percentages, if based on the reported data, may be slightly different than the more accurate amounts included herein.



(dollars in millions, except per-share amounts)	2015			Chg.	2014			Chg.	2013
Operating Revenue	$	570.5		2%	$	560.0		53%	$	365.2
Operating Costs and Expenses	531.5			7%	495.4			52%	325.3
Operating Income	39.0			(40)%	64.6			62%	39.9
Other Income (Expense)	8.6			NM	(35.8		)	120%	(16.3		)
Income Tax Expense (Benefit)	16.5			NM	(1.4		)	NM	11.1
Income From Continuing Operations	31.1			3%	30.2			142%	12.5
Discontinued Operations (net of taxes)	—			(100)%	34.3			54%	22.3
Net Income	31.1			(52)%	64.5			85%	34.8
Income attributable to noncontrolling interest	(1.5		)	(52)%	(3.1		)	6X	(0.5		)
Net income attributable to A&B	$	29.6		(52)%	$	61.4		79%	$	34.3

Basic Earnings Per Share	$	0.54		(57)%	$	1.26		64%	$	0.77
Diluted Earnings Per Share	$	0.54		(57)%	$	1.25		64%	$	0.76

2015 vs. 2014

Operating Revenue for 2015 increased 2 percent , or $10.5 million , to $570.5 million , primarily due to increased revenue from the Real Estate Development and Sales and Real Estate Leasing segments, partially offset by lower revenue from the Materials and Construction and Agribusiness segments. The reasons for business- and segment-specific year-to-year fluctuations in revenue are further described below in the Analysis of Operating Revenue and Profit by Segment.

Operating Costs and Expenses for 2015 increased 7 percent , or $36.1 million , to $531.5 million . Operating costs increased $36.1 million due to higher Real Estate Development segment and Agribusiness segment costs, partially offset by lower Materials and Construction segment costs. Agribusiness segment costs increased during 2015 as compared to 2014 primarily due to higher sugar operating costs of $14.0 million and $22.6 million of costs associated with the cessation of sugar operations. The reasons for changes in business- and segment-specific year-to-year fluctuations in operating costs, which affect segment operating profit, are more fully described below in the Analysis of Operating Revenue and Profit by Segment.

Other Income (Expense) was $8.6 million in 2015 compared with $(35.8) million in 2014 . The change in other income (expense) was principally due to increased joint venture earnings from the closing of 329 Waihonua units in 2015, and a higher non-cash reduction in the carrying value of a tax equity investment in 2014. The Company made a $23.8 million investment in a 12-megawatt solar farm on Kauai ("KRS II") in July 2014, and the tax benefits associated with the KRS II investment are accompanied by non-cash reductions of the investment's carrying value. Tax benefits associated with the investment are included in the Income tax expense (benefit) line item in the Consolidated Statements of Income. Interest expense decreased by $2.2 million due to higher average debt levels in 2014 as a result of acquisitions made in late 2013.

Income Taxes and the effective rate were higher in 2015 compared with 2014 , due principally to higher tax credits in 2014 associated with the Company's investment in KRS II.

Income attributable to noncontrolling interest decreased $1.6 million in 2015 compared to 2014 . The noncontrolling interest represents third-party minority interests in two entities that Grace consolidates and in which Grace owns a 70 percent share and 51 percent share.

2014 vs. 2013

Operating Revenue for 2014 increased 53 percent, or $194.8 million, to $560.0 million, primarily due to a full year of Materials and Construction revenue in 2014, compared to one fiscal quarter of revenue in 2013, as Grace was acquired on October 1, 2013. In addition, Real Estate Leasing revenue increased primarily due to expansion of the portfolio though acquisitions made in 2013. These increases were partially offset by a reduction in Agribusiness revenue. The reasons for business- and segment-specific year-to-year fluctuations in revenue are further described below in the Analysis of Operating Revenue and Profit by Segment.

Operating Costs and Expenses for 2014 increased 52 percent, or $170.1 million, to $495.4 million. Operating costs increased principally due to a full year of operating costs and expenses for Grace in 2014, compared to one quarter of Grace operating costs and expenses in 2013. Additionally, operating costs increased due to higher Real Estate Leasing segment costs, including increased depreciation expense related to 2013 acquisitions, and increased operating costs due to the expansion of the portfolio in 2013. The reasons for changes in business- and segment-specific year-to-year fluctuations in operating costs, which affect segment operating profit, are more fully described below in the Analysis of Operating Revenue and Profit by Segment.

Other Income (Expense) was $(35.8) million in 2014 compared with $(16.3) million in 2013. The change in other income (expense) was principally due to a $14.7 million reduction in the carrying value of the Company's investment in KRS II. Tax benefits associated with the KRS II investment are accompanied by non-cash reductions of the investment's carrying value. Tax benefits associated with the investment are included in the Income tax expense (benefit) line item in the Consolidated Statements of Income. Interest expense increased by $9.9 million due to higher average debt levels as a result of acquisitions made in 2013.

Income Taxes and the effective rate were lower in 2014 compared with 2013 due principally to tax benefits associated with the Company's investment in KRS II and Agribusiness losses from continuing operations in 2014 as compared to income in 2013, but was partially offset by higher income from continuing operations from the Materials and Construction segment due to a full year of results in 2014 versus one quarter of results in 2013.

Income attributable to noncontrolling interest increased $2.6 million in 2014 compared to 2013 due to the full year impact resulting from the acquisition of Grace on October 1, 2013. The noncontrolling interest represents third-party minority interests in two entities that Grace consolidates and in which Grace owns a 70 percent share and 51 percent share.

ANALYSIS OF OPERATING REVENUE AND PROFIT BY SEGMENT

Additional detailed information related to the operations and financial performance of the Company’s Operating Segments is included in Part II Item 6 and Note 19 to the Consolidated Financial Statements. The following information should be read in relation to the information contained in those sections.

Real Estate

Real Estate Leasing and Real Estate Development and Sales revenue and operating profit are analyzed before subtracting amounts related to discontinued operations and sales proceeds related to the disposition of commercial properties. A discussion of discontinued operations for the real estate business is included separately.

Effect of Property Sales Mix on Operating Results: Direct year-over-year comparison of the Real Estate Development and Sales results may not provide a consistent, measurable indicator of future performance because results from period to period are significantly affected by the mix and timing of property sales. Operating results, by virtue of each project’s asset class, geography, and timing, are inherently variable. Earnings from joint venture investments are not included in segment revenue, but are included in operating profit. The mix of real estate sales in any year or quarter can be diverse and can include developed residential real estate, commercial properties, developable subdivision lots, undeveloped land, and property sold under threat of condemnation. The sale of undeveloped land and vacant parcels in Hawaii generally provides higher margins than does the sale of developed and commercial property, due to the low historical-cost basis of the Company’s Hawaii land. Consequently, Real Estate Development and Sales revenue trends, cash flows from the sales of real estate, and the amount of real estate held for sale on the balance sheets do not necessarily indicate future profitability trends for this segment.

Additionally, the operating profit reported in each quarter does not necessarily follow a percentage of sales trend because the cost basis of property sold can differ significantly between transactions.

Real Estate Leasing ; 2015 compared with 2014



(dollars in millions)	2015			2014			Change
Real Estate Leasing segment revenue	$	133.8		$	125.6		7	%
Real Estate Leasing operating costs and expenses	79.1			76.0			4	%
Selling, general and administrative expenses	1.8			1.7			6	%
Other segment expense/(income)	(0.2		)	0.4			NM
Segment operating profit	$	53.1		$	47.5		12	%
Operating profit margin	39.7		%	37.8		%
Net Operating Income*	$	83.9		$	77.3		9	%
Leasable Area (million sq. ft.) - Improved (at year end)
Hawaii - improved	2.7			2.6
Mainland - improved	2.2			2.5
Total improved	4.9			5.1
Hawaii urban ground leases (acres at year end)	106			115


*	Refer to page 46 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.

Real Estate Leasing revenue for 2015 was 7 percent higher than 2014 , principally due to the revenue impact from the acquisitions of Kaka'ako Commerce Center (December 2014) and Aikahi Shopping Center leasehold improvements (May 2015), as well as improved performance from Hawaii properties, partially offset by the disposition of two Mainland properties in 2015 described in the acquisitions and dispositions table for 2015.

Operating profit was 12 percent higher in 2015 , compared with 2014 , principally due to improved performance from Hawaii properties and the favorable impact from the previously mentioned Hawaii acquisitions, partially offset by the two Mainland dispositions. Depreciation expense was approximately 3 percent higher year-over-year, as proceeds from commercial property sales under 1031 exchange transactions are reinvested in commercial properties at a higher relative book basis than the property sold.

The Company's commercial portfolio's weighted average occupancy summarized by geographic location and property type for the year ended December 31, 2015 was as follows:



Weighted average occupancy - percent	Hawaii	Mainland	Total
Retail	94%	93%	94%
Industrial	95%	99%	97%
Office	83%	91%	90%
Total portfolio	93%	95%	94%

Same-store occupancy in 2015 was 95 percent, unchanged from 2014 .

In 2015 , approximately 13.5 percent of leases, measured as a percentage of expiring annual gross rent to total annual gross rent, were scheduled to expire. As of December 31, 2015 , approximately 66 percent of the expiring leases had been renewed, and the change in average annual rental income on renewals, including tenant concessions, if any, as compared to the prior rental income was 15 percent. Total tenant improvement costs and leasing commissions were $8.1 million in 2015 .

Leasable space was 4.9 million square feet at December 31, 2015 , and included the following activity:



Dispositions			Acquisitions
Date	Property	Leasable sq. ft	Date	Property	Leasable sq. ft
3-15	Wilshire Shopping Center	46,500	5-15	Aikahi Park Shopping Center leasehold improvements	98,000
5-15	San Pedro Plaza	171,900
12-15	Union Bank	84,000
	Total Dispositions	302,400		Total Acquisitions	98,000

Real Estate Leasing ; 2014 compared with 2013



(dollars in millions)	2014			2013			Change
Real Estate Leasing segment revenue	$	125.6		$	110.4		14	%
Real Estate Leasing operating costs and expenses	76.0			64.4			18	%
Selling, general and administrative expenses	1.7			2.3			(26	)%
Other segment expense	0.4			0.3			33	%
Segment operating profit	$	47.5		$	43.4		9	%
Operating profit margin	37.8		%	39.3		%
Net Operating Income*	$	77.3		$	68.8		12	%
Leasable Area (million sq. ft.) - Improved (at year end)
Hawaii - improved	2.6			2.6
Mainland - improved	2.5			2.5
Total improved	5.1			5.1
Hawaii urban ground leases (acres at year end)	115			116


*	Refer to page 46 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.

Real Estate Leasing revenue for 2014 was 14 percent higher than the amount reported for 2013 . The increase was principally due to the revenue impact resulting from the acquisitions of Waianae Mall (January 2013), Napili Plaza (May 2013), Pearl Highlands Center (September 2013), The Shops at Kukui'ula (September 2013) and the Kailua Portfolio (December 2013), partially offset by the dispositions of ten Mainland properties sold to fund the Kailua Portfolio acquisition.

Operating profit was 9 percent higher in 2014 , compared with 2013 , principally due to the favorable impact from previously mentioned Hawaii acquisitions and Mainland dispositions. Depreciation expense was approximately 11 percent higher year-over-year, as proceeds from commercial property sales under 1031 exchange transactions are reinvested in commercial properties at a higher relative book basis than the property sold.

Leasable space was 5.1 million square feet at December 31, 2014 , and included the following activity:

Dispositions

Acquisitions

Date

Property

Leasable sq. ft

Date

Property

Leasable sq. ft

1-14

Maui Mall

185,700

12-14

Kaka'ako Commerce Center

204,400

Total Dispositions

185,700

Total Acquisitions

204,400

Use of Non-GAAP Financial Measures

The Company calculates NOI as operating profit from continuing operations, less general and administrative expenses, straight-line rental adjustments, interest income, interest expense, depreciation and amortization, and gains on sales of interests in real estate. NOI is considered by management to be an important and appropriate supplemental performance metric because management believes it helps both investors and management understand the ongoing core operations of our properties excluding corporate and financing-related costs and noncash depreciation and amortization. NOI is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from GAAP income (loss) from operations or net income (loss). NOI should not be considered as an alternative to GAAP net income as an indicator of the Company's financial performance or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. Other real estate companies may use different methodologies for calculating NOI, and accordingly, the Company's presentation of NOI may not be comparable to other real estate companies. The Company believes that the Real Estate Leasing segment's operating profit from continuing operations is the most directly comparable GAAP measurement to NOI. A reconciliation of Real Estate Leasing operating profit to Real Estate Leasing segment NOI is as follows:

Reconciliation of Real Estate Leasing Operating Profit to NOI

(In Millions, Unaudited)



	2015			2014			2013
Real Estate Leasing segment operating profit before discontinued operations	$	53.1		$	47.5		$	43.4
Less amounts reported in discontinued operations (pre-tax)	—			(0.3		)	(14.6		)
Real Estate Leasing segment operating profit after subtracting discontinued operations	53.1			47.2			28.8

Depreciation and amortization	28.9			28.0			24.8
Straight-line lease adjustments	(2.3		)	(2.7		)	(2.9		)
General and administrative expenses	3.9			4.5			3.5
Other	0.3			—			—
Discontinued operations	—			0.3			14.6
Real Estate Leasing segment NOI	$	83.9		$	77.3		$	68.8

Real Estate Development and Sales ; 2015 compared with 2014 and 2013



(dollars in millions)	2015			2014			2013
Improved property sales revenue ¹	$	31.0		$	64.1		$	331.6
Development sales revenue	75.0			56.6			41.8
Unimproved/other property sales revenue	25.5			29.3			49.6
Total Real Estate Development and Sales segment revenue ¹	131.5			150.0			423.0
Cost of Real Estate Development and Sales ¹	(82.1		)	(55.2		)	(362.3		)
Operating expenses	(15.0		)	(16.7		)	(16.0		)
Write down of The Shops at Kukui'ula joint venture investment	—			—			(6.3		)
Earnings from joint ventures	30.2			2.0			4.3
Other income	0.4			5.6			1.7
Total Real Estate Development and Sales operating profit	$	65.0		$	85.7		$	44.4
Real Estate Development and Sales operating profit margin	49.4		%	57.1		%	10.5		%


¹	2015 includes the sales of an office building in Washington in December 2015, a Colorado retail property in March 2015 and a Texas office building in May 2015 that are classified within cost of sales and development in the Consolidated Statement of Income, but reflected as revenue for segment reporting purposes.

2015 : Revenue from Real Estate Development and Sales, before subtracting amounts related to improved property sales, was $131.5 million , principally related to the sales of five residential lots on Oahu, 18.4 acres at Maui Business Park II, sales of three Mainland properties, 10 parcels on Maui, three Kauai parcels, and a parcel in Santa Barbara, California. Operating profit also included joint venture residential sales of 329 Waihonua condominium units on Oahu, 22 units at Kukui’ula on Kauai, 12 units at Ka Milo on the Island of Hawaii, and the one remaining unit at Kai Malu on Maui. The margin on these sales was partially offset by joint venture expenses.

2014 : Revenue from Real Estate Development and Sales, before subtracting amounts presented as discontinued operations, was $ 150.0 million , principally related to the sale of Maui Mall, seven residential lots on Oahu, 7.2 acres at Maui Business Park II, a 6.4-acre parcel at Wailea resort on Maui, 11 parcels on Maui, and the deferred recognition of proceeds from three retail Mainland properties. Operating income included returns from the Company’s investment in the 205-unit One Ala Moana condominium on Oahu. Operating profit also included joint venture residential sales of 14 units at Kukui’ula on Kauai, 15 residential units at Ka Milo on the Island of Hawaii, two units at Kai Malu on Maui and 12 residential units at the Waihonua condominium on Oahu. The margin on these sales was partially offset by joint venture expenses.

2013 : Revenue from Real Estate Development and Sales, before subtracting amounts presented as discontinued operations, was $ 423.0 million , principally related to the gain on the sale of 10 Mainland improved properties, nine residential lots on Oahu, a 24-acre bulk parcel adjacent to Maui Business Park II, two non-core Maui land parcels and a small commercial lot on Oahu. Operating profit also included joint venture residential sales of 10 units at Kukui’ula on Kauai, 13 residential units at Ka Milo on the Island of Hawaii and seven units at Kai Malu on Maui. The margin on the sales described above was partially offset by a $6.3 million impairment charge in the third quarter of 2013, related to taking control of The Shops at Kukui’ula and the consolidation of the joint venture, as well as due diligence costs related to acquisition activities and joint venture expenses.

Discontinued Operations ; The revenue, operating profit, and after-tax effects of discontinued operations for 2015 , 2014 and 2013 were as follows (in millions, except per-share amounts):



	2015		2014		2013
Proceeds from the sale of income-producing properties (Real Estate Development and Sales Segment)	$	—	$	70.1	$	337.6
Real Estate Leasing revenue (Real Estate Leasing Segment)	$	—	$	0.3	$	31.6

Gain on sale of income-producing properties	$	—	$	55.9	$	22.1
Real Estate Leasing operating profit	—		0.3		14.6
Total operating profit before taxes	—		56.2		36.7
Income tax expense	—		21.9		14.4
Income from discontinued operations	$	—	$	34.3	$	22.3

2015: There were no sales in 2015 that were classified as discontinued operations pursuant to Financial Accounting Standards Board Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity .

2014 : The revenues and expenses related to the sale of Maui Mall, a retail property in Hawaii, were classified as discontinued operations.

2013 : The revenues and expenses related to the sales of Northpoint Industrial, an industrial property in California; Centennial Plaza, an industrial property in Utah; Issaquah Office Center, an office building in Washington; Republic Distribution Center, an industrial property in Texas; Activity Distribution Center, an industrial building in California; Heritage Business Park, an industrial property in Texas; Savannah Logistics Center, an industrial warehouse in Georgia; Broadlands Marketplace, a retail property in Colorado; Meadows on the Parkway, a retail center in Colorado; and Rancho Temecula, a retail center in California were classified as discontinued operations. Additionally, the revenues and expenses related to Maui Mall, a retail property on Maui sold on January 6, 2014, were classified as discontinued operations as of December 31, 2013.

Materials and Construction

Materials and Construction ; 2015 compared with 2014



(dollars in millions)	2015			2014			Change
Revenue	$	219.0		$	234.3		(7	)%
Operating profit	$	30.9		$	25.9		19	%
Operating profit margin	14.1		%	11.1		%
Depreciation and amortization	$	11.6		$	15.2		(24	)%
Aggregate produced (tons in thousands)	759.1			793.7			(4	)%
Aggregate used and sold (tons in thousands)	840.2			711.4			18	%
Asphaltic concrete placed (tons in thousands)	466.7			470.5			(1	)%
Backlog	$	226.5		$	219.4		3	%

Materials and Construction revenue was $219.0 million in 2015 , compared to $234.3 million in 2014 . Revenue declined 7 percent primarily due to a reduction in the price of asphalt sold due to the decline in oil prices, partially offset by increased material and construction- and traffic-control-related product sales. Backlog at the end of December 31, 2015 was $226.5 million , compared to $219.4 million as of December 31, 2014 . Backlog includes the entire backlog of Maui Paving, a 50 percent-owned non-consolidated affiliate.

Operating profit was $30.9 million for 2015 , compared to $25.9 million for 2014 . The increase was primarily related to increased paving, quarrying, and material sales, as well as earnings from a materials joint venture, partially offset by lower asphalt sales margins. Operating profit for 2015 also reflected approximately $1.0 million of negative non-cash depreciation and amortization charges from purchase price accounting adjustments to tangible and intangible assets recorded at fair value in the acquisition of Grace. Earnings from joint venture investments are not included in segment revenue, but are included in operating profit.

Materials and Construction (2013 includes Grace results only from its October 1, 2013 acquisition)



(dollars in millions)	2014			2013
Revenue	$	234.3		$	54.9
Operating profit	$	25.9		$	2.9
Operating profit margin	11.1		%	5.3		%
Depreciation and amortization	$	15.2		$	4.4
Aggregate produced (tons in thousands)	793.7			193.1
Aggregate used and sold (tons in thousands)	711.4			112.3
Asphaltic concrete placed (tons in thousands)	470.5			114.5
Backlog	$	219.4		$	218.1

On October 1, 2013, the Company completed the acquisition of Grace. Segment results for 2013 reflect Grace's results from the date of acquisition to December 31, 2013, and are, therefore, not comparable to full-year results for 2014.

Materials and Construction revenue was $234.3 million in 2014 , and was primarily attributable to Grace's paving activities and construction material sales. Backlog at the end of December 31, 2014 was $219.4 million , compared to $218.1 million as of December 31, 2013 .

Operating profit was $25.9 million for 2014 , and was primarily related to paving, quarrying, and material sales and reflected approximately $4.0 million of negative non-cash depreciation and amortization charges from purchase price accounting adjustments to tangible and intangible assets recorded at fair value in the acquisition of Grace.

Agribusiness

Agribusiness ; 2015 compared with 2014



(dollars in millions)	2015			2014			Change
Revenue	$	117.2		$	120.5		(3	)%
Operating loss	$	(51.9	)	$	(11.8	)	(4X)
Operating margin	NM			NM
Tons sugar produced	136,400			162,100			(16	)%
Tons sugar sold (raw and specialty sugar)	152,300			154,300			(1	)%

Agribusiness revenue decreased $ 3.3 million , or 3 percent, in 2015 as compared to 2014 . The decrease was primarily due to lower power sales revenue related to lower deliveries from a newly amended power contract, lower molasses revenue due to lower production and sales during the year, partially offset by higher raw sugar revenue from a higher price.

Operating loss increased $ 40.1 million in 2015 compared with 2014 . The increase was primarily due to $22.6 million of charges recognized in connection with the cessation of sugar operations at HC&S, lower raw sugar margin due to lower production during the year, lower power margin from lower pricing and volume, and a 2014 land sale that did not repeat in 2015.

Sugar production in 2015 was 16 percent lower than 2014 due to a lower number of acres harvested, as well as lower yields, as a result of inclement weather during the harvesting season. Tons of sugar sold were one percent lower in 2015 than in 2014, due principally to lower volume of specialty sugar sold.

Agribusiness ; 2014 compared with 2013



(dollars in millions)	2014			2013		Change
Revenue	$	120.5		146.1		(18	)%
Operating profit (loss)	$	(11.8	)	10.7		NM
Operating margin	NM			7.3	%
Tons sugar produced	162,100			191,500		(15	)%
Tons sugar sold (raw and specialty sugar)	154,300			159,600		(3	)%

Agribusiness revenue decreased $ 25.6 million , or 18 percent , in 2014 compared with 2013. The decrease was primarily due to lower raw sugar sales revenue due principally to lower prices, lower vessel charter revenue due to no outside charters in 2014, and lower specialty sugar sales from lower volume, partially offset by higher power sales volume and price, and higher molasses sales volume.

Operating profit decreased $ 22.5 million in 2014 compared with 2013. The decrease was primarily due to lower raw sugar margin due to lower pricing and production during the year, lower other operating income, which included insurance proceeds received in 2013 that did not reoccur in 2014 and no outside charters, partially offset by higher power margins primarily due to a higher volume of deliveries.

Sugar production in 2014 was 15 percent lower than 2013 due principally to a lower number of acres harvested as a result of inclement weather during the harvesting season. Tons of sugar sold were three percent lower in 2014 than in 2013, due principally to lower volume of specialty sugar sold.

LIQUIDITY AND CAPITAL RESOURCES

Overview: A&B’s primary liquidity needs have historically been to support working capital requirements and fund capital expenditures and real estate developments. A&B’s principal sources of liquidity have been cash flows provided by operating activities, available cash and cash equivalent balances, and borrowing capacity under its various credit facilities.

A&B’s operating income is generated by its subsidiaries. There are no restrictions on the ability of A&B’s wholly owned subsidiaries to pay dividends or make other distributions to A&B. A&B regularly evaluates investment opportunities, including development projects, joint venture investments, share repurchases, business acquisitions and other strategic transactions to increase shareholder value. A&B cannot predict whether or when it may enter into acquisitions or joint ventures or what impact any such transactions could have on A&B’s results of operations, cash flows or financial condition. A&B’s cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section entitled “Risk Factors” beginning on page 17.

Cash Flows: Cash flows from operations continue to be a significant source of liquidity for the Company. During each of the years ended December 31, 2015 , 2014 , and 2013 , cash flows from operating activities, which include expenditures related to real estate developments held-for-sale, were $128.5 million , $39.1 million , and $(38.3) million , respectively. The increase in cash flows from operations of $89.4 million from 2014 to 2015 was primarily due to lower expenditures for real estate development inventory of $34.5 million , a reduction in sugar-related and materials and construction-related inventories of $39.4 million , and an increase in proceeds from sales of real estate inventory of $19.4 million.

Cash provided by investing activities was $1.0 million for the year ended December 31, 2015, while cash used in investing activities was $28.0 million , and $211.7 million for the years ended December 31, 2014, and 2013 , respectively. During the year ended December 31, 2015, cash used in investing activities included cash outlays related to capital expenditures and investments in non-consolidated affiliates, which were $43.4 million and $29.4 million , respectively. Proceeds received from the disposal of properties related to 1031 transactions were $40.0 million, of which approximately $22.6 million represented reverse 1031 sales proceeds related to the Kaka'ako Commerce Center transaction in 2014 and $17.4 million is expected to be reinvested in 1031 transactions during 2016. Other investing cash flow activity during 2015 included $44.4 million of proceeds from joint ventures, principally related to Waihonua, as well as $8.1 million related to the disposal of property and other assets.

Net cash flows used in investing activities for capital expenditures were as follows:



	December 31,
(dollars in millions)	2015		2014		Change
Commercial real estate property acquisition/improvements	$	16.2	$	32.6	(50	)%
Tenant improvements	5.5		4.3		28	%
Quarrying and paving	7.2		10.7		(33	)%
Agribusiness and other	14.5		12.6		15	%
Total capital expenditures*	$	43.4	$	60.2	(28	)%


*	Capital expenditures for real estate developments to be held and sold as real estate development inventory are classified in the Consolidated Statements of Cash Flows as operating activities.

In 2016, A&B expects that its required minimum maintenance capital expenditures will be approximately $24 million a year. A&B’s total capital budget for 2016, which is primarily related to growth capital, is currently planned for approximately $260 million, and includes spending for new, but currently unidentified investment opportunities, as well as expenditures for real estate developments and 1031 lease portfolio acquisitions. Approximately $80 million of the total projected capital budget relates to ongoing real estate development and investment, including Kamalani, B-note investment funding, Kukui’ula and other investments. Additionally, $50 million of the 2015 capital budget relate to currently unidentified real estate and other investment opportunities and approximately $108 million relates to 1031 acquisitions. Of the remaining projected capital expenditures, $14 million relates to lease portfolio maintenance capital and the balance principally relates to growth and maintenance capital for Grace and the Agribusiness segment. Should investment opportunities in excess of the amounts budgeted arise, A&B believes it has adequate sources of liquidity to fund these investments.

Net cash flows provided by (used in) financing activities totaled $(131.0) million , $(11.6) million and $252.2 million in 2015 , 2014 and 2013 , respectively. The increase in cash flows used in financing activities in 2015 was primarily due to lower borrowings and higher repayments of debt during 2015 as compared to 2014. As a result, the Company's debt balance declined by $117.8 million during 2015.

The Company believes that funds generated from results of operations, available cash and cash equivalents, and available borrowings under credit facilities will be sufficient to finance the Company’s business requirements for the next fiscal year, including working capital, capital expenditures, potential acquisitions and stock repurchases. There can be no assurance, however, that the Company will continue to generate cash flows at or above current levels or that it will be able to maintain its ability to borrow under its available credit facilities.

Other Sources of Liquidity: Additional sources of liquidity for the Company consisted of cash and cash equivalents, trade receivables, and quarry and sugar inventories that totaled approximately $104.0 million at December 31, 2015 , a decrease of $12.6 million from December 31, 2014 . This net decrease was due primarily to $7.0 million and $11.0 million in lower sugar and quarry inventories, respectively, partially offset by a $5.5 million increase in trade receivables.

The Company also has revolving credit and term facilities that provide additional sources of liquidity for working capital requirements or investment opportunities on a short-term as well as longer-term basis. Total debt was $588.2 million at the end of 2015 compared with $706.0 million at the end of 2014 . As of December 31, 2015 , undrawn amounts under these facilities, which are more fully described below, totaled $ 413.5 million , and includes $26.0 million that may only be used for asphalt purchases.

In December 2015, the Company entered into a three -year unsecured note purchase and private shelf agreement (the "Prudential Agreement") with Prudential Investment Management, Inc. and its affiliates (collectively, "Prudential") that enabled the Company to issue notes in an aggregate amount up to $450 million , less the sum of all principal amounts then outstanding on any notes issued by the Company or any of its subsidiaries to Prudential and the amounts of any notes that are committed under the Prudential Agreement. The Prudential Agreement, as amended, expires in December 2018 and contains certain restrictive covenants that are substantially the same as the covenants contained in the A&B Senior Credit Facility, as amended. Borrowings under the shelf facility bear interest at rates that are determined at the time of the borrowing. At December 31, 2015 , approximately $123.1 million of uncommitted shelf capacity was undrawn under the facility.

The Company has a revolving senior credit facility that provides for an aggregate $350 million, 5-year unsecured commitment (A&B Senior Credit Facility), with an uncommitted $100 million increase option. On December 31, 2015, the Company completed an amendment to the A&B Senior Credit Facility agreement, which extended the maturity date to

December 2020, modified certain covenants, and reduced the interest rates and fees charged under the credit facility. Amounts drawn under the facility bear interest at a stated rate, as defined, plus a margin based on a ratio of debt to total adjusted asset value pricing grid. At December 31, 2015 , $73.8 million was outstanding, $11.8 million in letters of credit had been issued against the facility, and $264.4 million remained undrawn.

A&B’s ability to access its credit facilities is subject to its compliance with the terms and conditions of the credit facilities, including financial covenants. The financial covenants under current agreements require A&B to maintain certain financial covenants, such as the maintenance of minimum shareholders’ equity levels, minimum EBITDA to fixed charges ratio, maximum debt to total assets ratio, minimum unencumbered income-producing asset value to unencumbered debt ratio and limitations on priority debt. At December 31, 2015 , A&B was in compliance with all such covenants. While there can be no assurance that A&B will remain in compliance with its covenants, A&B expects that it will remain in compliance. Credit facilities are more fully described in Note 8 to the Consolidated Financial Statements.

Balance Sheet: The Company had working capital deficiencies of $32.2 million and $15.4 million at December 31, 2015 and 2014 , respectively. The increase in the working capital deficiency is primarily attributed to lower sugar and quarry inventory in the Agribusiness and Material and Construction segments, respectively.

Tax-Deferred Real Estate Exchanges: Sales: During 2015 , sales and condemnation proceeds that qualified for potential tax-deferral treatment under Internal Revenue Code Sections 1031 and 1033 totaled approximately $39.9 million from the sale of office properties in Texas and Washington, a retail property in Colorado and non-core land on Maui. During 2014 , sales and condemnation proceeds that qualified for potential tax-deferral treatment under Internal Revenue Code Sections 1031 and 1033 totaled approximately $81.7 million from the sale of Maui Mall and non-core land on Maui.

Purchases: During 2015 , the Company utilized $1.9 million from tax-deferred sales to acquire the land adjacent to Lahaina Square on Maui under a forward 1031 transaction. During 2014 , the Company acquired Kaka'ako Commerce Center, a 204,400-square-foot, light-industrial complex in urban Honolulu, under a forward 1031 exchange transaction, in which the Company utilized $14.9 million from tax-deferred sales during 2014, as well as proceeds from the sales of several Maui land properties and three mainland properties in 2015.

The proceeds from 1031 tax-deferred sales are held in escrow pending future use to purchase new real estate assets. The proceeds from 1033 condemnations are held by the Company until the funds are redeployed. As of December 31, 2015 , there were approximately $17.4 million in proceeds from tax-deferred sales or condemnations that had not been reinvested.

CONTRACTUAL OBLIGATIONS, COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

Contractual Obligations: At December 31, 2015 , the Company had the following estimated contractual obligations (in millions):



				Payment due by period

Contractual Obligations		Total		2016		2017-2018		2019-2020		Thereafter
Long-term debt obligations	(a)	$	587.9	$	90.4	$	81.7	$	144.4	$	271.4
Estimated interest on debt	(b)	137.2		28.2		39.8		29.5		39.7
Purchase obligations	(c)	16.5		16.5		—		—		—
Post-retirement obligations	(d)	8.8		1.0		2.0		1.9		3.9
Non-qualified benefit obligations	(e)	8.0		4.2		1.1		0.1		2.6
Operating lease obligations	(f)	50.5		5.7		10.6		9.0		25.2
Total		$	808.9	$	146.0	$	135.2	$	184.9	$	342.8

(a)

Long-term debt obligations (including current portion, but excluding debt premium or discount) include principal repayments of short-term and long-term debt for the respective period(s) described (see Note 8 to the Consolidated Financial Statements for principal repayments for each of the next five years). Long-term debt includes amounts borrowed under revolving credit facilities and have been reflected as payments due in 2020.


(b)	Estimated cash paid for interest on debt is determined based on (1) the stated interest rate for fixed debt and (2) the rate in effect on December 31, 2015 for variable rate debt. Because the Company’s variable rate debt may be

rolled over, actual interest may be greater or less than the amounts indicated. Estimated interest on debt also includes swap payments on the Company's interest rate swaps.

(c)

Purchase obligations include only non-cancelable contractual obligations for the purchases of goods and services. Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure and approximate timing of the transaction. Any amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.

(d)

Post-retirement obligations include expected payments to medical service providers in connection with providing benefits to the Company’s employees and retirees. The $3.9 million noted in the column labeled “Thereafter” comprises estimated benefit payments for 2021 through 2025. Post-retirement obligations are described further in Note 11 to the Consolidated Financial Statements. The obligation for pensions reflected on the Company’s consolidated balance sheet is excluded from the table above because the Company is unable to reliably estimate the timing and amount of contributions.


(e)	Non-qualified benefit obligations include estimated payments to executives and directors under the Company’s three non-qualified plans. The $2.6 million noted in the column labeled “Thereafter” comprises estimated benefit payments for 2021 through 2025. Additional information about the Company’s non-qualified plans is included in Note 11 to the Consolidated Financial Statements.


(f)	Operating lease obligations primarily include land, office space and equipment under non-cancelable, long-term lease arrangements that do not transfer the rights and risks of ownership to A&B. These amounts are further described in Note 9 to the Consolidated Financial Statements.

Upon Separation from Matson in 2012, the Company’s unrecognized tax benefits were reflected in Matson’s financial statements because Matson is considered the successor parent to the affiliated tax group. In connection with the Separation, the Company entered into a tax indemnification agreement with Matson and established a liability of $1 million, representing the fair value of the indemnity to Matson in the event the Company’s pre-separation unrecognized tax benefits are not realized. The remaining liability as of December 31, 2015 was $0.1 million. As of December 31, 2015 , the Company has not identified any material unrecognized tax positions.

Other Commitments and Contingencies : A description of other commitments, contingencies and off-balance sheet arrangements, is described in Note 14 to the Consolidated Financial Statements of Item 8 in this Form 10-K, and incorporated herein by reference.

OUTLOOK

All of the forward-looking statements made herein are qualified by the inherent risks of the Company’s operations and the markets it serves, as more fully described on pages 17 to 29 of this Form 10-K and other filings with the SEC.

There are two primary sources of periodic economic forecasts and data for the State of Hawaii: The University of Hawaii Economic Research Organization (UHERO) and the State’s Department of Business, Economic Development and Tourism (DBEDT). Much of the economic information included herein has been derived from economic reports available on UHERO’s and DBEDT’s websites that provide more complete information about the status of, and forecast for, the Hawaii economy. Information below on Oahu residential resales is published by the Honolulu Board of Realtors and Title Guaranty of Hawaii, Incorporated. Information below on the Oahu commercial real estate market is provided by Colliers International (Hawaii). Bankruptcy filing information cited below is published by the U.S. Bankruptcy Court District of Hawaii. Information below on foreclosures is from published reports. Debit and credit card same-store sales activity is provided by First Hawaiian Bank.

The Company’s overall outlook assumes steady growth for the U.S. and Hawaii economies. The Hawaii economy produced real growth of 2.0 percent in 2015 and is expected to continue to grow at a moderate pace for the next several years.

The primary driver of growth is tourism, which set an all-time record for visitor expenditures and arrivals for a fourth consecutive year in 2015 and is expected to continue to grow at a modest rate for the next several years.

Construction continues its upward trend. The value of statewide construction permits for 2015 was $4.0 billion, up by 19.6 percent over 2014, led by an increase in residential and commercial/industrial construction permits.

The median resale prices for homes and condominiums on Oahu reached record highs in 2015. The median resale price for a home on Oahu in 2015 was $700,000, up 3.7 percent compared to 2014, and the median resale price of an Oahu condominium was up 2.9 percent at $360,000. In December, median resale prices for Oahu condominiums reached a record

high of $386,250. For December 2015, days on market were low at 20 days for homes and 22 days for condos. Single-family resales on Maui, Kauai and the Big Island improved in 2015 compared to 2014.

Oahu commercial real estate continues to perform well, as detailed in the table below. Vacancy has trended lower, with the exception of retail vacancy rates, which were higher for the fourth quarter of 2015 compared to the fourth quarter of 2014, due to the addition of a new wing at the Ala Moana Shopping Center. Average asking rents have increased for all asset classes.



Property Type	Vacancy Rate for the Quarter Ended December 31, 2015	Vacancy Rate for the Quarter Ended December 31, 2014	Percentage Point Change	Average Asking Rent Per Square Foot Per Month for the Quarter Ended December 31, 2015	Average Asking Rent Per Square Foot Per Month for the Quarter Ended December 31, 2014	Percent Change
Retail	5.1%	4.1%	1.0	$3.84	$3.64	5.5%
Industrial	1.7%	2.1%	(0.4)	$1.13	$1.10	2.7%
Office	12.7%	13.2%	(0.5)	$1.67	$1.64	1.8%

The state continues to see positive trends in other economic indicators. Unemployment in December 2015 was 3.2 percent, down from 4.0 percent in December 2014, and below the national unemployment rate of 5.0 percent. Bankruptcy filings in 2015 were down by 7.8 percent compared to 2014. Foreclosures were down 12.4 percent in 2015 compared to last year. First Hawaiian Bank reported that its debit and credit card same-store sales activity increased 8.4 percent for the fourth quarter of 2015, compared to the fourth quarter of 2014.

The Company's Real Estate Leasing net operating income (NOI) was up 8.5 percent * in 2015. In 2016, NOI is expected to grow only slightly due to the near-term NOI impacts related to the continued migration of Mainland commercial assets to Hawaii, the strategic repositioning of certain Hawaii retail assets, and the timing of lease expirations for several large tenants.

The volume and timing of real estate development sales are always difficult to predict with any accuracy. In 2016, the Company expects to close on the sales of Mainland commercial properties to fund the Manoa Marketplace acquisition, as well as joint venture sales of the tower and mid-rise units at The Collection in the fourth quarter.

In January 2016, the Company announced the cessation of sugar operations at Hawaiian Commercial & Sugar Company (HC&S) and, as a result, expects to recognize losses of $95 million to $125 million in 2016, which consist of operating losses related to the ongoing Agribusiness operations (including the final sugar harvest at HC&S) in the range of $5 million to $15 million and cessation-related charges in the range of $89 million to $110 million. Based upon current production estimates and sugar prices, the cessation is projected to be a cash neutral event as the cash outlays related to the cessation process are expected to be offset by the recapture of cash currently tied up in working capital, cash proceeds from the final harvest in 2016, and cash tax benefits realized. Post-cessation, the Company expects the volatility in Agribusiness earnings to be reduced significantly and that the segment will be breakeven to modestly profitable on a normalized basis.

As of December 31, 2015, the Materials and Construction segment had a consolidated backlog of $226.5 million . The performance of the segment in 2016 will be dictated largely by the percentage of the backlog that Grace can complete and the amount of agency bids issued, won and completed. Paving progress will be determined, in part, by prevailing weather conditions. The environment remains favorable for an increase in paving and material sales activity as a result of continued significant deferred maintenance on Oahu’s roads and the near-term potential for an increase in residential development in West Oahu.


*	Refer to page 46 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A&B is exposed to changes in interest rates, primarily as a result of its borrowing and investing activities used to maintain liquidity and to fund business operations. In order to manage its exposure to changes in interest rates, A&B utilizes a balanced mix of debt maturities, along with both fixed-rate and variable-rate debt. The nature and amount of A&B’s long-term and short-term debt can be expected to fluctuate as a result of future business requirements, market conditions, and other factors.

A&B’s fixed rate debt, excluding debt premium or discount, consists of $446.1 million in principal term notes. A&B’s variable rate debt consists of $77.8 million under its revolving credit facilities and $64.0 million under term loans. Other than in default, A&B does not have an obligation, nor the option in some cases, to prepay its fixed-rate debt prior to maturity and, as a result, interest rate fluctuations and the resulting changes in fair value would not have an impact on A&B’s financial condition or results of operations unless A&B was required to refinance such debt. For A&B’s variable rate debt, a one percent increase in interest rates would have a $1.2 million impact on A&B's results of operations for 2015 , assuming the December 31, 2015 balance of the variable rate debt was outstanding throughout 2015 .

The following table summarizes A&B’s debt obligations at December 31, 2015 , presenting principal cash flows and related interest rates by the expected fiscal year of repayment.



	Expected Fiscal Year of Repayment as of December 31, 2015 (dollars in millions)
																						Fair Value at
																						December 31,
	2016			2017			2018			2019			2020			Thereafter			Total			2015
Liabilities
Fixed rate	$	31.8		$	39.0		$	39.4		$	38.7		$	35.9		$	261.3		$	446.1		$	456.1
Average interest rate	4.87		%	4.83		%	4.75		%	4.68		%	4.61		%	4.39		%	4.54		%
Variable rate	$	58.6		$	1.6		$	1.7		$	1.8		$	67.9		$	10.2		$	141.8		$	140.9
Average interest rate*	2.43		%	2.24		%	2.26		%	2.28		%	2.30		%	2.08		%	2.27		%


*	Estimated interest rates on variable debt are determined based on the rate in effect on December 31, 2015 . Actual interest rates may be greater or less than the amounts indicated when variable rate debt is rolled over.

From time to time, the Company may invest its excess cash in short-term money market funds that purchase government securities or corporate debt securities. At December 31, 2015 , the Company had a negligible amount invested in money market funds. These money market funds maintain a weighted average maturity of less than 90 days, and accordingly, a one percent change in interest rates is not expected to have a material impact on the fair value of these investments or on interest income.

A&B has no material exposure to foreign currency risks, although it is indirectly affected by changes in currency rates to the extent that changes in rates affect tourism in Hawaii.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



			Page

Report of Independent Registered Public Accounting Firm			57
Consolidated Statements of Income			58
Consolidated Statements of Comprehensive Income			59
Consolidated Balance Sheets			60
Consolidated Statements of Cash Flows			61
Consolidated Statements of Equity			63
Notes to Consolidated Financial Statements			64
	1.	Background and Basis of Presentation	64
	2.	Significant Accounting Policies	64
	3.	Related Party Transactions	72
	4.	Discontinued Operations	73
	5.	Investments in Affiliates	73
	6.	Uncompleted Contracts	75
	7.	Property	76
	8.	Notes Payable and Long-Term Debt	77
	9.	Leases – The Company as Lessee	80
	10	Leases – The Company as Lessor	80
	11.	Employee Benefit Plans	81
	12.	Income Taxes	89
	13.	Share-Based Awards	91
	14.	Commitments and Contingencies	93
	15.	Derivative Instruments	95
	16.	Earnings Per Share "EPS"	95
	17.	Redeemable Noncontrolling Interest	96
	18.	Cessation of HC&S Sugar Operations	97
	19.	Segment Results	97
	20.	Subsequent Event	104

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Alexander & Baldwin, Inc.

Honolulu, Hawaii

We have audited the accompanying consolidated balance sheets of Alexander & Baldwin, Inc. and subsidiaries (the "Company") as of December 31, 2015 and 2014 , and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2015 . These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Alexander & Baldwin, Inc. and subsidiaries as of December 31, 2015 and 2014 , and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 , in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2015 , based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2016 , expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ Deloitte & Touche LLP

Honolulu, Hawaii

February 29, 2016

ALEXANDER & BALDWIN, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per-share amounts)



	Year Ended December 31,
	2015			2014			2013
Operating Revenue:
Real estate leasing	$	133.8		$	125.2		$	78.8
Real estate development and sales	100.5			80.0			85.4
Materials and construction	219.0			234.3			54.9
Agribusiness	117.2			120.5			146.1
Total operating revenue	570.5			560.0			365.2
Operating Costs and Expenses:
Cost of real estate leasing	80.6			78.3			48.4
Cost of real estate development and sales	51.1			41.0			46.7
Cost of materials and construction contracts	175.7			191.3			47.6
Cost of agribusiness goods and services	168.8			131.9			136.8
Selling, general and administrative	55.3			52.9			41.2
Separation/acquisition costs	—			—			4.6
Total operating costs and expenses	531.5			495.4			325.3
Operating Income	39.0			64.6			39.9
Other Income and (Expense):
Income related to joint ventures	36.8			2.1			4.3
Gain on insurance proceeds	—			—			2.4
Impairment and equity losses related to joint ventures	—			(0.3		)	(6.6		)
Reduction in KRS II carrying value, net (Note 5, 12, 14)	(2.6		)	(14.7		)	—
Interest income and other	1.2			6.1			2.7
Interest expense	(26.8		)	(29.0		)	(19.1		)
Income From Continuing Operations Before Income Taxes	47.6			28.8			23.6
Income tax expense (benefit)	16.5			(1.4		)	11.1
Income From Continuing Operations	31.1			30.2			12.5
Income from discontinued operations, net of income taxes (Note 4)	—			34.3			22.3
Net Income	31.1			64.5			34.8
Income attributable to noncontrolling interest	(1.5		)	(3.1		)	(0.5		)
Net Income Attributable to A&B	$	29.6		$	61.4		$	34.3

Basic Earnings per Share of Common Stock:
Continuing operations available to A&B shareholders	$	0.54		$	0.56		$	0.27
Discontinued operations available to A&B shareholders	—			0.70			0.50
Net income available to A&B shareholders	$	0.54		$	1.26		$	0.77
Diluted Earnings per Share of Common Stock:
Continuing operations available to A&B shareholders	$	0.54		$	0.55		$	0.26
Discontinued operations available to A&B shareholders	—			0.70			0.50
Net income available to A&B shareholders	$	0.54		$	1.25		$	0.76

Weighted Average Number of Shares Outstanding:
Basic	48.9			48.7			44.4
Diluted	49.3			49.3			45.1

Amounts Available to A&B Shareholders (Note 16):
Income from continuing operations, net of tax	$	26.5		$	27.1		$	12.0
Discontinued operations, net of tax	—			34.3			22.3
Net income	$	26.5		$	61.4		$	34.3

See notes to consolidated financial statements.

ALEXANDER & BALDWIN, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)



	Year Ended December 31,
	2015			2014			2013
Net Income	$	31.1		$	64.5		$	34.8
Other Comprehensive Income (Loss), Net of Tax:
Defined benefit pension plans:
Net gain (loss) / prior service credit (cost)	(7.1		)	(26.7		)	22.4
Amortization of net loss included in net periodic pension cost	7.3			4.5			7.7
Amortization of prior service credit included in net periodic pension cost	(1.3		)	(1.3		)	(1.3		)
Prior service cost	(0.4		)	—			—
Income taxes related to other comprehensive income	0.6			9.2			(11.7		)
Other Comprehensive Income (Loss)	(0.9		)	(14.3		)	17.1
Comprehensive Income	30.2			50.2			51.9
Comprehensive income attributable to noncontrolling interest	(1.5		)	(3.1		)	(0.5		)
Comprehensive income attributable to A&B	$	28.7		$	47.1		$	51.4

See notes to consolidated financial statements.

ALEXANDER & BALDWIN, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except per-share amount)



	December 31,
	2015			2014
ASSETS
Current Assets
Cash and cash equivalents	$	1.3		$	2.8
Accounts receivable, less allowances of $1.7 for 2015 and $1.7 for 2014	38.6			33.1
Contracts retention	11.5			9.1
Costs and estimated earnings in excess of billings on uncompleted contracts	16.3			15.9
Inventories	55.9			81.9
Real estate held for sale	—			2.5
Income tax receivable	14.0			6.7
Prepaid expenses and other assets	14.9			15.6
Total current assets	152.5			167.6
Investments in Affiliates	416.4			418.6
Real Estate Developments	183.5			224.0
Property - Net	1,269.4			1,301.7
Intangible Assets - Net	54.4			63.9
Goodwill	102.3			102.3
Other Assets	65.0			43.5
Total assets	$	2,243.5		$	2,321.6
LIABILITIES AND EQUITY
Current Liabilities
Notes payable and current portion of long-term debt	$	90.4		$	74.5
Accounts payable	35.5			37.6
Billings in excess of costs and estimated earnings on uncompleted contracts	2.6			3.6
Accrued interest	5.5			5.7
Deferred revenue	0.1			16.5
Indemnity holdback related to Grace acquisition	9.3			9.3
Accrued and other liabilities	41.3			35.8
Total current liabilities	184.7			183.0
Long-term Liabilities
Long-term debt	497.8			631.5
Deferred income taxes	202.1			185.7
Accrued pension and post-retirement benefits	59.7			54.8
Other non-current liabilities	60.5			51.8
Total long-term liabilities	820.1			923.8
Commitments and Contingencies (Note 14)
Redeemable Noncontrolling Interest (Note 17)	11.6			—
Equity
Common stock - no par value; authorized, 150 million shares; outstanding, 48.9 million and 48.8 million shares at December 31, 2015 and 2014, respectively	1,151.7			1,147.3
Accumulated other comprehensive loss	(45.3		)	(44.4		)
Retained earnings	117.2			101.0
Total A&B shareholders' equity	1,223.6			1,203.9
Noncontrolling interest	3.5			10.9
Total equity	1,227.1			1,214.8
Total liabilities and equity	$	2,243.5		$	2,321.6

See notes to consolidated financial statements.

ALEXANDER & BALDWIN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)



	Year Ended December 31,
	2015			2014			2013
Cash Flows from Operating Activities:
Net income	$	31.1		$	64.5		$	34.8
Adjustments to reconcile net income to net cash provided by (used in) operations:
Depreciation and amortization	55.7			55.0			41.7
Deferred income taxes	16.9			8.8			(0.6		)
Gains on asset transactions, net of impairment losses	(42.7		)	(82.2		)	(52.8		)
Share-based compensation expense	4.7			4.9			4.2
Investments in affiliates	(3.7		)	0.1			(2.9		)
HC&S write-offs	6.9			—			—
Changes in operating assets and liabilities:
Trade, contracts retention, and other receivables	(3.1		)	1.6			3.3
Costs and estimated earnings in excess of billings on uncompleted contracts - net	(1.4		)	(6.4		)	(1.9		)
Inventories	25.9			(13.5		)	(2.7		)
Prepaid expenses, income tax receivable and other assets	(13.1		)	5.0			(0.4		)
Accrued pension and post-retirement benefits	3.6			(2.3		)	5.2
Accounts payable and contracts retention	0.1			(2.3		)	(4.9		)
Accrued and other liabilities	(18.2		)	(6.0		)	7.6
Real estate inventory sales (real estate developments held for sale)	73.0			53.6			81.7
Expenditures for real estate inventory (real estate developments held for sale)	(7.2		)	(41.7		)	(150.6		)
Net cash provided by (used in) operations	128.5			39.1			(38.3		)
Cash Flows from Investing Activities:
Capital expenditures for property, plant and equipment	(43.4		)	(60.2		)	(32.5		)
Capital expenditures related to 1031 commercial property transactions	(1.3		)	(14.9		)	(472.8		)
Proceeds from investment tax credits and grants related to Port Allen Solar Farm	—			4.5			2.4
Proceeds from disposal of property and other assets	8.1			9.5			1.2
Proceeds from disposals related to 1031 commercial property transactions	40.0			85.6			330.8
Payments for purchases of investments in affiliates and preferred investment	(29.4		)	(75.1		)	(43.4		)
Proceeds from investments in affiliates and preferred investment	44.4			36.2			5.1
Change in restricted cash associated with 1031 transactions	(17.4		)	0.6			3.2
Acquisition of business, net of cash (including Grace indemnity holdback)	—			(14.2		)	(5.7		)
Net cash provided by (used in) investing activities	1.0			(28.0		)	(211.7		)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt	132.0			283.0			585.0
Payments of long-term debt and deferred financing costs	(248.1		)	(224.2		)	(380.3		)
Proceeds from (payments on) line-of-credit agreement, net	(3.0		)	(62.3		)	51.6
Distribution to noncontrolling interests	(1.1		)	(0.2		)	(1.1		)
Dividends paid	(10.3		)	(8.3		)	(2.0		)
Proceeds from issuance (repurchase) of capital stock and other, net	(0.5		)	0.4			(1.0		)
Net cash provided by (used in) financing activities	(131.0		)	(11.6		)	252.2
Cash and Cash Equivalents:
Net increase (decrease) for the year	(1.5		)	(0.5		)	2.2
Balance, beginning of year	2.8			3.3			1.1
Balance, end of year	$	1.3		$	2.8		$	3.3



	Year Ended December 31,
	2015			2014			2013
Other Cash Flow Information:
Interest paid, net of amounts capitalized	$	(27.3	)	$	(29.8	)	$	(19.1	)
Income taxes paid	$	(6.4	)	$	(14.2	)	$	(12.0	)
Non-cash Investing and Financing Activities:
Contribution of land and development assets to joint ventures	$	9.6		$	33.8		$	—
Real estate exchanged for note receivable	$	1.9		$	3.6		$	—
Acquisition of Grace (issuance of equity and indemnity holdback)	$	—		$	—		$	219.8
Mortgage debt assumed at fair value in real estate acquisitions	$	—		$	—		$	142.2
Declared distribution to noncontrolling interest	$	0.4		$	1.1		$	0.2
Asset retirement obligations	$	6.0		$	—		$	—
Property (net) acquired in connection with the consolidation of The Shops at Kukui'ula	$	—		$	—		$	39.0
Capital expenditures included in accounts payable and accrued expenses	$	8.0		$	5.7		$	6.6

See notes to consolidated financial statements.

ALEXANDER & BALDWIN, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In millions, except per-share amounts)



	Total Equity
						Accumulated													Redeem-
		Common				Other													able
		Stock				Compre-							Non-						Non-
			Stated			hensive				Retained			Controlling						Controlling
		Shares	Value				Loss			Earnings			interest			Total			interest
Balance, January 1, 2013		42.9	$	938.0			$	(47.2	)	$	20.1		$	—		$	910.9		$	—
Net income										34.3			0.5			34.8
Other comprehensive income, net of tax							17.1									17.1
Dividends paid on common stock										(2.0		)				(2.0		)
Distributions to noncontrolling interest													(0.7		)	(0.7		)
Share-based compensation			4.2													4.2
Grace acquisition		5.4	196.3										9.1			205.4
Shares issued, net		0.3	0.4							(3.0		)				(2.6		)
Excess tax benefit from share-based awards			1.6													1.6
Balance, December 31, 2013		48.6	1,140.5				(30.1		)	49.4			8.9			1,168.7			—
Net income										61.4			3.1			64.5
Other comprehensive loss, net of tax							(14.3		)							(14.3		)
Dividends paid on common stock ($0.17 per share)										(8.3		)				(8.3		)
Distributions to noncontrolling interest													(1.1		)	(1.1		)
Share-based compensation			4.9													4.9
Shares issued or repurchased, net		0.2	0.6							(1.5		)				(0.9		)
Excess tax benefit from share-based awards			1.3													1.3
Balance, December 31, 2014		48.8	1,147.3				(44.4		)	101.0			10.9			1,214.8			—
Net income										29.6			1.1			30.7			0.4
Other comprehensive loss, net of tax							(0.9		)							(0.9		)
Dividends paid on common stock ($0.21 per share)										(10.3		)				(10.3		)
Reclassification of redeemable noncontrolling interest (Note 17)													(8.5		)	(8.5		)	8.5
Distributions to noncontrolling interest																—			(0.4		)
Adjustments to redemption value of redeemable noncontrolling interest (Note 17)										(3.1		)				(3.1		)	3.1
Share-based compensation			4.7													4.7
Shares issued or repurchased, net		0.1	(0.9		)					—						(0.9		)
Excess tax benefit from share-based awards			0.6													0.6
Balance, December 31, 2015		48.9	$	1,151.7			$	(45.3	)	$	117.2		$	3.5		$	1,227.1		$	11.6

See notes to consolidated financial statements.

Alexander & Baldwin, Inc.

Notes to Consolidated Financial Statements

1. BACKGROUND AND BASIS OF PRESENTATION

Description of Business : A&B is headquartered in Honolulu and operates four segments, principally in Hawaii: Real Estate Development and Sales; Real Estate Leasing; Agribusiness; and Materials and Construction.

Real Estate Development and Sales: The Real Estate Development and Sales segment generates its revenues through the investment in and development and sale of land and commercial and residential properties in Hawaii.

Real Estate Leasing: The Real Estate Leasing segment owns, operates and manages retail, office and industrial properties in Hawaii and on the Mainland. The Real Estate Leasing segment also leases urban land in Hawaii to third-party lessees.

Agribusiness: The Agribusiness segment produces bulk raw sugar, specialty food grade sugars and molasses; provides general trucking services, equipment maintenance and repair services; leases agricultural land to third parties; and generates and sells electricity to the extent not used in A&B’s Agribusiness operations. On December 31, 2015, the Company determined it would cease its sugar operations on Maui upon completing its final harvest in 2016 (the "Cessation"), which will result in the eventual layoff of over 650 employees. See Note 18, "Cessation of HC&S Operations" for further discussion regarding the Cessation and the related costs associated with such exit and disposal activities.

Materials and Construction: The Materials and Construction segment, which primarily includes the results of Grace Pacific ("Grace") from October 1, 2013, the date of acquisition, performs asphalt paving as prime contractor and subcontractor; imports and sells liquid asphalt; mines, processes and sells rock and sand aggregate; produces and sells asphaltic concrete and ready-mix concrete; provides and sells various construction- and traffic-control-related products; and manufactures and sells precast concrete products.

Rounding: Amounts in the consolidated financial statements and notes thereto are rounded to the nearest tenth of a million, but per-share calculations were determined based on amounts before rounding. Accordingly, a recalculation of some per-share amounts and percentages, if based on the reported data, may result in differences.


2.	SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include the accounts of Alexander & Baldwin, Inc. and all wholly owned and controlled subsidiaries, after elimination of intercompany amounts. Significant investments in businesses, partnerships and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method. A controlling financial interest is one in which the Company has a majority voting interest or one in which the Company is the primary beneficiary of a variable interest entity. In determining whether the Company is the primary beneficiary of a variable interest entity in which it has an interest, the Company is required to make significant judgments with respect to various factors including, but not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance, the rights and ability of other investors to participate in decisions affecting the economic performance of the entity, and kick-out rights, among others. Activities that significantly affect the economic performance of the entities in which the Company has an interest include, but are not limited to, establishing and modifying detailed business, development, marketing and sales plans, approving and modifying the project budget, approving design changes and associated overruns, if any, and approving project financing, among others. The Company has not consolidated any variable interest entity in which the Company does not also have voting control because it has determined that it is not the primary beneficiary since decisions to direct the activities that most significantly impact the entity’s performance are shared by the joint venture partners.

The consolidated financial statements include the results of GP/RM, a supplier in the precast concrete industry, and GLP Asphalt, LLC ("GLP"), an importer and distributor of liquid asphalt, which are owned 51 percent and 70 percent, respectively. These entities are consolidated because the Company holds a controlling financial interest through its majority ownership of the voting interests of the entities. The remaining interest in these entities is reported as noncontrolling interest in the consolidated financial statements. Profits, losses and cash distributions are allocated in accordance with the respective operating agreements.

Use of Estimates: The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the

amounts reported. Estimates and assumptions are used for, but not limited to: (i) asset impairments, including intangible assets and goodwill, (ii) legal and environmental contingencies, (iii) revenue recognition for long-term real estate developments and construction contracts, (iv) pension and postretirement estimates, and (v) income taxes. Future results could be materially affected if actual results differ from these estimates and assumptions.

Customer Concentration: Grace derives a significant portion of Materials and Construction revenues from a limited customer base. For the years ended December 31, 2015 and 2014, revenue of approximately $38.1 million and $37.5 million , respectively, was generated directly and indirectly from projects administered by the City and County of Honolulu. For the years ended December 31, 2015 and 2014, revenue of approximately $80.8 million and $79.6 million , respectively, was generated directly and indirectly from the State of Hawaii, where Grace served as general contractor or subcontractor. The revenues derived from the City and County of Honolulu and the State of Hawaii for the period from the date of acquisition of October 1, 2013 through December 31, 2013 were $14.3 million and $8.9 million , respectively. Hawaiian Commercial & Sugar Company, a consolidated subsidiary included in the Agribusiness segment, derived approximately $71.6 million , $65.5 million , and $87.6 million of revenue from C&H Sugar Company for the years ended December 31, 2015 , 2014 , and 2013 , respectively.

Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with a maturity of three months or less at the date of purchase. The Company carries these investments at cost, which approximates fair value. There were no outstanding checks in excess of funds on deposit at December 31, 2015. Outstanding checks in excess of funds on deposit was $3.0 million at December 31, 2014 and are reflected as current liabilities in the consolidated balance sheets.

Fair Value of Financial Instruments: The fair values of cash and cash equivalents, receivables and short-term borrowings approximate their carrying values due to the short-term nature of the instruments. The carrying amount and fair value of the Company’s debt at December 31, 2015 were $ 588.2 million and $597.0 million , respectively, and $706.0 million and $729.6 million at December 31, 2014 , respectively. The fair value of debt is calculated by discounting the future cash flows of the debt at rates based on instruments with similar risk, terms and maturities as compared to the Company’s existing debt arrangements (level 2).

Allowance for Doubtful Accounts: Allowances for doubtful accounts are established by management based on estimates of collectability. Estimates of collectability are principally based on an evaluation of the current financial condition the Company’s customers and their payment history, which are regularly monitored by the Company. The changes in the allowance for doubtful accounts, included on the consolidated balance sheets as an offset to “Accounts receivable,” for the three years ended December 31, 2015 were as follows (in millions):



	Balance at Beginning of year	Provision for bad debt	Write-offs and Other	Balance at End of Year
2015	$1.7	$0.4	$(0.4)	$1.7
2014	$1.3	$0.8	$(0.4)	$1.7
2013	$1.6	$0.1	$(0.4)	$1.3

Operating Cycle : The Company uses the duration of the construction contracts that range from one year to three years as its operating cycle for purposes of classifying assets and liabilities related to contracts. Accounts receivable and contracts retention collectible after one year related to the Materials and Construction segment are included in current assets in the consolidated balance sheets and amounted to $7.3 million and $6.0 million as of December 31, 2015 and December 31, 2014 , respectively. Accounts and contracts payable related to the Materials and Construction segment payable after one year are included in current liabilities in the consolidated balance sheets and amounted to $0.6 million for both years as of December 31, 2015 and December 31, 2014 .

Inventories: Sugar inventories are stated at the lower of cost (first-in, first-out basis) or market value. Materials and supplies and Materials and Construction segment inventory are stated at the lower of cost (principally average cost, first-in, first-out basis) or market value.

Inventories at December 31, 2015 and 2014 were as follows (in millions):



	2015		2014
Sugar inventories	$	16.3	$	23.3
Asphalt	12.8		21.3
Processed rock, portland cement, and sand	12.2		15.7
Work in progress	3.7		2.8
Retail merchandise	1.6		1.5
Parts, materials and supplies inventories	9.3		17.3
Total	$	55.9	$	81.9

Property: Property is stated at cost, net of accumulated depreciation and amortization. Expenditures for major renewals and betterments are capitalized. Replacements, maintenance, and repairs that do not improve or extend asset lives are charged to expense as incurred. Upon acquiring commercial real estate that is deemed a business, the Company records land, buildings, leases above and below market, and other intangible assets based on their fair values. Costs related to due diligence are expensed as incurred.

Depreciation: Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets or the units-of-production method for quarry production-related assets. Estimated useful lives of property are as follows:



Classification	Range of Life (in years)
Buildings	10 to 40
Water, power and sewer systems	5 to 50
Rock crushing and asphalt plants	25 to 35
Machinery and equipment	2 to 35
Other property improvements	3 to 35

Real Estate Developments: Expenditures for real estate developments are capitalized during construction and are classified as real estate developments on the consolidated balance sheets. When construction is substantially complete, the costs are reclassified as either Real Estate Held for Sale or Property, based upon the Company’s intent to either sell the completed asset or to hold it as an investment property, respectively. Cash flows related to real estate developments are classified as either operating or investing activities, based upon the Company’s intention to retain ownership or to sell the property, respectively, of the property as an investment following completion of construction.

For development projects, capitalized costs are allocated using the direct method for expenditures that are specifically associated with the unit being sold and the relative-sales-value method for expenditures that benefit the entire project. Capitalized development costs typically include costs related to land acquisition, grading, roads, water and sewage systems, landscaping, capitalized interest, and project amenities. Direct overhead costs incurred after the development project is substantially complete, such as utilities, maintenance and real estate taxes, are charged to selling, general and administrative expense as incurred. All indirect overhead costs are charged to selling, general and administrative costs as incurred.

Capitalized Interest: Interest costs incurred in connection with significant expenditures for real estate developments, the construction of assets, or investments in real estate joint ventures are capitalized during the period in which activities necessary to get the asset ready for its intended use are in progress. Capitalization of interest is discontinued when the asset is substantially complete and ready for its intended use. Capitalization of interest on investments in real estate joint ventures is recorded until the underlying investee commences its principal operations, which is typically when the investee has other-than-ancillary revenue generation. Total interest cost incurred was $29.1 million , $31.0 million and $20.8 million in 2015 , 2014 and 2013 , respectively. Capitalized interest in 2015 , 2014 and 2013 was $2.3 million , $1.9 million and $1.8 million , respectively, and was principally related to the Company's investment in The Collection, Waihonua and the Company’s Maui Business Park II project.

Impairment of Long-Lived Assets and Finite-Lived Intangible Assets: Long-lived assets, including finite-lived intangible assets, are reviewed for possible impairment when events or circumstances indicate that the carrying value may not be recoverable. In such an evaluation, the estimated future undiscounted cash flows generated by the asset are compared with the amount recorded for the asset to determine if its carrying value is not recoverable. If this review determines that the recorded value will not be recovered, the amount recorded for the asset is reduced to estimated fair value. These asset

impairment analyses are highly subjective because they require management to make assumptions and apply considerable judgments to, among others, estimates of the timing and amount of future cash flows, expected useful lives of the assets, uncertainty about future events, including changes in economic conditions, changes in operating performance, changes in the use of the assets and ongoing costs of maintenance and improvements of the assets, and thus, the accounting estimates may change from period to period. If management uses different assumptions or if different conditions occur in future periods, A&B’s financial condition or its future operating results could be materially impacted.

Impairment of Investments: The Company's investments in unconsolidated affiliates are reviewed for impairment whenever there is evidence that fair value may be below carrying cost. An investment is written down to fair value if fair value is below carrying cost and the impairment is believed to be other-than-temporary. In evaluating the fair value of an investment and whether any identified impairment is other-than-temporary, significant estimates and considerable judgments are involved. These estimates and judgments are based, in part, on the Company’s current and future evaluation of economic conditions in general, as well as a joint venture’s current and future plans. Additionally, these impairment calculations are highly subjective because they also require management to make assumptions and apply judgments to estimates regarding the timing and amount of future cash flows that may consider various factors, including sales prices, development costs, market conditions and absorption rates, probabilities related to various cash flow scenarios, and appropriate discount rates based on the perceived risks, among others. In evaluating whether an impairment is other-than-temporary, the Company considers all available information, including the length of time and extent of the impairment, the financial condition and near-term prospects of the affiliate, the Company’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value, and projected industry and economic trends, among others. Changes in these and other assumptions could affect the projected operational results and fair value of the unconsolidated affiliates, and accordingly, may require valuation adjustments to the Company’s investments that may materially impact the Company’s financial condition or its future operating results. For example, if current market conditions deteriorate significantly or a joint venture’s plans change materially, impairment charges may be required in future periods, and those charges could be material.

In July 2014, the Company invested $23.8 million in KIUC Renewable Solutions Two LLC (KRS II), an entity that owns and operates a 12-megawatt solar farm in Koloa, Kauai. The investment return from the Company's investment in KRS II is principally composed of federal and state tax benefits. As tax benefits are realized over the life of the investment, the Company recognizes a non-cash reduction to the carrying amount of its investment in KRS II. During the years ended December 31, 2015 and 2014, the Company recorded a net non-cash reduction of $2.6 million and $14.7 million , respectively, in Other income (expense) in the accompanying consolidated statements of income. The Company expects that future reductions to its investment in KRS II will be recognized as tax benefits are realized.

In 2013, the Company entered into an Amended and Restated Limited Liability Company Agreement of Kukui'ula Village (Agreement) with DMB Kukui'ula Village LLC (DMB). Under the Agreement, the Company assumed financial and operational control of Kukui'ula Village LLC (Village) and consolidated the assets and liabilities of Village at fair value, resulting in a $6.3 million write down of its investment in the joint venture.

Weakness in particular real estate markets, difficulty in obtaining or renewing project-level financing or development approvals, and changes in the Company’s development strategy, among other factors, may affect the value or feasibility of certain development projects owned by the Company or by its joint ventures and could lead to additional impairment charges in the future.

Intangible Assets: Intangible assets are recorded on the consolidated balance sheets as other non-current assets and are related to the acquisition of commercial properties. Intangible assets acquired in 2015 and 2014 were as follows:



	2015			2014
	Amount		Weighted Average Life (Years)	Amount		Weighted Average Life (Years)
Amortized intangible assets:
In-place/favorable leases	$	1.0	2.6	$	2.1	1.8

Intangible assets for the years ended December 31, included the following (in millions):



	2015					2014
	Cost		Accumulated Amortization			Cost		Accumulated Amortization
Amortized intangible assets:
In-place leases	$	62.6	$	(34.0	)	$	61.6	$	(25.8	)
Favorable leases	16.6		(9.1		)	16.6		(7.8		)
Permitted quarry rights	18.0		(1.3		)	18.0		(0.7		)
Contract backlog	2.6		(2.6		)	2.6		(2.5		)
Trade name/customer relationships	2.2		(0.6		)	2.2		(0.3		)
Total assets	$	102.0	$	(47.6	)	$	101.0	$	(37.1	)

Aggregate intangible asset amortization was $10.5 million , $11.2 million and $9.3 million for 2015 , 2014 and 2013 , respectively. Estimated amortization expenses related to intangible assets over the next five years are as follows (in millions):



	Estimated Amortization
2016	$6.7
2017	$5.5
2018	$4.7
2019	$4.2
2020	$3.5

Goodwill: The Company recorded a total of $93.6 million of goodwill in connection with the acquisition of Grace, which occurred on October 1, 2013. Additionally, the Company recorded $9.3 million of goodwill in connection with the consolidation of The Shops at Kukui'ula. The Grace and The Shops at Kukui'ula goodwill is not expected to be deductible for tax purposes. In 2014, the Company finalized its valuation of Grace and, as a result, recorded an additional $3.3 million of goodwill, primarily related to the fair value of liabilities associated with the maintenance and management of former quarry sites. The Company reviews goodwill for impairment at the reporting unit level annually and whenever events or changes in circumstances indicate that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. The changes in the carrying amount of goodwill allocated to the Company's reportable segments for the years ended December 31, 2015 and 2014 were as follows (in millions):



	Materials & Construction		Real Estate Leasing			Total
Balance, January 1, 2014	$	90.3	$	9.3		$	99.6
Goodwill increase during the year	3.3		—			3.3
Goodwill allocated to sale of Maui Mall	—		(0.6		)	(0.6		)
Balance, December 31, 2014	93.6		8.7			102.3
Changes to goodwill	—		—			—
Balance, December 31, 2015	$	93.6	$	8.7		$	102.3

Revenue Recognition: The Company has a wide variety of revenue sources, including real estate sales, commercial property rentals, material sales, paving construction, and the sales of raw sugar and molasses. Before recognizing revenue, the Company assesses the underlying terms of the transaction to ensure that recognition meets the requirements of relevant accounting standards. In general, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery of the service or product has occurred, the sales price is fixed or determinable, and collectability is reasonably assured.

Real Estate Sales Revenue Recognition: Real Estate Development and Sales revenue represents proceeds from the sale of a variety of real estate development inventory. Real estate development inventory may include industrial lots, residential lots, condominium units, single-family homes and multi-family homes. Sales are recorded when the risks and rewards of ownership have passed to the buyers (generally on closing dates), adequate initial and continuing investments have been received, and collection of remaining balances, if any, is reasonably assured. For certain development projects that have continuing post-closing involvement and for which total revenue and capital costs are reasonably estimable, the Company uses

the percentage-of-completion method for revenue recognition. Under this method, the amount of revenue recognized is based on development costs that have been incurred through the reporting period as a percentage of total expected development cost associated with the development project. This generally results in a stabilized gross margin percentage, but requires significant judgment and estimates.

Real Estate Leasing Revenue Recognition: Real Estate Leasing revenue is recognized on a straight-line basis over the terms of the related leases, including periods for which no rent is due (typically referred to as “rent holidays”). Differences between revenues recognized and amounts due under respective lease agreements are recorded as increases or decreases, as applicable, to deferred rent receivable. Also included in rental revenue are certain tenant reimbursements and percentage rents determined in accordance with the terms of the leases. Income arising from tenant rents that are contingent upon the sales of the tenant exceeding a defined threshold are recognized only after the contingency has been resolved (e.g., sales thresholds have been achieved).

Construction Contracts and Related Products Revenue Recognition : Grace generates revenue primarily from material sales and paving contracts. The recognition of revenue is based on the underlying terms of the transaction.

Materials - Revenues from material sales, which include basalt aggregate, liquid asphalt and hot mix asphalt, are recognized when title to the product and risk of loss passes to third parties (generally this occurs when the product is picked up by customers or their agents) and when collection is reasonably assured.

Construction - A majority of paving contracts is performed for Hawaii state, federal, and county governments. Unit price contracts, which comprise a significant portion of Grace's paving contracts, require Grace to provide line-item deliverables at fixed unit prices based on approved quantities irrespective of Grace’s actual per unit costs. Earnings on unit price contracts are recognized as quantities are delivered and accepted by the customer. Lump sum contracts require that the total amount of work be performed for a single price irrespective of actual quantities or Grace’s actual costs. Earnings on fixed-price paving contracts are generally recognized using the percentage-of-completion method with progress toward completion measured on the basis of units (tons, cubic yards, square yards, square feet or other units of measure) of work completed as of a specific date to an estimate of the total units of work to be delivered under each contract. Grace uses this method as its management considers units of work completed to be the best available measure of progress on contracts. Contracts in progress are reviewed regularly, and sales and earnings may be adjusted based on revisions to assumption and estimates, including, but not limited to, revisions to job performance, job site conditions, changes to the scope of work, estimated contract costs, progress toward completion, changes in internal and external factors or conditions and final contract settlement. Selling, general and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses become evident.

Sugar and Molasses Revenue Recognition: Revenue from sugar sales is recorded when title to the product and risk of loss passes to third parties (generally this occurs when the product is shipped or delivered to customers) and when collection is reasonably assured.

Agricultural Costs: Costs of growing and harvesting sugar cane are charged to the cost of inventory in the year incurred and to cost of sales as sugar is sold.

Discontinued Operations: In 2014, the Company early adopted the provisions of Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) : Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”), which changes the requirements for reporting discontinued operations under Subtopic 205-20. For periods prior to the adoption of ASU 2014-08, the sales of certain income-producing assets were classified as discontinued operations if the operations and cash flows of the assets clearly could be distinguished from the remaining assets of the Company, if cash flows for the assets had been, or would have been, eliminated from the ongoing operations of the Company, if the Company would not have had a significant continuing involvement in the operations of the assets sold, and if the amount was considered material. Certain assets that are “held-for-sale,” based on the likelihood and intention of selling the property within 12 months, were also treated as discontinued operations. Sales of land not under lease and residential houses and lots were generally considered inventory and were not included in discontinued operations.

Employee Benefit Plans: The Company provides a wide range of benefits to existing employees and retired employees, including single-employer defined benefit plans, postretirement, defined contribution plans, post-employment and health care benefits. The Company records amounts relating to these plans based on various actuarial assumptions, including discount rates, assumed rates of return, compensation increases, turnover rates and health care cost trend rates. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current economic

conditions and trends. The Company believes that the assumptions utilized in recording obligations under the Company’s plans, which are presented in Note 11, “Employee Benefit Plans,” are reasonable based on its experience and on advice from its independent actuaries; however, differences in actual experience or changes in the assumptions may materially affect the Company’s financial position or results of operations.

Share-Based Compensation: The Company records compensation expense for all share-based payment awards made to employees and directors. The Company’s various equity plans are more fully described in Note 13, Share Based Awards.

Earnings Per Share (“EPS”): Basic and diluted earnings per share are computed and disclosed in accordance with FASB Accounting Standards Codification Topic 260, Earnings Per Share . The Company utilizes the two-class method to compute earnings available to common shareholders. Under the two-class method, earnings are adjusted by accretion amounts to redeemable noncontrolling interests recorded at redemption value. The adjustments represent in-substance dividend distributions to the noncontrolling interest holder as the holder has a contractual right to receive a specified amount upon redemption. As a result, earnings are adjusted to reflect this in-substance distribution that is different from other common shareholders. In addition, the Company allocates net earnings to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company's participating securities consist of time-based restricted unit awards that contain a non-forfeitable right to receive dividends and, therefore, are considered to participate in earnings with common shareholders. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards. The Company's "EPS" calculation and description of calculation is contained in Note 16, "Earnings Per Share."

Income Taxes: The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are applied in the calculation of tax credits, tax benefits and deductions, and in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. Deferred tax assets and deferred tax liabilities are adjusted to the extent necessary to reflect tax rates expected to be in effect when the temporary differences reverse. Adjustments may be required to deferred tax assets and deferred tax liabilities due to changes in tax laws and audit adjustments by tax authorities. To the extent adjustments are required in any given period, the adjustments would be included within the tax provision in the Consolidated Statements of Income or Balance Sheets. The Company records a liability for uncertain tax positions not deemed to meet the more-likely-than-not threshold. The Company did not have material uncertain tax positions as of December 31, 2015 and 2014 .

The Company has not recorded a valuation allowance for its deferred tax assets. A valuation allowance would be established if, based on the weight of available evidence, management believes that it is more likely than not that some portion or all of a recorded deferred tax asset would not be realized in future periods.

The investment return from the Company's investment in KRS II is principally composed of federal and state tax benefits, including tax credits. These tax credits are accounted for using the flow-through method, which reduces the provision for income taxes in the year the tax credits first become available. The total KRS II net tax credit benefits that the Company recognized for book purposes in 2014 was approximately $13.7 million .

Comprehensive Loss: Comprehensive loss includes all changes in equity, except those resulting from transactions with shareholders and net income. Other comprehensive loss principally includes amortization of deferred pension and postretirement costs. The components of accumulated other comprehensive loss, net of taxes, were as follows for the years ended December 31 (in millions):



	2015			2014			2013
Unrealized components of benefit plans:
Pension plans	$	(44.7	)	$	(43.9	)	$	(29.3	)
Post-retirement plans	(0.6		)	(0.5		)	(1.1		)
Non-qualified benefit plans	—			—			0.3
Accumulated other comprehensive loss	$	(45.3	)	$	(44.4	)	$	(30.1	)

The changes in accumulated other comprehensive loss for pension and postretirement plans for the years ended December 31, were as follows (in millions, net of tax):



	December 31,
	2015			2014
Beginning balance	$	(44.4	)	$	(30.1	)
Amounts reclassified from accumulated other comprehensive loss, net of tax	(0.9		)	(14.3		)
Ending balance	$	(45.3	)	$	(44.4	)

The reclassifications of other comprehensive loss components out of accumulated other comprehensive loss for the years ended December 31, were as follows (in millions):




Details about Other Comprehensive Income (Loss) Components	2015			2014			2013
Actuarial gain (loss)*	$	(7.1	)	$	(26.7	)	$	22.4
Prior service cost	(0.4		)	—			—
Amortization of defined benefit pension items reclassified to net periodic pension cost:
Net loss*	7.3			4.5			7.7
Prior service credit*	(1.3		)	(1.3		)	(1.3		)
Total before income tax	(1.5		)	(23.5		)	28.8
Income taxes	0.6			9.2			(11.7		)
Other comprehensive income (loss) net of tax	$	(0.9	)	$	(14.3	)	$	17.1


*	These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 11 for additional details).

Self-Insured Liabilities: The Company is self-insured for certain losses that include, but are not limited to, employee health, workers’ compensation, general liability, real and personal property, and real estate construction warranty and defect claims. When feasible, the Company obtains third-party insurance coverage to limit its exposure to these claims. When estimating its self-insured liabilities, the Company considers a number of factors, including historical claims experience, demographic factors, and valuations provided by independent third-parties.

Impact of Recently Issued Accounting Standards: In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , as a new Topic, ASC Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. This ASU is to be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. In July 2015, the FASB reached a decision to defer the effective date of the amended guidance. In August 2015, ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, was issued which defers the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. The Company is currently evaluating the potential impact of adopting this new accounting standard.

In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs , ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in ASU 2015-03 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently evaluating the impact this accounting standard will have on the Company’s consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory ("ASU 2015-11"). This ASU changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation when cost is determined on a first-in, first-out or average cost basis. The provisions of ASU 2015-11 are effective for fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact this accounting standard will have on the Company’s consolidated financial statements.

In August 2015, the FASB issued ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting) (“ASU 2015-15”). ASU 2015-15 indicates that the guidance in ASU 2015-03 did not address presentation or subsequent measurement of debt issuance costs related to line of credit arrangements. Given the absence of authoritative guidance within ASU 2015-03, the SEC staff has indicated that they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the costs ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit arrangement. ASU 2015-15 is effective for fiscal years, and interim periods within, beginning after December 15, 2015. The Company does not expect the adoption of ASU 2015-15 to have any effect on the Company’s financial position or results of operations.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes , which will require the presentation of deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The Company early adopted this guidance retrospectively during the fourth quarter of 2015. The impact of adopting the above guidance as of December 31, 2014 was as follows:



	Deferred tax current assets			Total assets			Deferred tax long-term liabilities			Total liabilities and equity
Previously reported	$	8.3		$	2,329.9		$	194.0		$	2,329.9
Balance Sheet Classification of Deferred Taxes	(8.3		)	(8.3		)	(8.3		)	(8.3		)
Current presentation	$	—		$	2,321.6		$	185.7		$	2,321.6


3.	RELATED PARTY TRANSACTIONS

Construction Contracts and Material Sales. The Company entered into contracts in the ordinary course of business, as a supplier, with affiliates that are members in entities in which the Company also is a member. Revenues earned from transactions with affiliates totaled approximately $23.0 million , $23.9 million , and $7.9 million for the years ended December 31, 2015 , 2014 , and 2013, respectively. Receivables from these affiliates were $2.7 million and $3.0 million at December 31, 2015 and 2014 , respectively. Amounts due to these affiliates were immaterial at December 31, 2015 and 2014 .

Real Estate Leasing and Development. The Company entered into contracts in the ordinary course of business, as a lessor of property, with unconsolidated affiliates in which the Company has an interest, as well as with certain entities that are owned by a director of the Company. Revenues earned from these transactions were immaterial for each of the years ended December 31, 2015, 2014 and 2013. Receivables from these affiliates were immaterial as of December 31, 2015 and 2014.

During the year ended December 31, 2015, the Company recorded developer fee revenues of approximately $2.9 million related to management and administrative services provided to certain unconsolidated investment in affiliates. Developer fee revenues recorded for each of the years ended December 31, 2014 and 2013 were immaterial.

Consulting Agreement. In January 2016, the Company entered into a one -year consulting agreement with a former executive of its Grace subsidiary, who retired in December 2015. The term of the agreement is for the period January 1, 2016 through December 31, 2016, pursuant to which the Company will pay $200,000 in exchange for services related to the operation of Grace, including assisting in leadership transition, operating performance and government and community affairs.


4.	DISCONTINUED OPERATIONS

During 2013, the sales of four industrial properties, three retail properties and two office buildings were classified as discontinued operations. Additionally, Maui Mall, a retail property on Maui that was sold in January 2014, was classified as discontinued operations for each of the years ended December 31, 2014 and 2013.

The revenue, operating profit, income tax expense and after-tax effects of these transactions for 2015, 2014 and 2013 were as follows (in millions):



	2015		2014		2013
Proceeds from the sale of income-producing properties	$	—	$	70.1	$	337.6
Real Estate Leasing revenue	$	—	$	0.3	$	31.6

Gain on sale of income-producing properties, net	$	—	$	55.9	$	22.1
Real Estate Leasing operating profit	—		0.3		14.6
Total operating profit before taxes	—		56.2		36.7
Income tax expense	—		21.9		14.4
Income from discontinued operations	$	—	$	34.3	$	22.3
Basic Earnings Per Share	$	—	$	0.70	$	0.50
Diluted Earnings Per Share	$	—	$	0.70	$	0.50


5.	INVESTMENTS IN AFFILIATES

At December 31, 2015 and 2014 , investments consisted principally of equity in limited liability companies. The Company has the ability to exercise significant influence over the operating and financial policies of these investments and, accordingly, accounts for its investments using the equity method of accounting. The amount of the Company’s investment at December 31, 2015 that represents undistributed earnings of investments in affiliates was approximately $12.3 million . Dividends and distributions from unconsolidated affiliates totaled $72.2 million in 2015 , $17.9 million in 2014 and $6.6 million for 2013 . The Company’s investments in affiliates totaled $416.4 million and $418.6 million as of December 31, 2015 and 2014 , respectively.

Operating results include the Company’s proportionate share of net income from its equity method investments. A summary of combined financial information for the Company’s equity method investments at December 31 is as follows (in millions):



	2015		2014
Current assets	$	107.1	$	52.7
Non-current assets	854.0		935.6
Total assets	$	961.1	$	988.3

Current liabilities	$	64.4	$	53.0
Non-current liabilities	200.7		245.9
Total liabilities	$	265.1	$	298.9



	Year Ended December 31,
	2015		2014		2013
Operating revenue	$	471.7	$	71.0	$	37.8
Operating costs and expenses	411.6		65.9		31.1
Operating income	$	60.1	$	5.1	$	6.7
Income from continuing operations*	$	57.2	$	5.0	$	6.8
Net income	$	56.1	$	5.0	$	6.8

* Includes earnings from equity method investments held by the investee.

Significant joint ventures at December 31, 2015 , included the following:

In 2002, the Company entered into a joint venture with DMB Communities II, an affiliate of DMB Associates, Inc., an Arizona-based developer of master-planned communities (“DMB”), for the development of Kukui’ula, a master planned resort residential community located in Poipu, Kauai, planned for up to 1,500 high-end residential units. The carrying value of the Company's investment in Kukui'ula, which includes capital contributed by A&B to the joint venture, the value of land initially contributed, net of joint venture earnings and losses, was $275.5 million as of December 31, 2015 . The total capital contributed to-date to the joint venture by the Company was approximately 59 percent as of December 31, 2015 . Due to the joint venture’s obligation to complete improvements and amenities, the joint venture uses the percentage-of-completion method for revenue recognition. The Company does not have a controlling financial interest in the joint venture, but exercises significant influence over the operating and financial policies of the venture, and therefore, accounts for its investment using the equity method. Due to the complex nature of cash distributions to the members, net income of the joint venture is allocated to the members, including the Company, using the Hypothetical Liquidation at Book Value (“HLBV”) method. Under the HLBV method, joint venture income or loss is allocated to the members based on the period change in each member’s claim on the book value of net assets of the venture, excluding capital contributions and distributions made during the period.

In 2010, A&B acquired fully-entitled land near the Ala Moana Center in Honolulu for the development of Waihonua ("Waihonua"), a 340 -saleable unit residential high-rise condominium. In 2012, the Company formed a joint venture and contributed the land, pre-development assets and cash. The Company also secured capital partners that provided the remainder of the $65.0 million in total equity required for the project and the joint venture secured construction financing. In connection with the project, the Company provided a limited guaranty to the construction lender in the amount of the lesser of $20 million or the outstanding loan balance. The Company's exposure to loss was limited to its equity investment and the outstanding balance on the loan, up to $20 million . The Company does not have a controlling financial interest in the joint venture, but exercises significant influence over the operating and financial policies of the venture, and therefore, accounted for its investment under the equity method. Construction of Waihonua was completed in November 2014, and 12 units closed in December 2014. The remaining 328 units closed in January 2015 and the construction loan was paid off, extinguishing the guarantee. The Company's investment at December 31, 2015 and 2014 was $0.0 million and $35.6 million , respectively. For the year ended December 31, 2015, the Company determined that its Waihonua joint venture met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X and, therefore, pursuant to Rule 3-09 of Regulation S-X, has attached separate financial statements to this Annual Report on Form 10-K as Exhibit 99.1.

In July 2014, the Company invested $23.8 million in KRS II, an entity that owns and operates a 12-megawatt solar farm in Koloa, Kauai. The Company does not have a controlling financial interest in KRS II, but exercises significant influence over the operating and financial policies of the venture, and therefore, accounts for its investment under the equity method. The investment return from the Company's investment in KRS II is principally composed of federal and state tax benefits. As tax benefits are realized over the life of the investment, the Company recognizes a non-cash reduction to the carrying amount of its investment in KRS II. Due to the complex nature of cash distributions, net income of the joint venture is allocated to the Company using the HLBV method. Under the HLBV method, joint venture income or loss is allocated to the members based on the period change in each member’s claim on the net assets of the venture, excluding capital contributions and distributions made during the period. For the year ended December 31, 2015 and 2014, the Company recorded a net, non-cash reduction of $2.6 million and $14.7 million , respectively, in Other income (expense) in the accompanying consolidated statements of income. The Company's investment balance at December 31, 2015 and 2014 was $4.4 million and $8.4 million . The Company expects that future reductions to its investment in KRS II will be recognized as tax benefits are realized. In connection with the KRS II investment, the Company provided a limited indemnity to Kauai Island Utility Cooperative ("KIUC") that indemnifies KIUC for payments up to $6.0 million made by KIUC under a KIUC guaranty to the lender that provided KRS II's project financing. KIUC is an equity partner and managing member of KRS II, project sponsor and customer for the output of the KRS II facility. The fair value of the Company's indemnity was not material.

In October 2014, the Company contributed land, pre-paid development assets and cash to The Collection LLC, a joint venture formed to develop a 464 -unit high-rise residential condominium project on Oahu, consisting of a 396 -unit high-rise condominium tower, 14 three-bedroom townhomes, and a 54 -unit mid-rise building. In addition to the Company's initial contribution, the Company also secured equity partners that contributed an additional $16.8 million in cash. The Company's total agreed upon contribution, which includes the land and pre-paid development assets already contributed, is $50.3 million . In connection with the project, the Company provided a limited guaranty to the construction lender for the project at the lesser of $30 million or the outstanding loan balance. The Company's exposure to loss is limited to its total equity investment and the outstanding balance on the loan, up to $30 million . The fair value of the Company's guaranty was not material. The Company's investment at December 31, 2015 and 2014 was $49.1 million and $45.9 million , respectively. The Company accounts for its investment under the equity method.

The Company also has investments in various other joint ventures that operate or develop real estate and joint ventures that engage in materials and construction-related activities and renewable energy. The Company does not have a controlling financial interest, but has the ability to exercise significant influence over the operating and financial policies of these joint ventures and, accordingly, accounts for its investments in these ventures using the equity method of accounting.

On September 24, 2013, KDC LLC ("KDC"), a wholly owned subsidiary of the Company and member of Kukui'ula Village LLC ("Village"), entered into an Amended and Restated Limited Liability Company Agreement of Kukui'ula Village ("Agreement") with DMB Kukui'ula Village LLC ("DMB"), a Delaware limited liability company, as a member, and KKV Management LLC, a Hawaii limited liability company, as the manager and a member. Village owns and operates The Shops at Kukui'ula, a commercial retail center on the south shore of Kauai. Under the Agreement, KDC assumed control of Village, and accordingly, consolidated Village's assets and liabilities at fair value. Prior to the consolidation of the assets and liabilities of Village on September 24, 2013, the carrying value of the Company's investment in Village was approximately $6.3 million . Based on the other member's forfeiture of it's interest in the joint venture for no consideration, there was an indication that the fair value of the Company's investment in Village was below its carrying value. Consequently, the Company wrote down its investment in Village in connection with the consolidation of Village in 2013.

6. UNCOMPLETED CONTRACTS

Information related to uncompleted contracts as of December 31, 2015 and 2014 is as follows (in millions):



	2015			2014
Costs incurred on uncompleted contracts	$	80.3		$	126.7
Estimated earnings	29.2			32.8
Subtotal	109.5			159.5
Less: billings to date	95.8			147.2
Total	$	13.7		$	12.3

Included in accompanying consolidated balance sheets under the following captions:
Costs and estimated earnings in excess of billings on uncompleted contracts	$	16.3		$	15.9
Estimated billings in excess of costs and estimated earnings on uncompleted contracts	(2.6		)	(3.6		)
Total	$	13.7		$	12.3

7. PROPERTY

Property on the consolidated balance sheets includes the following (in millions):



	December 31,
	2015			2014
Buildings	$	571.3		$	586.7
Land	578.5			588.5
Machinery and equipment	242.6			236.1
Asphalt plants and quarry assets	77.1			65.5
Water, power and sewer systems	145.6			142.6
Other property improvements	86.8			90.7
Vessel	11.3			7.2
Subtotal	1,713.2			1,717.3
Accumulated depreciation	(443.8		)	(415.6		)
Property - net	$	1,269.4		$	1,301.7

Depreciation expense for the years ended December 31, 2015 and 2014 was $43.8 million and $43.9 million , respectively.

8. NOTES PAYABLE AND LONG-TERM DEBT

At December 31, 2015 and 2014 , notes payable and long-term debt consisted of the following (in millions):



	2015			2014
Revolving Credit loans (2.10% for 2015 and 2.37% for 2014)	$	77.8		$	169.8
Term Loans:
3.90%, payable through 2024	75.0			75.0
6.90%, payable through 2020	75.0			80.0
3.88%, payable through 2027	50.0			—
5.55%, payable through 2026	47.0			50.0
5.53%, payable through 2024	31.5			37.5
5.56%, payable through 2026	25.0			25.0
4.35%, payable through 2026	23.4			25.0
4.15%, payable through 2024, secured by Pearl Highlands Center (a)	91.9			93.6
LIBOR plus 2.66%, payable through 2016, secured by The Shops at Kukui'ula (c)	37.0			40.5
LIBOR plus 1.5%, payable through 2021, secured by Kailua Town Center III (b)	11.0			11.2
LIBOR plus 2.63%, payable through 2016, secured by Kahala Estate Properties (d)	8.2			35.2
6.38%, payable through 2017, secured by Midstate Hayes	8.2			8.3
LIBOR plus 1.0%, payable through 2021, secured by asphalt terminal (e)	6.9			8.0
5.19%, payable through 2019	8.4			10.2
1.85%, payable through 2017	5.2			7.9
3.31%, payable through 2018	4.6			6.3
2.00%, payable through 2018	1.5			2.2
2.65%, payable through 2016	0.6			1.2
5.39%, payable through 2015, secured by Waianae Mall	—			19.1
Total debt	588.2			706.0
Less debt (premium) discount	(0.3		)	(0.4		)
Total debt (contractual)	587.9			705.6
Less current portion	(90.4		)	(74.5		)
Add debt premium (discount)	0.3			0.4
Long-term debt	$	497.8		$	631.5


(a)	On December 1, 2014, the Company refinanced and increased the amount of the loan secured by Pearl Highlands Center.


(b)	Loan has a stated interest rate of LIBOR plus 1.5% , but is swapped through maturity to a 5.95% fixed rate.


(c)	Loan has an effective interest rate of 2.83% for 2015 and 2.82% for 2014.


(d)	Loan has an effective interest rate of 2.82% for 2015 and 2.78% for 2014.


(e)	Loan has a stated interest rate of LIBOR plus 1.0% , but is swapped through maturity to a 5.98% fixed rate.

Long-term Debt Maturities: At December 31, 2015 , debt maturities during the next five years and thereafter, excluding amortization of debt discount or premium, are $90.4 million in 2016 (which includes $45.3 million in balloon payments on secured mortgage debt), $40.6 million in 2017 , $41.1 million in 2018 , $40.5 million for 2019 , $103.9 million in 2020 (which includes $66.0 million of revolving credit loans that mature in 2020), and $271.4 million thereafter.

Revolving Credit Facilities: The Company has a revolving senior credit facility that provides for an aggregate $350 million , 5 -year unsecured commitment ("A&B Senior Credit Facility"), with an uncommitted $100 million increase option. The A&B Senior Credit Facility also provides for a $100 million sub-limit for the issuance of standby and commercial letters of credit and an $80 million sub-limit for swing line loans. Amounts drawn under the facilities bear interest at a stated rate, as defined, plus a margin that is determined based on a pricing grid using the ratio of debt to total adjusted asset value, as defined. The agreement contains certain restrictive covenants, the most significant of which requires the maintenance of minimum shareholders’ equity levels, minimum EBITDA to fixed charges ratio, maximum debt to total assets ratio, minimum unencumbered income-producing asset value to unencumbered debt ratio, and limitations on priority debt.

In December 2015, the Company completed an amendment to the A&B Senior Credit Facility agreement, which extended the maturity date to December 2020, modified certain covenants (described below), and reduced the interest rates and fees charged under the credit facility.

At December 31, 2015 , $73.8 million was outstanding, $11.8 million in letters of credit had been issued against the A&B Senior Credit Facility, and $264.4 million was undrawn.

In December 2015, the Company entered into a 3 -year unsecured note purchase and private shelf agreement (the "Prudential Agreement") with Prudential Investment Management, Inc. and its affiliates (collectively, "Prudential") that enables the Company to issue notes in an aggregate amount up to $450 million , less the sum of all principal amounts then outstanding on any notes issued by the Company or any of its subsidiaries to Prudential and the amounts of any notes that are committed under the Prudential Agreement. The Prudential Agreement, as amended, expires in December 2018 and contains certain restrictive covenants that are substantially the same as the covenants contained in the A&B Senior Credit Facility, as amended. Borrowings under the uncommitted shelf facility bear interest at rates that are determined at the time of the borrowing. At December 31, 2015 , approximately $123.1 million was undrawn under the facility.

The principal covenant amendments under the Revolver Amendment and the Prudential Agreement are as follows:


•	An increase in the maximum percentage of unsecured debt to unencumbered income-producing assets value from approximately 57 percent to 60 percent .


•	A reduction in the applicable cap rate applied to certain income-producing assets included in unencumbered income producing assets value of between 25 bps to 50 bps, which increases the covenant value of these income-producing assets.


•	The addition of certain real estate development assets and real estate investments in the unencumbered income producing assets value, subject to an overall limitation of 15 percent of total unencumbered income producing assets value.


•	An increase in the maximum amount of investments in third party notes and mezzanine investments to 5 percent of total adjusted assets value.


•	The add back of certain non-recurring, one-time expenses to earnings before interest, taxes, depreciation, and amortization.

At December 31, 2015 , the Company had, at one of its subsidiaries, a $30.0 million line of credit that matures in December 2016. The line was extended and reduced from $40 million in August 2014. Approximately $4.0 million and $13.7 million was outstanding on the $30.0 million line of credit as of December 31, 2015 and 2014, respectively. The credit line is collateralized by the subsidiary's accounts receivable, inventory and equipment. The Company and the noncontrolling interest holders are guarantors, on a several basis, for their pro rata shares (based on membership interests) of borrowings under the line of credit.

The undrawn amount under all revolving credit and term facilities as of December 31, 2015 totaled $413.5 million , and includes $26.0 million of capacity that may only be used for asphalt purchases.

Real Estate Secured Term Debt: On December 18, 2013, the Company entered into a short-term facility ("Bridge Loan"), by and among A&B LLC, Bank of America, N.A., and other lenders party thereto, to finance a portion of the Company's $372.7 million purchase of the Kailua Portfolio. On December 20, 2013, the Company consummated the acquisition and borrowed $60.0 million under the Bridge Loan, which bore interest at LIBOR plus 3 percent . The Bridge Loan was paid off on January 6, 2014 with reverse 1031 proceeds from the disposition of Maui Mall. Additionally, in connection with the acquisition of the Kailua Portfolio, the Company assumed a $12.0 million mortgage note, which matures in September 2021, and an interest rate swap that effectively converts the floating rate debt to a fixed rate of 5.95 percent .

On December 16, 2013, Estates of Kahala LLC, a wholly owned subsidiary of the Company, entered into a non-recourse loan agreement ("Loan Agreement") and promissory note ("Note") with First Hawaiian Bank ("Lender"). The $42.0 million loan is secured by 15 residential lots on Kahala Avenue on Oahu, three parcels in Windward Oahu, and an agricultural parcel on Maui. The Loan Agreement and Note require principal payments equal to 70 percent of the net sales proceeds from the sale of any of the secured properties. To the extent cumulative principal payments were less than $18.0 million after 18 months , the Company was required to make an additional principal payment, such that the remaining principal balance of the loan is less than or equal to $24.0 million . At June 16, 2015 the cumulative principal payments were greater than the requirement and no payment was made. The loan bears interest at LIBOR plus 2.625 percent , matures on December 16, 2016 , is prepayable without penalty, and provides for a 1 -year extension option, provided certain conditions are met. The loan also requires that the Company maintain a loan to value ratio below 65 percent for the properties secured. At December 31, 2015 , the balance of the loan was $8.2 million .

On September 24, 2013, KDC LLC ("KDC"), a wholly owned subsidiary of A&B and a 50 percent member of Kukui'ula Village LLC ("Village"), entered into an Amended and Restated Limited Liability Company Agreement of Kukui'ula Village ("Agreement") with DMB Kukui'ula Village LLC ("DMB)", a Delaware limited liability company, as a member, and KKV Management LLC, a Hawaii limited liability company, as the manager and a member. Village owns and operates The Shops at Kukui'ula, a commercial retail center on the south shore of Kauai. Under the Agreement KDC assumed control of Village. Accordingly, A&B consolidated Village's assets and liabilities at fair value, which included secured loans totaling approximately $51.2 million . The first loan, totaling $41.8 million ("Real Estate Loan"), was secured by The Shops at Kukui'ula and 45 acres owned by Kukui'ula Development Company (Hawaii), LLC ("Kukui'ula"), in which KDC is a member. The second loan, totaling $9.4 million , ("Term Loan") was secured by a letter of credit. The Real Estate Loan and Term Loan were scheduled to mature on September 28, 2013 . On September 25, 2013, Village entered into an agreement to extend the maturities of the loans to November 5, 2013 , in order to finalize refinancing negotiations with the lender. In connection with the loan extensions, Village made a $5 million principal payment on the Real Estate Loan. On November 5, 2013, the Company refinanced the remaining $44.0 million of secured loans related to The Shops at Kukui'ula with new 3 -year term loans. The first loan, totaling $34.6 million , is secured by The Shops at Kukui'ula, 45 acres owned by Kukui'ula, in which KDC is a member, and an A&B guaranty. The loan bears interest at LIBOR plus 2.85 percent and requires principal amortization of $0.9 million per quarter . The second loan, totaling $9.4 million , is interest only, secured by a letter of credit, and bears interest at LIBOR plus 2.0 percent . The first loan contains guarantor covenants that substantially mirror the covenants in A&B's $350 million revolving credit agreement. At December 31, 2015 , the balances of the Real Estate Loan and Term Loan were $27.6 million and $9.4 million , respectively.

On September 17, 2013, the Company closed the purchase of Pearl Highlands Center, a 415,400 -square-foot, fee simple retail center in Pearl City, Oahu (the “Property”), for $82.2 million in cash and the assumption of a $59.3 million mortgage loan (the “Pearl Loan”), pursuant to the terms of the Real Estate Purchase and Sale Agreement, dated April 9, 2013, between PHSC Holdings, LLC and A&B Properties. On December 1, 2014, the Company refinanced and increased the amount of the loan secured by the Property. The new loan ("Refinanced Loan") was increased to $92.0 million and bears interest at 4.15 percent. The Refinanced Loan matures in December 2024, and requires monthly principal and interest payments of approximately $0.4 million . A final principal payment of approximately $73.0 million is due on December 8, 2024. The Refinanced Loan is secured by the Property under a Mortgage and Security Agreement between the Company and The Northwestern Mutual Life Insurance Company.

On January 22, 2013, A&B completed the purchase of Waianae Mall, a 170,300 -square-foot, 10 -building retail center in Leeward Oahu, for $10.1 million in cash and the assumption of a $19.7 million loan (the “Loan”). The Promissory Note for the Loan was secured by a Mortgage, Assignment of Leases and Rents and Security Agreement, bearing interest at 5.39 percent , and requiring monthly payments of principal and interest totaling $0.1 million . A final balloon payment of $18.7 million was paid on June 5, 2015 .

The approximate book values of assets used in the Real Estate segments pledged as collateral under the foregoing credit agreements at December 31, 2015 was $237.5 million . The approximate book values of assets used in the Materials and Construction segment pledged as collateral under the foregoing credit agreements at December 31, 2015 was $29.5 million . There were no assets used in the Agribusiness segment that were pledged as collateral.

9. LEASES—THE COMPANY AS LESSEE

Principal non-cancelable operating leases include land, office space, harbors and equipment leased for periods that expire through 2063 . Management expects that in the normal course of business, most operating leases will be renewed or replaced by other similar leases. Rental expense under operating leases totaled $7.2 million , $6.7 million and $4.5 million for 2015 , 2014 and 2013 , respectively. Rental expense for operating leases that provide for future escalations are accounted for on a straight-line basis.

Future minimum payments under non-cancelable operating leases were as follows (in millions):



Years Ended December 31,	Minimum Lease Payments
2016	$	5.7
2017	5.6
2018	5.0
2019	4.5
2020	4.5
Thereafter	25.2
Total	$	50.5

10. LEASES—THE COMPANY AS LESSOR

The Company leases to third-parties land and buildings under operating leases. The historical cost of, and accumulated depreciation on, leased property at December 31, 2015 and 2014 were as follows (in millions):



	2015			2014
Leased property - real estate	$	1,126.8		$	1,149.9
Less accumulated depreciation	(125.9		)	(118.5		)
Property under operating leases - net	$	1,000.9		$	1,031.4

Total rental income, excluding tenant reimbursements (which totaled $30.2 million , $28.8 million and $24.1 million for the years ended December 31, 2015 , 2014 and 2013 , respectively), under these operating leases was as follows (in millions):



Years Ended December 31,	2015		2014		2013
Minimum rentals	$	96.2	$	89.8	$	80.5
Contingent rentals (based on sales volume)	4.8		4.7		3.0
Total	$	101.0	$	94.5	$	83.5

Future minimum rentals on non-cancelable operating leases at December 31, 2015 were as follows (in millions):



	Operating Leases
2016	$	85.0
2017	73.7
2018	61.4
2019	53.2
2020	41.3
Thereafter	282.8
Total	$	597.4

11. EMPLOYEE BENEFIT PLANS

The Company has funded single-employer defined benefit pension plans that cover substantially all non-bargaining unit employees and certain bargaining unit employees. In addition, the Company has plans that provide certain retiree health care and life insurance benefits to substantially all salaried and to certain hourly employees. Employees are generally eligible for such benefits upon retirement and completion of a specified number of years of credited service. The Company does not pre-fund these health care and life insurance benefits and has the right to modify or terminate certain of these plans in the future. Certain groups of retirees pay a portion of the benefit costs.

Plan Administration, Investments and Asset Allocations: The Company has an Investment Committee that is responsible for the investment and management of the pension plan assets. In 2013, the Company changed its pension plan investment and management approach to a liability-driven investment strategy, which seeks to increase the correlation of the pension plan assets and liabilities to reduce the volatility of the plan's funded status, and over time, improve the funded status of the plan. The adoption of this strategy has resulted in an asset allocation that is weighted more toward fixed income investments, which reduces investment volatility, but also reduces investment returns over time. In connection with the adoption of a liability-driven investment strategy, the Company appointed an investment adviser that directs investments and selects investment options, based on guidelines established by the Investment Committee.

The Company’s investment strategy for its pension plan assets is to achieve a diversified mix of investments that balances long-term growth with an acceptable level of risk. The mix of assets includes a fixed income allocation that increases as the plan's funded status improves. The Company’s weighted-average asset allocations at December 31, 2015 and 2014 , and 2015 year-end target allocation, by asset category, were as follows:



	Target		2015		2014
Domestic equity securities	34	%	34	%	32	%
International equity securities	18	%	18	%	15	%
Debt securities	36	%	35	%	44	%
Alternatives and other	12	%	10	%	6	%
Cash	—	%	3	%	3	%
Total	100	%	100	%	100	%

The Company’s investments in equity securities primarily include domestic large-cap and mid-cap companies, but also include an allocation to small-cap and international equity securities. Equity investments do not include any direct holdings of the Company’s stock but may include such holdings to the extent that the stock is included as part of certain mutual fund or ETF holdings. Debt securities include investment-grade corporate bonds from diversified industries and U.S. Treasuries. Other types of investments include funds that invest in commercial real estate assets, and to a lesser extent, private equity investments in technology companies.

The expected return on plan assets assumption ( 7.10 percent for 2015 ) is principally based on the long-term outlook for various asset class returns, asset mix, the historical performance of the plan assets under the liability-driven investment strategy, and a comparison of the estimated long-term return calculated to the distribution of assumptions adopted by other plans with similar asset mixes. For the years ended December 31, 2015 and 2014, the return on plan assets was (2.79) and 8.12 percent, respectively. Over the long-term, the actual returns have generally exceeded the benchmark returns used by the Company to evaluate performance of its fund managers.

The Company’s pension plan assets are held in a master trust and stated at estimated fair value, which is based on the fair values of the underlying investments. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

FASB ASC Topic 820, Fair Value Measurements and Disclosures , as amended, establishes a fair value hierarchy, which requires the pension plans to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy places the highest priority on unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurements) and assigns the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs within the hierarchy are defined as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the pension plans’ own assumptions about the assumptions that market participants would use in pricing an asset or liability.

If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

Equity Securities: Domestic and international common stocks are valued by obtaining quoted prices on recognized and highly liquid exchanges.

Exchange-Traded Funds (ETF) : ETFs are valued by obtaining quoted prices on recognized and highly liquid exchanges.

Fixed Income Securities: Corporate bonds and U.S. government treasury and agency securities are valued based upon the closing price reported in the market in which the security is traded. U.S. government agency, corporate asset-backed securities, and mortgage securities may utilize models, such as a matrix pricing model, that incorporates other observable inputs such as cash flow, security structure, or market information, when broker/dealer quotes are not available.

Private Equity Fund and Insurance Contract Interests: The fair value of underlying investments in private equity assets is determined based on one or more valuation techniques, such as the market or income valuation approach, utilizing information provided by the general partner and taking into consideration the purchase price of the underlying securities, developments concerning the investee company subsequent to the acquisition of the investment, financial data and projections of the investee company provided to the general partner, illiquidity and non-transferability, and such other factors as the general partner deems relevant. Insurance contract interests consist of investments in group annuity contracts, which are valued based on the present value of expected future payments.

The fair values of the Company’s pension plan assets at December 31, 2015 and 2014 , by asset category, are as follows (in millions):



	Fair Value Measurements as of
	December 31, 2015
	Total		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category
Cash	$	3.8	$	3.8	$	—	$	—
Equity securities:
Domestic	16.7		16.7		—		—
Domestic exchange-traded funds	33.1		33.1		—		—
International	18.6		18.6		—		—
International and emerging markets exchange-traded funds	7.2		7.2		—		—
Fixed income securities:
U.S. Treasury obligations	17.1		17.1		—		—
Domestic corporate bonds and notes	31.6		—		31.6		—
Foreign corporate bonds	3.1		—		3.1		—
Other types of investments:
Limited partnership interest in private equity fund	0.2		—		—		0.2
Exchange-traded global real estate securities	11.2		11.2
Insurance contracts	0.2		—		—		0.2
Exchange-traded commodity fund	2.7		2.7		—		—
Other receivables	0.7		0.7		—		—
Total	$	146.2	$	111.1	$	34.7	$	0.4



	Fair Value Measurements as of
	December 31, 2014
	Total		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category
Cash	$	3.5	$	3.5	$	—	$	—
Equity securities:
Domestic	18.2		18.2		—		—
Domestic exchange-traded funds	33.0		33.0
International	9.8		9.7		0.1		—
International and emerging markets exchange-traded funds	14.9		14.9
Fixed income securities:
U.S. Treasury obligations	24.7		24.7		—		—
Domestic corporate bonds and notes	40.9		—		40.9		—
Foreign corporate bonds	5.4		—		5.4		—
Other types of investments:
Limited partnership interest in private equity fund	0.3		—		—		0.3
Exchange-traded global real estate fund	5.1		5.1		—		—
Insurance contracts	1.4		—		—		1.4
Exchange-traded commodity fund	2.8		2.8		—		—
Other receivables	0.8		0.8		—		—
Total	$	160.8	$	112.7	$	46.4	$	1.7

The table below presents a reconciliation of all pension plan investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2015 and 2014 (in millions):



	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Real Estate			Private Equity			Insurance			Limited Partnership			Total
Beginning balance, January 1, 2014	$	7.5		$	0.3		$	1.0		$	6.4		$	15.2
Actual return on plan assets:
Assets held at the reporting date	—			—			0.4			—			0.4
Assets sold during the period	—			—			—			—			—
Purchases, sales and settlements	(7.5		)	—			—			(6.4		)	(13.9		)
Ending balance, December 31, 2014	—			0.3			1.4			—			1.7
Actual return on plan assets:
Assets held at the reporting date	—			(0.1		)	0.1			—			—
Assets sold during the period	—			—			(1.3		)	—			(1.3		)
Ending balance, December 31, 2015	$	—		$	0.2		$	0.2		$	—		$	0.4

Contributions are determined annually for each plan by the Company’s pension Administrative Committee, based upon the actuarially determined minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, the Pension Protection Act of 2006 (the “Act”), and the maximum deductible contribution allowed for tax purposes. In 2015 , 2014 and 2013 , the Company contributed approximately $2.6 million , $5.7 million , and $0.1 million , respectively, to its defined benefit pension plans. The Company’s funding policy is to contribute cash to its pension plans so that it meets at least the minimum contribution requirements.

For the plans covering employees who are members of collective bargaining units, the benefit formulas are determined according to the collective bargaining agreements, either using career average pay as the base or a flat dollar amount per year of service.

In 2007, the Company changed the traditional defined benefit pension plan formula for new non-bargaining unit employees hired after January 1, 2008 and, replaced it with a cash balance defined benefit pension plan formula. Subsequently, effective January 1, 2012, the Company changed the benefits under its traditional defined benefit plans for non-bargaining unit employees hired before January 1, 2008 and, replaced the benefit with the same cash balance defined benefit pension plan formula provided to those employees hired after January 1, 2008. Retirement benefits under the cash balance pension plan formula are based on a fixed percentage of employee eligible compensation, plus interest. The plan interest credit rate will vary from year-to-year based on the 10-year U.S. Treasury rate .

Benefit Plan Assets and Obligations: The measurement date for the Company’s benefit plan disclosures is December 31 of each year. The status of the funded defined benefit pension plan and the unfunded accumulated post-retirement benefit plans at December 31, 2015 and 2014 are shown below (in millions):



	Pension Benefits						Other Post-retirement Benefits
	2015			2014			2015			2014
Change in Benefit Obligation
Benefit obligation at beginning of year	$	204.4		$	175.4		$	12.0		$	12.9
Service cost	3.1			2.6			0.1			0.1
Interest cost	8.0			8.3			0.5			0.6
Plan participants’ contributions	—			—			0.9			0.8
Actuarial (gain) loss	(8.9		)	29.7			0.4			(0.7		)
Benefits paid	(12.0		)	(11.6		)	(1.8		)	(1.7		)
Conversion of guaranteed annuity contract	(0.4		)	—			—			—
Curtailment	—			—			0.1			—
Amendments	0.4			—			—			—
Benefit obligation at end of year	$	194.6		$	204.4		$	12.2		$	12.0
Change in Plan Assets
Fair value of plan assets at beginning of year	160.8			153.4			—			—
Actual return on plan assets	(4.8		)	13.3			—			—
Employer contributions	2.6			5.7			0.8			0.9
Participant contributions	—			—			0.9			0.8
Conversion of guaranteed annuity contract	(0.4		)	—			—			—
Benefits paid	(12.0		)	(11.6		)	(1.8		)	(1.7		)
Other	—			—			0.1			—
Fair value of plan assets at end of year	$	146.2		$	160.8		$	—		$	—

Funded Status and Recognized Liability	$	(48.4	)	$	(43.6	)	$	(12.2	)	$	(12.0	)

The accumulated benefit obligation for the Company’s qualified pension plans was $193.7 million and $203.2 million as of December 31, 2015 and 2014 , respectively. Amounts recognized on the consolidated balance sheets and in accumulated other comprehensive loss at December 31, 2015 and 2014 were as follows (in millions):



	Pension Benefits						Other Post-retirement Benefits
	2015			2014			2015			2014
Current liabilities	—			—			(0.9		)	(0.8		)
Non-current liabilities	(48.4		)	(43.6		)	(11.3		)	(11.2		)
Total	$	(48.4	)	$	(43.6	)	$	(12.2	)	$	(12.0	)

Net loss (net of taxes)	$	47.3		$	47.3		$	0.6		$	0.5
Unrecognized prior service credit (net of taxes)	(2.6		)	(3.4		)	—			—
Total	$	44.7		$	43.9		$	0.6		$	0.5

The information for qualified pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2015 and 2014 is shown below (in millions):



	2015		2014
Projected benefit obligation	$	194.6	$	204.4
Accumulated benefit obligation	$	193.7	$	203.2
Fair value of plan assets	$	146.2	$	160.8

The estimated prior service credit for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2016 is $0.7 million . The estimated net loss that will be recognized in net periodic pension cost for the defined benefit pension plans in 2016 is $7.0 million . The estimated net loss for the other defined benefit post-retirement plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost in 2016 is $0.2 million . The estimated prior service cost for the other defined benefit post-retirement plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost in 2016 is negligible.

Unrecognized gains and losses of the post-retirement benefit plans are amortized over five years . Although current health costs are expected to increase, the Company attempts to mitigate these increases by maintaining caps on certain of its benefit plans, using lower cost health care plan options where possible, requiring that certain groups of employees pay a portion of their benefit costs, self-insuring for certain insurance plans, encouraging wellness programs for employees, and implementing measures to mitigate future benefit cost increases.

Components of the net periodic benefit cost and other amounts recognized in other comprehensive loss for the defined benefit pension plans and the post-retirement health care and life insurance benefit plans during 2015 , 2014 , and 2013 , are shown below (in millions):



	Pension Benefits									Other Post-retirement Benefits
	2015			2014			2013			2015			2014			2013
Components of Net Periodic Benefit Cost
Service cost	$	3.1		$	2.6		$	2.6		$	0.1		$	0.1		$	0.1
Interest cost	8.0			8.3			7.6			0.5			0.6			0.4
Expected return on plan assets	(11.1		)	(10.7		)	(10.9		)	—			—			—
Amortization of net loss	6.9			4.0			7.7			0.1			0.3			(0.2		)
Amortization of prior service cost	(0.8		)	(0.8		)	(0.8		)	—			—			—
Curtailment (gain)/loss	—			—			—			0.1			—			(0.5		)
Net periodic benefit cost	6.1			3.4			6.2			0.8			1.0			(0.2		)

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss)
Net loss (gain)	$	7.0		$	27.1		$	(24.7	)	$	0.4		$	(0.6	)	$	3.0
Amortization of unrecognized gain (loss)	(6.9		)	(4.0		)	(7.7		)	(0.1		)	(0.3		)	0.2
Amortization of prior service credit	0.8			0.8			0.8			—			—			—
Prior service cost	0.4			—			—			—			—			—
Total recognized in other comprehensive income	1.3			23.9			(31.6		)	0.3			(0.9		)	3.2
Total recognized in net periodic benefit cost and other comprehensive income	$	7.4		$	27.3		$	(25.4	)	$	1.1		$	0.1		$	3.0

The weighted average assumptions used to determine benefit information during 2015 , 2014 and 2013 were as follows:



	Pension Benefits						Other Post-retirement Benefits
	2015		2014		2013		2015		2014		2013
Weighted Average Assumptions:
Discount rate	4.50	%	4.00	%	4.90	%	4.50	%	4.10	%	4.90	%
Expected return on plan assets	7.10	%	7.10	%	8.00	%	—	%	—	%	—	%
Rate of compensation increase	0.5%-3%		0.5%-3%		3.00	%	0.5%-3%		3.00	%	3.00	%
Initial health care cost trend rate							7.00	%	7.30	%	7.50	%
Ultimate rate							4.50	%	4.50	%	4.50	%
Year ultimate rate is reached							2037		2028		2028

If the assumed health care cost trend rate were increased or decreased by one percentage point, the accumulated post-retirement benefit obligation, as of December 31, 2015 , 2014 and 2013 and the net periodic post-retirement benefit cost for 2015 , 2014 and 2013 , would have increased or decreased as follows (in millions):



	Other Post-retirement Benefits
	One Percentage Point
	Increase						Decrease
	2015		2014		2013		2015			2014			2013
Effect on total of service and interest cost components	$	0.1	$	0.1	$	—	$	—		$	(0.1	)	$	—
Effect on post-retirement benefit obligation	$	1.1	$	1.1	$	1.2	$	(0.9	)	$	(0.9	)	$	(1.0	)

Non-qualified Benefit Plans: The Company has non-qualified supplemental pension plans covering certain employees and retirees, which provide for incremental pension payments from the Company’s general funds so that total pension benefits would be substantially equal to amounts that would have been payable from the Company’s qualified pension plans if it were not for limitations imposed by income tax regulations. The obligations relating to these plans totaled $7.1 million at December 31, 2015 . A 3.9 percent discount rate was used to determine the 2015 obligation. The expense associated with the non-qualified plans was $0.1 million in 2015 , $0.1 million in 2014 , and $0.1 million in 2013 . As of December 31, 2015 , the amount recognized in accumulated other comprehensive income for unrecognized loss, net of tax, was approximately $1.6 million , and the amount recognized as unrecognized prior service credit, net of tax, was ($1.6) million . The estimated net loss and prior service (credit), net of tax, that will be recognized in net periodic pension cost in 2015 is $0.2 million .

Estimated Benefit Payments: The estimated future benefit payments for the next ten years are as follows (in millions):



	Pension		Non-qualified		Post-retirement
Year	Benefits		Plan Benefits		Benefits
2016	$	11.5	$	4.2	$	1.0
2017	$	11.7	$	0.1	$	1.0
2018	$	11.9	$	1.0	$	1.0
2019	$	12.1	$	0.1	$	1.0
2020	$	12.4	$	—	$	0.9
2021-2025	$	64.0	$	2.6	$	3.9

Current liabilities of approximately $5.1 million , related to non-qualified plan and post-retirement benefits, are classified as accrued and other liabilities in the consolidated balance sheet as of December 31, 2015 .

Multiemployer Plans: Grace and certain subsidiaries contribute to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:


a.	Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.


b.	If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.


c.	If the Company chooses to stop participating in some of its multiemployer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company's participation in these plans for the year ended December 31, 2015 , is outlined in the table below. The "EIN Pension Plan Number" column provides the Employee Identification Number (EIN) and the 3-digit plan number, if applicable. The most recent Pension Protection Act (PPA) zone status available in 2015 is for the plan's year-end as of December 31, 2014 , for the Pension Trust Fund for Operating Engineers Pension Plan and Laborer's National (Industrial) Pension Fund. The zone status available for 2015 for the Hawaii Laborers Trust Funds is for the plan year-end as of February 28, 2015 . GP Roadway Solutions, Inc. and GP/RM Prestress, LLC have separate contracts and different expiration dates with the Hawaii Laborers Trust Fund. The zone status is based on information that the Company received from the plan and is certified by the plan's actuary. Among other factors, plans that are less than 65 percent funded are "red zone" plans in need of reorganization; plans between 65 percent and 80 percent funded or that have an accumulated funding deficiency or are expected to have a deficiency in any of the next six years are "yellow zone" plans; plans that meet both of the "yellow zone" criteria are "orange zone" plans; and if the plan is funded more than 80 percent, it is a "green zone" plan. The "FIP/RP Status Pending/Implemented" column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. The last column lists the expiration dates of the collective-bargaining agreements to which the plans are subject.

There were no plans where the Company contributed more than 5 percent of the total contributions.

Pension Protection Act Zone Status

FIP/RP Status

Contribution by Entity

Surcharge Imposed

Expiration Date

Current Plan Year End

EIN Plan No.

2015 and 2014

Pending/Implemented

Jan. 1 - Dec. 31, 2015

Jan. 1 - Dec. 31, 2014

Fund

Operating Engineers

94-6090764; 001

Red

Yes

4.6

4.3

9/2/19

12/31/15

Laborers National

52-6074345; 001

Red

Yes

0.1

8/31/18

12/31/15

Hawaii Laborers

99-6025107; 001

Green

0.8

0.5

8/31/19

2/28/15

Hawaii Laborers

99-6025107; 001

Green

0.2

0.1

9/30/19

2/28/15

5.7

5.0

Defined Contribution Plans : The Company sponsors defined contribution plans that qualify under Section 401(k) of the Internal Revenue Code and provides matching contributions of up to 3 percent of eligible employee compensation. The Company’s matching contributions expensed under these plans totaled $0.7 million in each of the years ended December 31, 2015 and 2014 . The Company also maintains profit sharing plans, and if a minimum threshold of Company performance is achieved, provides contributions of 1 to 5 percent , depending upon Company performance above the minimum threshold. In 2015 , 2014 and 2013, the profit sharing contribution expense was zero , $0.6 million and $0.9 million , respectively.

Grace 401(k) Plans : The Company allows for discretionary non-elective employer contributions up to the sum of 10 percent of each eligible employee's compensation for the 12 months in the plan year, subject to certain limitations. Management incentives and/or profit sharing bonuses can be deferred to the employee's 401(k) account, but will be subject to the IRS' annual limit on employee elective deferrals. For the year ended December 31, 2015 , Grace recognized discretionary employer contributions and profit sharing expense of approximately $2.0 million .

12. INCOME TAXES

The income tax expense (benefit) on income from continuing operations for each of the three years in the period ended December 31, 2015 consisted of the following (in millions):



	2015			2014			2013
Current:
Federal	$	0.8		$	11.2		$	17.1
State	(1.2		)	2.8			2.1
Current	(0.4		)	14.0			19.2
Deferred:
Federal	14.6			(7.8		)	(5.7		)
State	2.3			(7.6		)	(2.4		)
Deferred	16.9			(15.4		)	(8.1		)
Income tax expense (benefit)	$	16.5		$	(1.4	)	$	11.1

Income tax expense (benefit) for 2015 , 2014 and 2013 differs from amounts computed by applying the statutory federal rate to income from continuing operations before income taxes for the following reasons (in millions):



	2015			2014			2013
Computed federal income tax expense	$	16.6		$	10.1		$	8.3
State income taxes	0.7			(4.1		)	1.0
Non-deductible transaction costs	—			—			1.6
Charitable contribution	—			—			(0.2		)
Federal solar tax credits	—			(11.3		)	—
Other—net	(0.8		)	3.9			0.4
Income tax expense (benefit)	$	16.5		$	(1.4	)	$	11.1

The effective income tax rate for the year ended December 31, 2015 was lower than the statutory rate due primarily to various state tax credits.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 of each year are as follows (in millions):



	2015		2014
Deferred tax assets:
Employee benefits	$	37.1	$	30.7
Capitalized costs	22.4		21.9
Joint ventures and other investments	4.3		19.0
Impairment and amortization	7.8		6.7
Insurance and other reserves	5.9		4.2
Solar investment benefits*	9.0		4.9
Other	5.7		9.8
Total deferred tax assets	$	92.2	$	97.2

Deferred tax liabilities:
Property (including tax-deferred gains on real estate transactions)	$	279.3	$	271.8
Straight-line rental income and advanced rent	9.0		8.4
Other	6.0		2.7
Total deferred tax liabilities	294.3		282.9

Net deferred tax liability	$	202.1	$	185.7

* Certain investment tax credits do not expire under state law and may be carried forward indefinitely.

The Company’s income taxes payable has been reduced by the tax benefits from share-based compensation. The Company receives an income tax benefit for exercised stock options calculated as the difference between the fair market value of the stock issued at the time of exercise and the option exercise price, tax-effected. The Company also receives an income tax benefit for restricted stock units when they vest, measured as the fair market value of the stock issued at the time of vesting, tax effected. The net tax benefits from share-based transactions were $1.7 million and $1.3 million for 2015 and 2014 , respectively, and the portion of the tax benefit related to the excess of the amount reported as the tax deduction over expense was reflected as an increase to equity in the accompanying consolidated statements of equity.

Subsequent to the separation from Matson, Inc. (formerly "Alexander & Baldwin Holding, Inc.") on June 30, 2012, the Company began reporting as a separate taxpayer. Upon separation, the Company’s unrecognized tax benefits were reflected on Matson Inc.’s (“Matson”) financial statements because Matson is considered the successor parent to the former Alexander & Baldwin, Inc. affiliated tax group. In connection with the separation, the Company entered into a Tax Sharing Agreement with Matson. As of December 31, 2015 , the Company's liability for the indemnity to Matson in the event the Company’s pre-separation unrecognized tax benefits are not realized was $0.1 million . As of December 31, 2015 , the Company has not identified any material unrecognized tax positions.

In July 2014, the Company invested $23.8 million in KRS II, an entity that owns and operates a 12 -megawatt solar farm in Koloa, Kauai. The Company accounts for its investment in KRS II under the equity method. The investment return from the Company's investment in KRS II is principally composed of federal and state tax benefits, including tax credits. These tax credits are accounted for using the flow-through method, which reduces the provision for income taxes in the year the tax credits first become available. The total KRS II net tax benefits that the Company recognized for book purposes in 2014 was approximately $13.7 million . As tax benefits are realized over the life of the investment, the Company recognizes a non-cash reduction to the carrying amount of its investment in KRS II. For the year ended December 31, 2015 and 2014, the Company recorded a net, non-cash reduction of $2.6 million and $14.7 million (net of earnings from the investment), respectively, in Other income (expense) in the accompanying consolidated statements of income. The Company expects that future reductions to its investment in KRS II will be recognized as tax benefits are realized.

The Company is subject to taxation by the United States and various state and local jurisdictions. As of December 31, 2015 , the Company’s tax years 2012, 2013 and 2014 are open to examination by the tax authorities. In addition, tax year 2012, for which the Company was included in the consolidated tax group with Matson, is open to examination by the tax authorities in the Company’s material jurisdictions. In addition, the 2011 tax year is also open to examination by California. The 2012 tax return for the Company on a standalone basis and the 2012 tax return for which the Company was included in the consolidated tax group with Matson is currently under examination by the Internal Revenue Service.

13. SHARE-BASED AWARDS

2012 Incentive Compensation Plan (“2012 Plan”): The 2012 Incentive Compensation Plan allows for the granting of stock options, restricted stock units and common stock. Under the 2012 Plan, 4.3 million shares of common stock were initially reserved for issuance, and as of December 31, 2015 , 1.3 million shares of the Company’s common stock remained available for future issuance, which is reflective of a 2.7 million share reduction for outstanding equity awards replaced when the Company separated from Matson. The shares of common stock authorized to be issued under the 2012 Plan may be drawn from the shares of the Company’s authorized but unissued common stock or from shares of its common stock that the Company acquires, including shares purchased on the open market or private transactions.

The 2012 Plan consists of four separate incentive compensation programs: (i) the discretionary grant program, (ii) the stock issuance program, (iii) the incentive bonus program and (iv) the automatic grant program for the non-employee members of the Company’s Board of Directors. Share-based compensation is generally awarded under three of the four programs, as more fully described below.

Discretionary Grant Program: Under the Discretionary Grant Program, stock options may be granted with an exercise price no less than 100 percent of the fair market value (defined as the closing market price) of the Company’s common stock on the date of the grant. Options generally become exercisable ratably over three years and have a maximum contractual term of 10 years. There were no option grants in 2015 and 2014 , and the Company currently does not expect to issue options in the future.

Stock Issuance Program: Under the Stock Issuance Program, shares of common stock or restricted stock units may be granted. Equity awards granted may be designated as time-based or performance-based.

Automatic Grant Program: At each annual shareholder meeting, non-employee directors will receive an award of restricted stock units that entitle the holder to an equivalent number of shares of common stock upon vesting. Awards of restricted stock units granted under the program generally vest ratably over three years.

Activity in the Company’s stock option plans in 2015 was as follows (in thousands, except weighted average exercise price and weighted average contractual life):



	2012 Plan		Weighted Average Exercise Price	Weighted Average Contractual Life	Aggregate Intrinsic Value
Outstanding, January 1, 2015	1,124.6		$18.84
Exercised	(26.0	)	$20.13
Outstanding, December 31, 2015	1,098.6		$18.81	3.6	$18,235

Vested or expected to vest	1,098.6		$18.81	3.6	$18,235
Exercisable, December 31, 2015	1,098.6		$18.81	3.6	$18,235

The following table summarizes 2015 non-vested restricted stock unit activity (in thousands, except weighted average grant-date fair value amounts):



	2012 Plan Restricted Stock Units		Weighted Average Grant-Date Fair Value
Outstanding, January 1, 2015	279.0		$33.76
Granted	124.7		$40.85
Vested	(106.4	)	$31.58
Canceled	(25.4	)	$35.14
Outstanding, December 31, 2015	271.9		$37.74

A portion of the restricted stock unit awards are time-based awards that vest ratably over three years . The remaining portion of the awards represents market-based awards that cliff vest after two or three years , provided that the total shareholder return of the Company’s common stock over the relevant period meets or exceeds pre-defined levels of relative total shareholder returns of the Standard & Poor’s MidCap 400 Index and the Russell 2000 index.

The fair value of the Company’s time-based awards is determined using the Company's stock price on the date of grant. The fair value of the Company's market-based awards is estimated using the Company's stock price on the date of grant and the probability of vesting using a Monte Carlo simulation with the following weighted average assumptions:



	2015		2014
Volatility of A&B common stock	29.5	%	25.4	%
Average volatility of peer companies	34.2	%	27.3	%
Risk-free interest rate	0.70	%	0.37	%

The weighted average fair value of the time-based restricted units and market-based performance share units was $40.85 in 2015 and $39.38 in 2014 . No compensation cost is recognized for estimated or actual forfeitures of time-based or market-based awards if an employee is terminated prior to rendering the requisite service period. The tax benefit realized upon vesting was immaterial for each of the years ended December 31, 2015, 2014 and 2013.

A summary of compensation cost related to share-based payments is as follows (in millions):



	2015			2014			2013
Share-based expense (net of estimated forfeitures):
Stock options	$	—		$	0.3		$	0.7
Incremental share-based compensation cost related to separation	—			0.2			0.5
Time-based and market-based restricted stock units	4.6			4.4			3.0
Total share-based expense	4.6			4.9			4.2
Total recognized tax benefit	(1.2		)	(1.5		)	(1.3		)
Share-based expense (net of tax)	$	3.4		$	3.4		$	2.9

Cash received upon option exercise	$	0.5		$	4.5		$	7.6
Intrinsic value of options exercised	$	0.5		$	5.4		$	6.7
Tax benefit realized upon option exercise	$	0.2		$	2.0		$	2.5
Fair value of stock vested	$	4.2		$	2.6		$	5.2

14. COMMITMENTS AND CONTINGENCIES

Commitments, Guarantees and Contingencies: Commitments and financial arrangements not recorded on the Company's consolidated balance sheet, excluding lease commitments that are disclosed in Note 9, included the following as of December 31, 2015 (in millions):



Standby letters of credit	(a)	$	11.8
Bonds	(b)	$	405.0

(a)

Consists of standby letters of credit, issued by the Company’s lenders under the Company’s revolving credit facilities, and relate primarily to the Company’s real estate activities. In the event the letters of credit are drawn upon, the Company would be obligated to reimburse the issuer of the letter of credit. None of the letters of credit has been drawn upon to date, and the Company believes it is unlikely that any of these letters of credit will be drawn upon.

(b)

Represents bonds related to construction and real estate activities in Hawaii. Approximately $381.3 million is related to construction bonds issued by third party sureties (bid, performance and payment bonds) and the remainder is related to commercial bonds issued by third party sureties (permit, subdivision, license and notary bonds). In the event the bonds are drawn upon, the Company would be obligated to reimburse the surety that issued the bond. None of the bonds has been drawn upon to date, and the Company believes it is unlikely that any of these bonds will be drawn upon.

Indemnity Agreements: For certain real estate joint ventures, the Company may be obligated under bond indemnities to complete construction of the real estate development if the joint venture does not perform. These indemnities are designed to protect the surety in exchange for the issuance of surety bonds that cover construction activities, such as project amenities, roads, utilities, and other infrastructure, at its joint ventures. Under the indemnities, the Company and its joint venture partners agree to indemnify the surety bond issuer from all losses and expenses arising from the failure of the joint venture to complete the specified bonded construction. The maximum potential amount of aggregate future payments is a function of the amount covered by outstanding bonds at the time of default by the joint venture, reduced by the amount of work completed to date. The recorded amounts of the indemnity liabilities were not material.

Other Obligations: Certain of the real estate businesses in which the Company holds a noncontrolling interest have long-term debt obligations. One of the Company’s joint ventures had a $10 million loan that was scheduled to mature in August 2015 . As a condition to providing the loan to the joint venture, the lender required that the Company and its joint venture partner guarantee certain obligations of the joint venture under a maintenance agreement. The maintenance agreement specified that the Company and its joint venture partner make payments to the lender to the extent that the loan-to-value measure or debt service ratio of the property held by the joint venture were below pre-determined thresholds. On September 26, 2014, the joint venture sold the commercial property and paid off the remaining balance on the loan, which terminated the Company's guaranty. The Company's share of the gain on the sale of the commercial property was not material.

The Company is a guarantor of indebtedness for certain of its unconsolidated joint ventures' borrowings with third party lenders, relating to the repayment of construction loans and performance of construction for the underlying project. As of December 31, 2015, the Company's limited guarantees on indebtedness totaled $12.3 million related to five of its unconsolidated joint ventures. The Company has not incurred any significant historical losses related to guarantees on its joint venture indebtedness.

In July 2014, the Company invested $23.8 million in a tax equity investment related to the construction and operation of a 12-megawatt solar farm on Kauai. The Company recovers its investment primarily through tax credits and tax benefits. In connection with this investment, the Company provided a contingent $6 million guaranty of KRS II project debt. The other equity partner and managing member of KRS II, project sponsor and customer for the output of the facility, Kauai Island Utility Cooperative, is the primary guarantor of the project debt.

Other than obligations described above and those described in Notes 5 and 8, obligations of the Company’s joint ventures do not have recourse to the Company and the Company’s “at-risk” amounts are limited to its investment.

Legal Proceedings and Other Contingencies: A&B owns 16,000 acres of watershed lands in East Maui that supply a significant portion of the irrigation water used by Hawaiian Commercial & Sugar Company (“HC&S”), a division of A&B that produces raw sugar. A&B also held four water licenses to another 30,000 acres owned by the State of Hawaii in East Maui which, over the last ten years , have supplied approximately 56 percent of the irrigation water used by HC&S. The last of these water license agreements expired in 1986, and all four agreements were then extended as revocable permits that were renewed annually. In 2001, a request was made to the State Board of Land and Natural Resources (the “BLNR”) to replace these revocable permits with a long-term water lease. Pending the conclusion by the BLNR of this contested case hearing on the request for the long-term lease, the BLNR has kept the existing permits on a holdover basis. Three parties filed a lawsuit on April 10, 2015 (the “4/10/15 Lawsuit”) alleging that the BLNR has been renewing the revocable permits annually rather than keeping them in holdover status. The lawsuit asks the court to void the revocable permits and to declare that the renewals were illegally issued without preparation of an environmental assessment (“EA”). In December 2015, the BLNR decided to re-affirm its prior decisions to keep the permits in holdover status. This decision by the BLNR is being challenged by the three parties. In January 2016, the court in the 4/10/15 Lawsuit ruled that the renewals were not subject to the EA requirement but that the BLNR lacked legal authority to keep the revocable permits in holdover status beyond one year. The court has allowed the parties to take an immediate appeal of this ruling.

In addition, on May 24, 2001, petitions were filed by a third party, requesting that the Commission on Water Resource Management of the State of Hawaii ("Water Commission") establish interim instream flow standards ("IIFS") in 27 East Maui streams that feed the Company’s irrigation system. The Water Commission initially took action on the petitions in 2008 and 2010, but the petitioners requested a contested case hearing to challenge the Water Commission's decisions on certain petitions. The Water Commission denied the contested case hearing request, but the petitioners successfully appealed the denial to the Hawaii Intermediate Court of Appeals, which ordered the Water Commission to grant the request. The Commission then authorized the appointment of a hearings officer for the contested case hearing and expanded the scope of the contested case hearing to encompass all 27 petitions for amendment of the IIFS for East Maui streams in 23 hydrologic units. The evidentiary phase of the hearing before the Commission-appointed hearings officer was completed on April 2, 2015. On January 15, 2016, the Commission-appointed hearings officer issued his recommended decision on the petitions. The recommended decision would restore water to streams in 11 of the 23 hydrologic units. A final decision on the petitions from the Commission is not expected until at least the second quarter of 2016.

If the Company is not permitted to use sufficient quantities of stream waters, it would have a material adverse effect on the Company's sugar-growing operations in 2016 and the Company's pursuit of a diversified agricultural model in subsequent years.

In January 2013, the Environmental Protection Agency (“EPA”) finalized nationwide standards for controlling hazardous air pollutant emissions from industrial, commercial, institutional boilers and process heaters (the “Boiler MACT” rule), which apply to HC&S’s three boilers at the Puunene Sugar Mill. Compliance with the Boiler MACT rule was January 2016, with full compliance required by July 2016. The Company anticipates that the Puunene Mill boilers will meet all applicable compliance deadlines and that the remaining compliance costs will be less than $250,000 , based on available information. The Company is currently implementing strategies for achieving full compliance with the new regulations and is assessing whether the announced end to sugar operations may impact some compliance requirements. Although the EPA has finalized its reconsideration of the rule, there remains some uncertainty as to final requirements pending the outcome of ongoing litigation. Any resulting changes to the Boiler MACT rule could impact the Company’s compliance requirements.

On June 24, 2014, the Hawaii State Department of Health (“DOH”) Clean Air Branch issued a Notice and Finding of Violation and Order (“NFVO”) to HC&S alleging various violations relating to the operation of HC&S’s three boilers at its sugar mill. The DOH reviewed a 5 -year period (2009-2013) and alleged violations relating primarily to periods of excess

visible emissions and operation of the wet scrubbers installed to control particulate matter emissions from the boiler stacks. All incidents included in the NFVO were self-reported by HC&S to the DOH prior to the DOH’s review, and there is no indication that these deviations resulted in any violation of health-based air quality standards. The NFVO includes an administrative penalty of $1.3 million , which HC&S has contested. The Company is unable to predict, at this time, the outcome or financial impact of the NFVO but does not believe that the financial impact of the NFVO will be material to its financial position, cash flows or results of operations.

A&B and its subsidiaries are parties to, or may be contingently liable in connection with, other legal actions arising in the normal conduct of its businesses, the outcomes of which, in the opinion of management after consultation with counsel, would not be expected to have a material effect on A&B’s financial position, cash flows or results of operations.

15. DERIVATIVE INSTRUMENTS

The Company is exposed to interest rate risk related to its variable interest debt. The Company balances its cost of debt and exposure to interest rates primarily through its mix of fixed and variable rate debt. From time to time, the Company may use interest rate swaps to manage its exposure to interest rate risk.

As of December 31, 2015 , the Company had a gross notional amount of $18.8 million related to interest rate swaps that were assumed in connection with prior acquisitions, in which the floating rates are swapped for fixed rates. The table below presents the fair value of derivative financial instruments, which are included in Other non-current liabilities in the consolidated balance sheets (in millions):



	As of December 31,
Classified in Other non-current liabilities	2015		2014
Interest rate swap liability - floating to fixed rate	$	2.5	$	2.9

The Company recorded $0.4 million income and $0.1 million of expense during 2015 and 2014 , respectively, related to the change in fair value of the interest rate swaps in Interest income and other in the accompanying consolidated statements of income.

16. EARNINGS PER SHARE "EPS"

Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards.

The following table provides a reconciliation of income from continuing operations to income from continuing operations available to A&B shareholders (in millions):



	2015			2014			2013
Income from continuing operations, net of tax	$	31.1		$	30.2		$	12.5
Less: Noncontrolling interest	(1.5		)	(3.1		)	(0.5		)
Income from continuing operations attributable to A&B shareholders, net of tax	29.6			27.1			12.0
Less: Undistributed earnings allocated to redeemable noncontrolling interest	(3.1		)	—			—
Income from continuing operations available to A&B shareholders, net of tax	26.5			27.1			12.0
Income from discontinued operations available to A&B shareholders, net of tax	—			34.3			22.3
Net income available to A&B shareholders	$	26.5		$	61.4		$	34.3

The number of shares used to compute basic and diluted earnings per share is as follows (in millions):



	2015	2014	2013
Denominator for basic EPS - weighted average shares outstanding	48.9	48.7	44.4
Effect of dilutive securities:
Non-participating stock options and restricted stock unit awards	0.4	0.6	0.7
Denominator for diluted EPS - weighted average shares outstanding	49.3	49.3	45.1

Basic earnings per share is computed based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed based on the weighted-average number of common shares outstanding adjusted by the number of additional shares, if any, that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive shares of common stock include non-qualified stock options, time-based restricted stock units, and market-based performance share units.

During the years ended December 31, 2015 , 2014 and 2013 , there were no anti-dilutive securities outstanding.

In January 2016, the Company granted to employees 86,739 shares of time-based restricted stock units, and 48,581 shares of market-based performance share units. The time-based restricted stock units vest ratably over 3 years and the performance share units cliff vest over 3 years , provided that the minimum level of the 3 -year performance objectives is achieved.

17. REDEEMABLE NONCONTROLLING INTEREST

The Company has a 70 percent ownership interest in GLP that was acquired in connection with the acquisition of Grace Pacific LLC. In 2015, the Company reclassified the noncontrolling interest of GLP to mezzanine equity in the accompanying balance sheet, as it is redeemable at the option of the holder. The impact of the redemption feature on prior periods was not material. The redeemable noncontrolling interest of GLP is recorded at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest's share of net income or loss and distributions or (ii) the redemption value, which is derived from a specified formula. Due to an increase in the calculated redemption value as a result of increased GLP earnings, adjustments to the redeemable noncontrolling interest of GLP during 2015 were $3.1 million . These adjustments are reflected in the computation of earnings per share using the two-class method.

18. CESSATION OF HC&S SUGAR OPERATIONS

On December 31, 2015, due to continuing and significant operating losses stemming from low sugar prices and poor production levels, the Company determined it would cease sugar operations at its Hawaiian Commercial & Sugar Company (“HC&S”) division on Maui. The Company expects that the final harvest and activities of the Cessation will be substantially completed by the end of 2016 and will result in the eventual layoff of over 650 employees on Maui. As a result of the decision to cease the HC&S sugar operations, the Company wrote-off $6.9 million related to certain fixed assets that will no longer be used in operations.

In connection with the Cessation, the Company currently projects recording total pre-tax book charges in the range of $112 million to $133 million , which consists of $23 million to $28 million of employee severance and related benefit charges, $69 million to $76 million of asset write-offs and accelerated depreciation, and $20 million to $29 million of property removal, restoration and other exit-related costs. The Company expects that the activities related to the Cessation will be substantially completed by the end of 2016. During 2015, the Company recorded pre-tax restructuring charges of $22.6 million related to employee severance benefits and related costs and asset write-offs in connection with the Cessation.

A summary of the pre-tax costs and remaining costs associated with the restructuring is as follows (in millions):



	Recognized as of December 31, 2015		Range of remaining amount to be Recognized	Total
Employee severance benefits and related costs	$	13.4	$9.6 - $14.6	$23.0 - $28.0
Asset write-offs and accelerated depreciation	9.2		59.8 - 66.8	69.0 - 76.0
Property removal, restoration and other exit-related costs	—		20.0 - 29.0	20.0 - 29.0
Total Cessation costs	$	22.6	$89.4 - $110.4	$112.0 - $133.0

The following table summarizes the activity related to the Cessation accruals during the year ended December 31, 2015 (in millions):



	Employee Severance Benefits and Related Costs
Balance at January 1, 2015	$	—
Cessation charges	13.4
Balance at December 31, 2015	$	13.4

There were no cash payments made during the year ended December 31, 2015.

19. SEGMENT RESULTS

Operating segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s chief operating decision maker is its Chief Executive Officer. The Chief Executive Officer regularly reviews the results of four segments: Real Estate Development and Sales, Real Estate Leasing, Materials and Construction, and Agribusiness.

The Real Estate Development and Sales segment generates its revenues and creates value through an active and comprehensive program of land stewardship, planning, entitlement, development, real estate investment and sale of land and commercial and residential properties, principally in Hawaii.

The Real Estate Leasing segment owns, operates, and manages a portfolio of 58 retail, office and industrial properties in Hawaii and on the Mainland totaling 4.9 million square feet of GLA. The Company also leases urban land in Hawaii to third-party lessees, including 42 acres on Oahu (improved with 660,000 square feet of commercial space owned by the lessees) and 64 acres on the neighbor islands. When property that was previously leased is sold, the sales revenue and operating profit are included with the Real Estate Development and Sales segment.

The Materials and Construction segment performs asphalt paving as prime contractor and subcontractor; imports and sells liquid asphalt; mines, processes and sells rock and sand aggregates; produces and sells asphaltic concrete and ready-mix concrete; provides and sells various construction- and traffic-control-related products and manufactures and sells precast concrete products.

The Agribusiness segment produces and sells bulk raw sugar, specialty food grade sugars, and molasses; provides general trucking services, mobile equipment maintenance and repair services; leases agricultural land to third parties; and generates and sells electricity to the extent not used in segment operations.

The accounting policies of the operating segments are described in the summary of significant accounting policies. Reportable segments are measured based on operating profit, exclusive of interest expense, general corporate expenses and income taxes. Revenues related to transactions between reportable segments have been eliminated. Transactions between reportable segments are accounted for on the same basis as transactions with unrelated third parties.

General contractor and subcontractor revenues for the years ended December 31, 2015 and 2014 were derived directly and indirectly from the State of Hawaii in the amounts of $80.8 million and $79.6 million , respectively. In addition, for the years ended December 31, 2015 and 2014, amounts were derived directly and indirectly from the City and County of Honolulu in the amounts of $38.1 million and $37.5 million , respectively. Raw sugar revenues from C&H Sugar Company, Inc., exceeded 10 percent of total consolidated revenues and totaled $71.6 million , $65.5 million , and $87.6 million for the years ended December 31, 2015 , 2014 , and 2013 , respectively.

Operating segment information for 2015 , 2014 and 2013 is summarized as below (in millions):




For the Year Ended December 31,	2015			2014			2013
Revenue:
Real Estate: ^1,4
Leasing	$	133.8		$	125.6		$	110.4
Development and Sales	131.5			150.0			423.0
Less amounts reported in discontinued operations ¹	—			(70.4		)	(369.2		)
Reconciling items ⁴	(31.0		)	—			—
Materials and Construction ²	219.0			234.3			54.9
Agribusiness	117.2			120.5			146.1
Total revenue	$	570.5		$	560.0		$	365.2
Operating profit (loss):
Real Estate:
Leasing	$	53.1		$	47.5		$	43.4
Development and Sales ³	65.0			85.7			44.4
Less amounts reported in discontinued operations ¹	—			(56.2		)	(36.7		)
Materials and Construction ²	30.9			25.9			2.9
Agribusiness operations	(29.3		)	(11.8		)	10.7
Agribusiness cessation costs ⁵	(22.6		)	—			—
Total operating profit	97.1			91.1			64.7
Interest expense	(26.8		)	(29.0		)	(19.1		)
General corporate expenses	(20.1		)	(18.6		)	(17.4		)
Reduction in KRS II carrying value, net (Note 5, 12, 14) ⁹	(2.6		)	(14.7		)	—
Separation/Acquisition Costs	—			—			(4.6		)
Income from continuing operations before income taxes	47.6			28.8			23.6
Income tax expense (benefit)	16.5			(1.4		)	11.1
Income from continuing operations	31.1			30.2			12.5
Income from discontinued operations (net of income taxes)	—			34.3			22.3
Net income	31.1			64.5			34.8
Income attributable to noncontrolling interest	(1.5		)	(3.1		)	(0.5		)
Net income attributable to A&B	$	29.6		$	61.4		$	34.3


¹	Amounts recast to reflect discontinued operations.


²	2013 includes the results, capital expenditures, and depreciation and amortization of Grace from the acquisition date of October 1, 2013 through December 31, 2013.

The Real Estate Development and Sales segment includes approximately $30.2 million , $2.0 million , and $4.2 million in equity in earnings from its various real estate joint ventures for 2015 , 2014 , and 2013 , respectively. Included in operating profit are non-cash impairment and equity losses of $0.3 million related to the sale of Crossroads in 2014 and $6.3 million related to the consolidation of The Shops at Kukui'ula in 2013.


⁴	2015 amounts represent the sales of an office building in Washington in December 2015, a Colorado retail property in March 2015 and a Texas office building in May 2015 that are classified as cost of sales and development in the Consolidated Statement of Income, but reflected as revenue for segment reporting purposes.


⁵	Costs related to the cessation of HC&S sugar operation.



As of December 31,	2015		2014		2013
Identifiable Assets:
Real Estate:
Leasing	$	1,058.8	$	1,121.1	$	1,113.0
Development and Sales ⁶	622.0		633.9		640.4
Agribusiness	151.5		159.7		155.3
Materials and Construction	386.6		385.9		358.7
Other ¹⁰	24.6		21.0		8.4
Total assets	$	2,243.5	$	2,321.6	$	2,275.8

Capital Expenditures:
Real Estate:
Leasing ⁷	$	23.0	$	51.8	$	488.5
Development and Sales ⁸	—		—		0.1
Agribusiness	13.1		10.8		11.8
Materials and Construction ²	7.2		10.7		4.8
Other	1.4		1.8		0.1
Total capital expenditures	$	44.7	$	75.1	$	505.3

Depreciation and Amortization:
Real Estate:
Leasing ¹	$	30.3	$	26.9	$	24.3
Development and Sales	0.2		0.2		0.2
Agribusiness	12.1		11.5		11.7
Materials and Construction ²	11.6		15.2		4.4
Other	1.5		1.2		1.1
Total depreciation and amortization	$	55.7	$	55.0	$	41.7


⁶	The Real Estate Development and Sales segment includes approximately $379.7 million , $383.8 million , and $335.0 million related to its investment in various real estate joint ventures as of December 31, 2015 , 2014 , and 2013 , respectively.


⁷	Represents gross capital additions to the leasing portfolio, including gross tax-deferred property purchases, but excluding the assumption of debt, that are reflected as non-cash transactions in the Consolidated Statements of Cash Flows.

⁸

Excludes expenditures for real estate developments held for sale which are classified as Cash Flows from Operating Activities within the Consolidated Statements of Cash Flows and excludes investment in joint ventures classified as Cash Flows from Investing Activities. Operating cash flows for expenditures related to real estate developments were $7.2 million , $41.7 million , and $150.6 million for 2015 , 2014 , and 2013 , respectively. Investments in real estate joint ventures were $25.8 million , $28.7 million , and $22.2 million in 2015 , 2014 , and 2013 , respectively.

⁹


¹⁰	Amounts recast to reflect adoption of FASB Accounting Standard Update No. 2015-17, Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes.

100

Unaudited quarterly segment results for the years ended December 31, 2015 and 2014 were as follows (in millions):



	2015
(Unaudited)	Q1			Q2			Q3			Q4
Revenue:
Real Estate:
Leasing	$	32.7		$	34.8		$	33.0		$	33.3
Development and Sales	36.5			52.4			19.9			22.7
Reconciling items ³	(4.3		)	(16.7		)	—			(10.0		)
Materials and Construction	56.9			57.4			51.0			53.7
Agribusiness	28.9			25.8			40.8			21.7
Total revenue	$	150.7		$	153.7		$	144.7		$	121.4
Operating profit (loss)
Real Estate:
Leasing	$	13.2		$	13.9		$	12.5		$	13.5
Development and Sales ⁴	32.0			14.3			11.2			7.5
Materials and Construction	7.2			7.0			7.5			9.2
Agribusiness operations	1.9			(4.7		)	(9.0		)	(17.5		)
Agribusiness cessation costs ⁵	—			—			—			(22.6		)
Total operating profit	54.3			30.5			22.2			(9.9		)
Interest expense	(7.1		)	(6.6		)	(6.5		)	(6.6		)
General corporate expenses	(5.6		)	(5.3		)	(4.8		)	(4.4		)
Reduction in KRS II carrying value (Notes 5, 12, 14) ²	(0.1		)	(1.5		)	(0.1		)	(0.9		)
Income (loss) from continuing operations before income taxes	41.5			17.1			10.8			(21.8		)
Income tax expense (benefit)	15.6			7.0			3.8			(9.9		)
Income (loss) from continuing operations	25.9			10.1			7.0			(11.9		)
Income from discontinued operations (net of income taxes)	—			—			—			—
Net income (loss)	25.9			10.1			7.0			(11.9		)
Income attributable to noncontrolling interest	(0.6		)	(0.3		)	(0.3		)	(0.3		)
Net income (loss) attributable to A&B	25.3			9.8			6.7			(12.2		)
Less: Undistributed earnings allocated to redeemable noncontrolling interest ⁶	—			—			(1.3		)	(1.8		)
Net income (loss) available to A&B shareholders	$	25.3		$	9.8		$	5.4		$	(14.0	)



Earnings per share available to A&B shareholders:
	Basic	$	0.52	$	0.20	$	0.11	$	(0.29	)
	Diluted	$	0.51	$	0.20	$	0.11	$	(0.29	)
Weighted average shares:
	Basic	48.8		48.9		48.9		48.9
	Diluted	49.3		49.4		49.3		48.9

101



	2014
(Unaudited)	Q1			Q2			Q3			Q4
Revenue:
Real Estate:
Leasing	$	31.2		$	31.0		$	31.3		$	32.1
Development and Sales	71.0			21.4			18.2			39.4
Less amounts reported in discontinued operations ¹	(70.4		)	—			—			—
Materials and Construction	50.1			64.5			58.4			61.3
Agribusiness	12.9			29.8			45.5			32.3
Total revenue	$	94.8		$	146.7		$	153.4		$	165.1
Operating profit (loss)
Real Estate:
Leasing	$	11.8		$	12.0		$	12.1		$	11.6
Development and Sales ⁴	52.3			7.8			11.4			14.2
Less amounts reported in discontinued operations ¹	(56.2		)	—			—			—
Materials and Construction	3.4			8.0			5.9			8.6
Agribusiness	3.0			0.4			(7.3		)	(7.9		)
Total operating profit	14.3			28.2			22.1			26.5
Interest expense	(7.2		)	(7.2		)	(7.2		)	(7.4		)
General corporate expenses	(5.2		)	(4.3		)	(3.9		)	(5.2		)
Reduction in KRS II carrying value (Notes 5, 12, 14) ²	—			—			(15.1		)	0.4
Income (loss) from continuing operations before income taxes	1.9			16.7			(4.1		)	14.3
Income tax expense (benefit)	0.8			6.5			(14.9		)	6.2
Income from continuing operations	1.1			10.2			10.8			8.1
Income from discontinued operations (net of income taxes)	34.3			—			—			—
Net income	35.4			10.2			10.8			8.1
Income attributable to noncontrolling interest	(0.4		)	(1.0		)	(0.6		)	(1.1		)
Net income attributable to A&B shareholders	$	35.0		$	9.2		$	10.2		$	7.0



Earnings per share attributable to A&B shareholders:
	Basic	$	0.72	$	0.19	$	0.21	$	0.14
	Diluted	$	0.71	$	0.19	$	0.21	$	0.14
Weighted average shares:
	Basic	48.7		48.7		48.8		48.8
	Diluted	49.2		49.3		49.3		49.3

102


¹	Amounts recast to reflect discontinued operations.


²	Represents a non-cash reduction in the carrying value of a $23.8 million tax equity investment in a 12-megawatt solar farm on Kauai (KRS II) that was made in July 2014. Tax benefits associated with the KRS II investment are accompanied by non-cash reductions of the investment's carrying value.


³	2015 amounts represent the sales of an office building in Washington in December 2015, a Colorado retail property in March 2015 and a Texas office building in May 2015 that are classified as cost of sales and development in the Consolidated Statement of Income, but reflected as revenue for segment reporting purposes.


⁴	The Real Estate Development and Sales segment includes approximately $30.2 million and $2.0 million in equity in earnings from its various real estate joint ventures for 2015 and 2014 , respectively.


⁵	Costs related to the cessation of HC&S sugar operation.


⁶	The Company deducted $1.3 million and $1.8 million of undistributed earnings allocated to redeemable noncontrolling interests from "net income (loss) attributable to A&B shareholders" in calculating "Earnings (loss) per share attributable to A&B shareholders" for each of the three months ended September 30 and December 31, 2015, respectively.

103

20. SUBSEQUENT EVENT

On January 26, 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.06 per share of outstanding common stock, which will be paid on March 3, 2016 to shareholders of record as of February 8, 2016.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

A. Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2015, the Company’s disclosure controls and procedures were effective.

B. Internal Control over Financial Reporting

(a) Management’s Annual Report on Internal Control Over Financial Reporting

The management of Alexander & Baldwin, Inc. has the responsibility for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:


•	Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the company;


•	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and


•	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting only provides reasonable assurance with respect to financial statement presentation and preparation and cannot provide absolute assurance that all control issues and instances of fraud, if any, will be detected. Management does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. Additionally, the design of a control system must consider the benefits of the controls relative to their costs. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 . In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on its assessment, management believes that, as of December 31, 2015 , the Company’s internal control over financial reporting was effective.

The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on the Company’s internal control over financial reporting. That report appears below.

104

(b) Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Alexander & Baldwin, Inc.

Honolulu, Hawaii

We have audited the internal control over financial reporting of Alexander & Baldwin, Inc. and subsidiaries (the "Company") as of December 31, 2015 , based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015 , based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2015 of the Company and our report dated February 29, 2016 , expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ Deloitte & Touche LLP

Honolulu, Hawaii

February 29, 2016

105

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company's fiscal fourth quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting, except for the remediation of the previously identified material weakness described below.

(d) Remediation of Previously Disclosed Material Weakness in Internal Control Over Financial Reporting

As previously disclosed in the Company's 2014 Form 10-K, management concluded that its internal control over financial reporting was not effective as of December 31, 2014 due to a material weakness in the design of the Company's internal controls over the accounting for deferred income taxes. In response to the identified control issue, the Company enhanced its review and related controls over the reconciliation of deferred income taxes through a combination of the following actions, all of which have been completed as of December 31, 2015:


•	Design and implement additional controls over the accounting for deferred income taxes: The Company designed and implemented additional accounting process and internal control procedures related to the accounting for deferred income taxes, such as an improved tax provision model, additional reconciliations, and enhanced review of deferred income tax balances.

•

Recruit additional qualified personnel and retain outside consultants to identify and assist with implementation of enhanced tax accounting processes and related internal control procedures: The Company retained external consultants to assist the Company in developing revised control processes and procedures related to the accounting for deferred income taxes, which were implemented during 2015. The Company has also hired additional qualified personnel, including a tax manager.


•	Provide additional training and education for tax and accounting staff: The Company's tax and accounting staff received additional training and education during 2015, and the Company will continue to support the professional training on an ongoing basis.

Management and the Company’s Board of Directors are committed to maintaining a strong internal control environment. With full implementation and testing of the design and operating effectiveness of the newly implemented and enhanced controls, the actions described above successfully remediated the material weakness in the Company's internal control over financial reporting. The Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective, and management concluded that the Company's internal control over financial reporting were effective as of December 31, 2015.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

A. Directors

For information about the directors of A&B, see the section captioned “Election of Directors” in A&B’s proxy statement for the 2016 Annual Meeting of Shareholders (“A&B’s 2016 Proxy Statement”), which section is incorporated herein by reference.

B. Executive Officers

The name of each executive officer of A&B (in alphabetical order), age (in parentheses) as of February 15, 2016, and present and prior positions with A&B and business experience for the past five years are given below.

Generally, the term of office of executive officers is at the pleasure of the Board of Directors. For a discussion of compliance with Section 16(a) of the Exchange Act by A&B’s directors and executive officers, see the subsection captioned “Section 16(a) Beneficial Ownership Reporting Compliance” in A&B’s 2016 Proxy Statement, which subsection is incorporated herein by reference. For a discussion of change in control agreements between A&B and certain of A&B’s executive officers, and the

106

Executive Severance Plan, see the subsections captioned “Other Potential Post-Employment Payments” in A&B’s 2016 Proxy Statement, which subsections are incorporated herein by reference.

References herein to “A&B Predecessor” are to Alexander & Baldwin, Inc. prior to its reorganization into Alexander & Baldwin Holdings, Inc.

Christopher J. Benjamin (52)

Chief Executive Officer of A&B, 1/16-present; President of A&B, 6/12-present; Chief Operating Officer of A&B, 6/12-12/15; President of Land Group, 9/11-6/12; President of A&B Properties, Inc. ("ABP"), 9/11-8/15; Senior Vice President of A&B Predecessor, 7/05-8/11; Chief Financial Officer of A&B Predecessor, 2/04-8/11; Treasurer of A&B Predecessor, 5/06-8/11; Plantation General Manager, Hawaiian Commercial & Sugar Company, 3/09-3/11; first joined A&B Predecessor in 2001.

Meredith J. Ching (59)

Senior Vice President (Government & Community Relations) of A&B, 6/12-present; Senior Vice President (Government & Community Relations) of A&B Predecessor, 6/07-6/12; Vice President of A&B Predecessor, 10/92-6/07; first joined A&B Predecessor in 1982.

Nelson N. S. Chun (63)

Senior Vice President and Chief Legal Officer of A&B, 6/12-present; Senior Vice President and Chief Legal Officer of A&B Predecessor, 7/05-6/12; Vice President and General Counsel of A&B Predecessor, 11/03-6/05; first joined A&B Predecessor in 2003.

Paul K. Ito (45)

Senior Vice President, Chief Financial Officer and Treasurer of A&B, 6/12-present; Controller of A&B 6/12-8/15; Vice President of A&B Predecessor, 4/07-6/12; Controller of A&B Predecessor, 5/06-6/12; Director, Internal Audit of A&B Predecessor, 4/05-4/06; first joined A&B Predecessor in 2005.

Stanley M. Kuriyama (62)

Chairman of A&B, 1/16-present; Chairman and Chief Executive Officer of A&B, 6/12-12/15; Chief Executive Officer of A&B Predecessor, 1/10-6/12; President of A&B Predecessor, 10/08-6/12; President and Chief Executive Officer, A&B Land Group, 7/05-9/08; Chief Executive Officer and Vice Chairman of ABP, 12/99-9/08; first joined A&B Predecessor in 1992.

George M. Morvis (48)

Vice President (Corporate Development) of A&B 6/12-present; Vice President (Corporate Development) of A&B Predecessor 1/12-6/12; Managing Director of Financial Shares Corporation, 10/94-1/12; joined A&B Predecessor in 2012.

Lance K. Parker (42)

President of ABP, 9/15-present; Senior Vice President of ABP, 6/13-8/15; Vice President of ABP, 7/07-6/13; first joined A&B Predecessor in 2004.

C. Corporate Governance

For information about the Audit Committee of the A&B Board of Directors, see the section captioned “Certain Information Concerning the Board of Directors” in A&B’s 2016 Proxy Statement, which section is incorporated herein by reference.

D. Code of Ethics

For information about A&B’s Code of Ethics, see the subsection captioned “Code of Ethics” in A&B’s 2016 Proxy Statement, which subsection is incorporated herein by reference.

107

ITEM 11. EXECUTIVE COMPENSATION

See the section captioned “Executive Compensation” and the subsection captioned “Compensation of Directors” in A&B’s 2016 Proxy Statement, which section and subsection are incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

See the section captioned “Security Ownership of Certain Shareholders” and the subsection titled “Security Ownership of Directors and Executive Officers” in A&B’s 2016 Proxy Statement, which section and subsection are incorporated herein by reference. See the Equity Compensation Plan Information table in Item 5 of Part II.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

See the section captioned “Election of Directors” and the subsection captioned “Certain Relationships and Transactions” in A&B’s 2016 Proxy Statement, which section and subsection are incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information concerning principal accountant fees and services appears in the section captioned “Ratification of Appointment of Independent Registered Public Accounting Firm” in A&B’s 2016 Proxy Statement, which section is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

A. Financial Statements

The financial statements are set forth in Item 8 of Part II above.

108

B. Financial Statement Schedules

SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

Alexander & Baldwin, Inc. and Subsidiaries

December 31, 2015



(in millions)			Initial Cost				Costs Capitalized Subsequent to Acquisition				Gross Amounts at Which Carried at Close of Period
Description	Encum- brances (1)		Land		Buildings and Improvements		Improvements		Carrying Costs		Land		Buildings and Improvements		Total (2)		Accumulated Depreciation (3)			Date of Construction	Date Acquired/ Completed
Real Estate Leasing Segment
Industrial:
Kailua Industrial/Other (HI)	$	—	$	10.5	$	2.0	$	0.1	$	—	$	10.5	$	2.1	$	12.6	$	(0.1	)	Various	2013
Kaka'ako Commerce Center (HI)	—		16.9		20.6		0.1		—		16.9		20.7		37.6		(0.5		)	1969	2014
Komohana Industrial Park (HI)	—		25.2		10.8		0.4		—		25.2		11.2		36.4		(1.7		)	1990	2010
P&L Warehouse (HI)	—		—		—		1.2		—		—		1.2		1.2		(0.6		)	1970	1970
Port Allen (HI)	—		—		0.7		1.9		—		—		2.6		2.6		(1.9		)	1985, 1993	1983-1993
Waipio Industrial (HI)	—		19.6		7.7		0.2		—		19.6		7.9		27.5		(1.5		)	1988, 1989	2009
Midstate Hayes (CA)	8.2		2.7		29.6		1.2		—		2.7		30.8		33.5		(6.1		)	2002-2008	2008
Sparks Business Center (NV)	—		3.2		17.2		3.0		—		3.2		20.2		23.4		(7.9		)	1996-1998	2002

Office:
Judd Building (HI)	—		1.0		2.1		1.9		—		1.0		4.0		5.0		(1.5		)	1898, 1979	2000
Kahului Office Building (HI)	—		1.0		0.4		5.9		—		1.0		6.3		7.3		(7.0		)	1974	1989
Kahului Office Center (HI)	—		—		—		5.7		—		—		5.7		5.7		(3.5		)	1991	1991
Lono Center (HI)	—		—		1.4		1.2		—		—		2.6		2.6		(1.3		)	1973	1991
Maui Clinic Building (HI)	—		—		—		0.5		—		—		0.5		0.5		(0.1		)	1958	2013
Mililani South (HI)	—		7.0		3.5		5.2		—		7.0		8.7		15.7		(0.4		)	1992, 2006	2012
Stangenwald Building (HI)	—		1.8		1.0		1.3		—		1.8		2.3		4.1		(0.9		)	1901, 1980	1996
1800 and 1820 Preston Park (TX)	—		4.5		19.9		5.0		—		4.5		24.9		29.4		(6.9		)	1997, 1998	2006
2868 Prospect Park (CA)	—		2.9		18.1		9.5		—		2.9		27.6		30.5		(13.7		)	1998	1998
2890 Gateway Oaks (CA)	—		1.7		10.8		1.7		—		1.7		12.5		14.2		(3.3		)	1999	2006
Concorde Commerce Center (AZ)	—		3.9		20.9		6.0		—		3.9		26.9		30.8		(6.6		)	1998	2006
Deer Valley Financial Center (AZ)	—		3.4		19.2		3.4		—		3.4		22.6		26.0		(6.9		)	2001	2005
Ninigret Office X and XI (TX)	—		3.1		17.7		4.6		—		3.1		22.3		25.4		(7.0		)	1999, 2002	2006

Retail:
Gateway at Mililani Mauka (HI)	—		7.3		4.7		5.2		—		7.3		9.9		17.2		(0.5		)	2006, 2013	2011
Kahului Shopping Center (HI)	—		—		—		2.7		—		—		2.7		2.7		(1.5		)	1951	1951
Kailua Grocery Anchored (HI)	11.0		77.9		56.0		0.7		—		77.9		56.7		134.6		(3.3		)	Various	2013-2015
Kailua Retail Other (HI)	—		29.6		26.7		1.4		—		29.6		28.1		57.7		(1.8		)	Various	2013
Kaneohe Bay Shopping Ctr. (HI)	—		—		13.4		1.9		—		—		15.3		15.3		(5.5		)	1971	2001
Kunia Shopping Center (HI)	—		2.7		10.6		1.3		—		2.7		11.9		14.6		(3.8		)	2004	2002
Lahaina Square (HI)	—		4.6		3.7		0.4		—		4.6		4.1		8.7		(0.6		)	1973	2010
Lanihau Marketplace (HI)	—		9.4		13.2		1.4		—		9.4		14.6		24.0		(2.1		)	1987	2010
Napili Plaza (HI)	—		9.4		8.0		0.5		—		9.4		8.5		17.9		(0.9		)	1991	2003, 2013
Pearl Highlands Center (HI)	91.9		43.4		96.2		1.8		—		43.4		98.0		141.4		(6.8		)	1993	2013
Port Allen Marina Ctr. (HI)	—		—		3.4		1.1		—		—		4.5		4.5		(1.9		)	2002	1971
The Shops at Kukui'ula (HI)	37.0		8.9		30.1		1.9		—		8.9		32.0		40.9		(2.1		)	2009	2013
Waianae Mall (HI)	—		17.4		10.1		4.2		—		17.4		14.3		31.7		(1.1		)	1975	2013
Waipio Shopping Center (HI)	—		24.0		7.6		0.4		—		24.0		8.0		32.0		(1.4		)	1986-2004	2009
Little Cottonwood Center (UT)	—		12.2		9.1		1.0		—		12.2		10.1		22.3		(1.6		)	1998-2008	2010
Royal MacArthur Center (TX)	—		3.5		10.1		1.7		—		3.5		11.8		15.3		(2.9		)	2006	2007

Other:
Oahu ground leases (HI)	—		164.2		0.6		—		—		164.2		0.6		164.8		—				2013
Other miscellaneous investments	—		17.9		1.3		12.2		—		17.9		13.5		31.4		(10.8		)

Total	$	148.1	$	540.8	$	508.4	$	99.8	$	—	$	540.8	$	608.2	$	1,149.0	$	(128.0	)

Total for Hawaii	$	139.9	$	499.7	$	335.8	$	62.7	$	—	$	499.7	$	398.5	$	898.2	$	(65.1	)
Total for U.S. Mainland	8.2		41.1		172.6		37.1		—		41.1		209.7		250.8		(62.9		)
Grand Total	$	148.1	$	540.8	$	508.4	$	99.8	$	—	$	540.8	$	608.2	$	1,149.0	$	(128.0	)

109



Description (amounts in millions)	Encumbrances		Land		Buildings and Improvements		Improvements		Carrying Costs		Land		Buildings and Improvements		Total		Accumulated Depreciation
Real Estate Development and Sales Segment
Aina ‘O Kane	$	—	$	—	$	—	$	1.2	$	—	$	—	$	1.2	$	1.2	$	—
Brydeswood	—		—		—		2.6		—		—		2.6		$	2.6	—
Grove Ranch	—		—		—		1.5		—		—		1.5		$	1.5	—
Haliimaile	—		—		—		1.0		—		—		1.0		$	1.0	—
Kahala Portfolio	8.2		49.7		—		1.5		—		49.7		1.5		$	51.2	—
Kamalani	—		—		—		3.1		—		—		3.1		$	3.1	—
Kahului Town Center	—		—		—		2.3		—		—		2.3		$	2.3	—
Kai 'Olino	—		—		—		11.3		—		—		11.3		$	11.3	—
Maui Business Park II	—		—		—		44.7		—		—		44.7		$	44.7	—
Wailea B-1	—		4.6		—		—		—		4.6		—		$	4.6	—
Wailea B-II	—		3.3		—		—		—		3.3		—		$	3.3	—
Wailea MF-6	—		5.8		—		—		—		5.8		—		$	5.8	—
Wailea MF-7	—		2.9		—		5.9		—		2.9		5.9		$	8.8	—
Wailea SF-8	—		1.3		—		—		—		1.3		—		$	1.3	—
Wailea MF-10	—		2.0		—		1.9		—		2.0		1.9		$	3.9	—
Wailea MF-16	—		2.7		—		—		—		2.7		—		$	2.7	—
The Ridge at Wailea (MF-19)	—		1.7		—		6.2		—		1.7		6.2		$	7.9	—
Wailea, other	—		15.3		—		1.5		—		15.3		1.5		$	16.8	—
Waiale Community	—		—		—		1.7		—		—		1.7		$	1.7	—
Other Maui landholdings	—		2.2		—		4.2		—		2.2		4.2		$	6.4	—
Other Kauai landholdings	—		—		—		1.4		—		—		1.4		$	1.4	—
Total	$	8.2	$	91.5	$	—	$	92.0	$	—	$	91.5	$	92.0	$	183.5	$	—


(1)	See Note 8 to consolidated financial statements.


(2)	The aggregate tax basis, as of December 31, 2015, for the Real Estate Leasing segment and Real Estate Development and Sales segment assets was approximately $ 575.4 million, including the outside tax basis of consolidated joint venture investments.


(3)	Depreciation is computed based upon the following estimated useful lives:

Building and improvements: 10 – 40 years

Leasehold improvements: 5 – 10 years (lesser of useful life or lease term)



Reconciliation of Real Estate (in millions)	2015			2014			2013
Balance at beginning of year	$	1,397.1		$	1,402.1		$	1,022.0
Additions and improvements	32.2			57.0			758.5
Dispositions, retirements and other adjustments	(96.8		)	(62.0		)	(378.4		)
Balance at end of year	$	1,332.5		$	1,397.1		$	1,402.1



Reconciliation of Accumulated Depreciation (in millions)	2015			2014			2013
Balance at beginning of year	$	120.5		$	116.9		$	133.8
Depreciation expense	20.5			19.2			19.5
Dispositions, retirements and other adjustments	(13.0		)	(15.6		)	(36.4		)
Balance at end of year	$	128.0		$	120.5		$	116.9

110

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Alexander & Baldwin, Inc.

Honolulu, Hawaii

We have audited the consolidated financial statements of Alexander & Baldwin, Inc. and subsidiaries (the "Company") as of December 31, 2015 and 2014 , and for each of the three years in the period ended December 31, 2015 , and the Company's internal control over financial reporting as of December 31, 2015 , and have issued our reports thereon dated February 29, 2016 ; such consolidated financial statements and reports are included elsewhere in this Form 10-K. Our audits also included the financial statement schedule of the Company listed in Item 15. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Honolulu, Hawaii

February 29, 2016

111

C. Exhibits Required by Item 601 of Regulation S - K

Exhibits not filed herewith are incorporated by reference to the exhibit number and previous filing shown in parentheses. All previous exhibits were filed with the Securities and Exchange Commission in Washington, D.C. Exhibits filed pursuant to the Securities Exchange Act of 1934 were filed under file number 001-34187. Shareholders may obtain copies of exhibits for a copying and handling charge of $0.15 per page by writing to Alyson J. Nakamura, Corporate Secretary, Alexander & Baldwin, Inc., P. O. Box 3440, Honolulu, Hawaii 96801.

2. Plan of acquisition, reorganization, arrangement, liquidation or succession.

2.a. Separation and Distribution Agreement by and between Alexander & Baldwin Holdings, Inc. and A & B II, Inc., dated June 8, 2012 (Exhibit 2.1 to Amendment No. 4 to Form 10 filed on June 8, 2012).

2.b. Agreement and Plan of Merger by and among Alexander & Baldwin, Inc., A&B II, LLC, Grace Pacific Corporation, GPC Holdings, Inc. and David C. Hulihee, dated June 6, 2013 (incorporated by reference to Annex A to Amendment No. 2 to Form S-4 filed on August 20, 2013).

3. Articles of incorporation and bylaws.

3.a. Amended and Restated Articles of Incorporation of the Registrant (as amended through June 4, 2012) (Exhibit 3.1 to Amendment No. 4 to Form 10 filed on June 8, 2012).

3.b. Amended and Restated Bylaws of the Registrant (as amended through June 4, 2012) (Exhibit 3.2 to Amendment No. 4 to Form 10 filed on June 8, 2012).

3.c. Resolutions of the Board of Directors of A & B II, Inc. authorizing Series A Junior Participating Preferred Stock (Exhibit 3.1 to Form 8-K, dated June 8, 2012).

4. Instruments defining rights of security holders, including indentures.

4.a. Rights Agreement, dated June 8, 2012, between A & B II, Inc. and Computershare Shareowner Services LLC, as Rights Agent (including the Form of Rights Certificate as Exhibit B and the Form of Summary of Rights to Purchase Preferred Stock as Exhibit C) (Exhibit 3.1 to Form 8-K, dated June 8, 2012).

10. Material contracts.

10.a. (i) Transition Services Agreement by and between Alexander & Baldwin Holdings, Inc. and A & B II, Inc., dated June 8, 2012 (Exhibit 10.1 to Amendment No. 4 to Form 10 filed on June 8, 2012).

(ii) Employee Matters Agreement by and between Alexander & Baldwin Holdings, Inc. and A & B II, Inc., dated June 8, 2012 (Exhibit 10.2 to Amendment No. 4 to Form 10 filed on June 8, 2012).

(iii) Tax Sharing Agreement by and between Alexander & Baldwin Holdings, Inc. and A & B II, Inc., dated June 8, 2012 (Exhibit 10.3 to Amendment No. 4 to Form 10 filed on June 8, 2012).

(iv) Contract for the Delivery and Sale of Raw Sugar, dated October 7, 2009, by and between Hawaiian Sugar & Transportation Cooperative and C&H Sugar Company, Inc. (Exhibit 10.4 to Amendment No. 2 to Form 10 filed on May 21, 2012).

(v) Amendment to Contract for the Delivery and Sale of Raw Sugar, dated December 6, 2011, by and between Hawaiian Sugar & Transportation Cooperative and C&H Sugar Company, Inc. (Exhibit 10.5 to Amendment No. 2 to Form 10 filed on May 21, 2012).

(vi) Amendment to Contract for the Delivery and Sale of Raw Sugar, dated December 24, 2012, by and between Hawaiian Sugar & Transportation Cooperative and C&H Sugar Company, Inc. (Exhibit 10.a.(vi) to Form 10‑K for the year ended December 31, 2014).

(vii) Amendment to Contract for the Delivery and Sale of Raw Sugar, dated September 10, 2014, by and between Hawaiian Sugar & Transportation Cooperative and C&H Sugar Company, Inc. (Exhibit 10.a.(vii) to Form 10‑K for the year ended December 31, 2014).

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(viii) Amended and Restated Operating Agreement of Kukui`ula Development Company (Hawaii), LLC, dated May 1, 2009, by and between KDC, LLC, a Hawaii limited liability company, and DMB Kukui`ula LLC, an Arizona limited liability company (Exhibit 10.6 to Amendment No. 2 to Form 10 filed on May 21, 2012).

(ix) First Amendment to the Amended and Restated Operating Agreement of Kukui`ula Development Company (Hawaii), LLC, dated September 28, 2010, by and between KDC, LLC, a Hawaii limited liability company, and DMB Kukui`ula LLC, an Arizona limited liability company (Exhibit 10.7 to Amendment No. 2 to Form 10 filed on May 21, 2012).

(x) Second Amendment to the Amended and Restated Operating Agreement of Kukui`ula Development Company (Hawaii), LLC, dated July 20, 2011, by and between KDC, LLC, a Hawaii limited liability company, and DMB Kukui`ula LLC, an Arizona limited liability company (Exhibit 10.8 to Amendment No. 2 to Form 10 filed on May 21, 2012).

(xi) General Contract of Indemnity, among Alexander & Baldwin, Inc., Kukui`ula Development Company (Hawaii), LLC, DMB Kukui`ula LLC, and DMB Communities LLC, in favor of Travelers Casualty and Surety Company of America, dated June 13, 2006 (incorporated by reference to Exhibit 10.1 to Alexander & Baldwin, Inc.’s Form 8-K dated June 14, 2006 (File No. 000-00565)).

(xii) Mutual Indemnification Agreement, among Kukui`ula Development Company (Hawaii), LLC, DMB Kukui`ula LLC, DMB Communities LLC, and Alexander & Baldwin, Inc., dated June 14, 2006 (incorporated by reference to Exhibit 10.2 to Alexander & Baldwin, Inc.’s Form 8-K dated June 14, 2006 (File No. 000-00565)).

(xiii) General Agreement of Indemnity, among Alexander & Baldwin, Inc., Kukui`ula Development Company (Hawaii), LLC, and DMB Communities LLC, in favor of Safeco Insurance Company of America, dated August 30, 2006 and entered into September 5, 2006 (incorporated by reference to Exhibit 10.1 to Alexander & Baldwin, Inc.’s Form 8-K dated September 5, 2006 (File No. 000-00565)).

(xiv) Mutual Indemnification Agreement, among Kukui`ula Development Company (Hawaii), LLC, DMB Kukui`ula LLC, DMB Communities LLC, and Alexander & Baldwin, Inc., dated August 30, 2006 and entered into September 5, 2006 (incorporated by reference to Exhibit 10.2 to Alexander & Baldwin, Inc.’s Form 8-K dated September 5, 2006 (File No. 000-00565)).

(xv) Credit Agreement between Alexander & Baldwin, LLC (formerly known as Alexander & Baldwin, Inc.), First Hawaiian Bank, Bank of America, N.A. and the other lenders party thereto, dated as of June 4, 2012 (Exhibit 10.2 to Form 8-K, dated June 4, 2012).

(xvi) First Amendment to Credit Agreement, dated December 18, 2013, by and among Alexander & Baldwin, LLC, Grace Pacific LLC, Alexander & Baldwin, Inc., A&B II, LLC, Bank of America, N.A., and First Hawaiian Bank (Exhibit 10.a.(xvi) to Alexander & Baldwin, Inc.’s Form 10-Q for the quarter ended March 31, 2015).

(xvii) Amended and Restated Credit Agreement, dated December 10, 2015, among Alexander & Baldwin, LLC, Grace Pacific LLC, Bank of America N.A., and other lenders party thereto.

(xviii) Amended and Restated Note Purchase and Private Shelf Agreement among Alexander & Baldwin, LLC (formerly known as Alexander & Baldwin, Inc.), Prudential Investment Management, Inc. and the other purchasers party thereto, dated as of June 4, 2012 (Exhibit 10.1 to Form 8-K, dated June 4, 2012).

(xix) Modification to Amended and Restated Note Purchase and Private Shelf Agreement among Alexander & Baldwin, LLC, Alexander & Baldwin, Inc., Prudential Investment Management, Inc. and the other purchasers party thereto, dated as of September 27, 2013 (Exhibit 10.a.(xviii) to Alexander & Baldwin, Inc.’s Form 10-Q for the quarter ended September 30, 2013).

(xx) Second Amended and Restated Note Purchase and Private Shelf Agreement, dated December 10, 2015, among Alexander & Baldwin, Inc., Alexander & Baldwin, LLC, Prudential Investment Management, Inc., and certain affiliates of Prudential Investment Management, Inc.

(xxi) Limited Guaranty among A & B Properties, Inc., First Hawaiian Bank, Wells Fargo Bank N.A., Bank of Hawaii, and Central Pacific Bank, dated as of November 30, 2012 (Exhibit 10.1 to Form 8-K, dated December 4, 2012).

113

(xxii) Completion Guaranty among A & B Properties, Inc., First Hawaiian Bank, Wells Fargo Bank N.A., Bank of Hawaii, and Central Pacific Bank, dated as of November 30, 2012 (Exhibit 10.2 to Form 8-K, dated December 4, 2012).

(xxiii) Note and Mortgage Assumption Agreement, dated January 15, 2013, among U.S. Bank National Association, as trustee for Morgan Stanley Capital I Inc., Commercial Mortgage Pass-Through Certificates, Series 2006-IQ11, TNP SRT Waianae Mall, LLC, and A&B Waianae LLC (Exhibit 10.a.(xx) to Form 10‑K for the year ended December 31, 2012).

(xxiv) Loan Assumption and Amendment to Loan Documents, among PHSC Holdings, LLC, ABP Pearl Highlands LLC, Pearl Highlands LLC, and The Northwestern Mutual Life Insurance Company, dated September 17, 2013 (Exhibit 10.a.(xxii) to Form 10-Q for the quarter ended September 30, 2013).

(xxv) Promissory Note between ABP Pearl Highlands LLC and The Northwestern Mutual Life Insurance Company, dated December 1, 2014 (Exhibit (10.1 to Form 8-K, dated December 1, 2014).

(xxvi) Mortgage and Security Agreement between ABP Pearl Highlands LLC and The Northwestern Mutual Life Insurance Company, dated December 1, 2014 (Exhibit 10.2 to Form 8-K, dated December 1, 2014).

(xxvii) Form of Lock-Up Agreement by and among Alexander & Baldwin, Inc., A&B II, LLC and the shareholder, dated June 6, 2013 (incorporated by reference to Exhibit 10.2 to Form S-4 filed July 5, 2013).

(xxviii) Purchase and Sale Agreement and Joint Escrow Instructions, dated October 18, 2013, between Castle Family LLC, Castle 1974 LLC, Castle Residuary LLC, and Castle Kaopa LLC, on one hand, and Alexander & Baldwin, Inc., on the other (Exhibit 10.1 to Form 8-K, dated November 19, 2013).

(xxix) First Amendment of Purchase and Sale Agreement and Joint Escrow Instructions, dated November 18, 2013, between Castle Family LLC, Castle 1974 LLC, Castle Residuary LLC, and Castle Kaopa LLC, on one hand, and Alexander & Baldwin, Inc., on the other (Exhibit 10.2 to Form 8-K, dated November 19, 2013).

(xxx) Purchase and Sale Agreement and Joint Escrow Instructions, dated October 18, 2013, between Harold K. L Castle Foundation and Alexander & Baldwin, Inc. (Exhibit 10.3 to Form 8-K, dated November 19, 2013).

(xxxi) First Amendment of Purchase and Sale Agreement and Joint Escrow Instructions, dated November 18, 2013, between Harold K. L Castle Foundation and Alexander & Baldwin, Inc. (Exhibit 10.4 to Form 8‑K, dated November 19, 2013).

(xxxii) Term Loan Agreement among Kukui`ula Village LLC, Bank of America, N.A., and the other financial institutions party thereto, dated as of November 5, 2013 (Exhibit 10.a.(xxviii) to Alexander & Baldwin, Inc.’s Form 10-K for the year ended December 31, 2013).

(xxxiii) Real Estate Term Loan Agreement among Kukui`ula Village LLC, Kukui`ula Development Company (Hawaii), LLC, Bank of America, N.A., and the other financial institutions party thereto, dated as of November 5, 2013 (Exhibit 10.a.(xxix) to Alexander & Baldwin, Inc.’s Form 10-K for the year ended December 31, 2013).

*10.b.1. (i) Alexander & Baldwin, Inc. 2012 Incentive Compensation Plan (Exhibit 99.1 to Form S-8 filed on June 29, 2012).

(ii) Form of Notice of Stock Option Grant (Exhibit 99.2 to Form S-8 filed on June 29, 2012).

(iii) Form of Stock Option Agreement for Executive Employees (Exhibit 99.4 to Form S-8 filed on June 29, 2012).

(iv) Form of Notice of Time-Based Restricted Stock Unit Grant (Exhibit 10.b.1.(iv) to Form 10-K for the year ended December 31, 2012).

(v) Form of Time-Based Restricted Stock Unit Agreement for Executive Employees (Exhibit 10.b.1.(v) to Form 10-K for the year ended December 31, 2012).

114

(vi) Form of Restricted Stock Unit Agreement for Non-Employee Directors (Exhibit 99.8 to Form S-8 filed on June 29, 2012).

(vii) Form of Restricted Stock Unit Agreement for Non-Employee Directors (Deferral Election) (Exhibit 99.9 to Form S-8 filed on June 29, 2012).

(viii) Form of Notice of Performance-Based Restricted Stock Unit Grant (Exhibit 99.10 to Form S-8 filed on June 29, 2012).

(ix) Form of Performance-Based Restricted Stock Unit Agreement for Executive Employees (Exhibit 99.12 to Form S-8 filed on June 29, 2012).

(x) Form of Universal Stock Option Agreement for Substitute Options-Executive Officers (2007 Plan) (Exhibit 99.13 to Form S-8 filed on June 29, 2012).

(xi) Form of Universal Stock Option Agreement for Substitute Options (1998 Plan) (Exhibit 99.15 to Form S-8 filed on June 29, 2012).

(xii) Form of Universal Stock Option Agreement for Substitute Options (1998 Non-employee Director Plan) (Exhibit 99.16 to Form S-8 filed on June 29, 2012).

(xiii) Form of Universal Restricted Stock Unit Award Agreement for Substitute Awards-Executive Officer (2007 Plan) (Exhibit 99.17 to Form S-8 filed on June 29, 2012).

(xiv) Form of Universal Restricted Stock Unit Award Agreement for Substitute Awards-Non-employee Board Member (Exhibit 99.19 to Form S-8 filed on June 29, 2012).

(xv) Form of Universal Restricted Stock Unit Award Agreement for Substitute Awards-Non-employee Board Member (Deferral Elections) (Exhibit 99.20 to Form S-8 filed on June 29, 2012).

(xvi) Form of Restricted Stock Unit Award Agreement for Substitute 2012 Performance-Based Award-Executive Officer (Exhibit 99.21 to Form S-8 filed on June 29, 2012).

(xvii) Form of Notice of Award of Performance Share Units (Exhibit 10.2 to Form 8-K, dated January 28, 2013).

(xviii) Form of Performance Share Unit Award Agreement (Exhibit 10.1 to Form 8-K, dated January 28, 2013).

(xix) Form of Notice of Award of Performance Share Units (Exhibit 10.b.1.(xix) to Form 10-K for the year ended December 31, 2014).

(xx) Form of Performance Share Unit Award Agreement (Exhibit 10.b.1.(xx) to Form 10-K for the year ended December 31, 2014).

(xxi) Form of Letter Agreement (Exhibit 10.1 to Form 8-K, dated June 28, 2012).

(xxii) Alexander & Baldwin, Inc. Executive Severance Plan (Exhibit 10.2 to Form 8-K, dated June 28, 2012).

(xxiii) Alexander & Baldwin, Inc. One-Year Performance Improvement Incentive Plan (Exhibit 10.3 to Form 8-K, dated January 28, 2013).

(xxiv) Amendment No. 1 to Alexander & Baldwin, Inc. One-Year Performance Improvement Incentive Plan, dated July 29, 2014 (Exhibit 10.b.1(xxii) to Alexander & Baldwin, Inc.’s Form 10-Q for the quarter ended September 30, 2014).

(xxv) Alexander & Baldwin, Inc. Excess Benefits Plan (Exhibit 10.4 to Form 8-K, dated June 28, 2012).

(xxvi) Amendment No. 1 to the Alexander & Baldwin, Inc. Excess Benefits Plan, effective as of March 1, 2013 (Exhibit 10.b.1(xxiii) to Form 10-Q for the quarter ended March 31, 2013).

115

(xxvii) Alexander & Baldwin, Inc. Deferred Compensation Plan for Outside Directors (Exhibit 10.b.1(xxii) to Form 10-Q for the quarter ended June 30, 2012).

(xxviii) Alexander & Baldwin, Inc. Retirement Plan for Outside Directors (Exhibit 10.b.1(xxiii) to Form 10‑Q for the quarter ended June 30, 2012).

(xxix) Amendment No. 1 to the Alexander & Baldwin, Inc. Retirement Plan for Outside Directors, effective as of March 1, 2013 (Exhibit 10.b.1(xxvi) to Form 10‑Q for the quarter ended March 31, 2013).

(xxx) Letter Agreement, dated October 22, 2009, between Alexander & Baldwin, Inc. and W. Allen Doane (incorporated by reference to Exhibit 10.b.1.(lxxii) to Alexander & Baldwin, Inc.’s Form 10-K for the year ended December 31, 2009).

(xxxi) Independent Contractor Agreement, dated January 1, 2016, between Grace Pacific LLC and David C. Hulihee.

^* All exhibits listed under 10.b.1. are management contracts or compensatory plans or arrangements.

21. Subsidiaries.

21. Alexander & Baldwin, Inc. Subsidiaries as of February 1, 2016 .

23. Consent

23.1 Consent of Deloitte & Touche LLP dated February 29, 2016 .

23.2 Consent of KKDLY LLC dated February 29, 2016 .

31.1 Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32. Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95. Mine Safety Disclosure.

99.1 Financial Statements of Kewalo Development LLC as of and for the years ended December 31, 2015 and 2014.

99.2 Financial Statements of Kewalo Development LLC as of and for the year ended December 31, 2013.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		ALEXANDER & BALDWIN, INC.
		(Registrant)


Date: February 29, 2016		By: /s/ Christopher J. Benjamin
		Christopher J. Benjamin, President and
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.



Signature	Title	Date

/s/ Stanley M. Kuriyama	Chairman of the Board	February 29, 2016
Stanley M. Kuriyama

/s/ Christopher J. Benjamin	President, Chief Executive	February 29, 2016
Christopher J. Benjamin	Officer, and Director

/s/ Paul K. Ito	Senior Vice President,	February 29, 2016
Paul K. Ito	Chief Financial Officer and Treasurer

/s/ W. Allen Doane	Director	February 29, 2016
W. Allen Doane

/s/ Robert S. Harrison	Director	February 29, 2016
Robert S. Harrison

/s/ David C. Hulihee	Director	February 29, 2016
David C. Hulihee

/s/ Charles G. King	Lead Director	February 29, 2016
Charles G. King

/s/ Douglas M. Pasquale	Director	February 29, 2016
Douglas M. Pasquale

/s/ Michele K. Saito	Director	February 29, 2016
Michele K. Saito

/s/ Jenai S. Wall	Director	February 29, 2016
Jenai S. Wall

/s/ Eric K. Yeaman	Director	February 29, 2016
Eric K. Yeaman

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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Registration Statement No. 333-182419 on Form S-8 of our reports relating to the consolidated financial statements and financial statement schedule of Alexander & Baldwin, Inc. and the effectiveness of Alexander & Baldwin, Inc.'s internal control over financial reporting dated February 29, 2016 , appearing in the Annual Report on Form 10-K of Alexander & Baldwin, Inc. for the year ended December 31, 2015 .

/s/ Deloitte & Touche LLP

Honolulu, Hawaii

February 29, 2016

118

Deal CUSIP Number: 01449LAA8

Revolver CUSIP Number: 01449LAB6

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of December 10, 2015

among

ALEXANDER & BALDWIN, LLC

and

GRACE PACIFIC LLC,

as the Borrowers,

BANK OF AMERICA, N.A. ,
as Agent, Swing Line Lender and L/C Issuer,

and

The Other Lenders Party Hereto

FIRST HAWAIIAN BANK ,

as Syndication Agent and L/C Issuer

AMERICAN AGCREDIT, PCA

and

WELLS FARGO BANK, N.A.,

as Co-Documentation Agents

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

and

FIRST HAWAIIAN BANK ,

as Joint Lead Arrangers and Co-Bookrunners

CHAR1\1436963v5

TABLE OF CONTENTS



Section			Page

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS			1
	1.01	Defined Terms.	1
	1.02	Other Interpretive Provisions.	27
	1.03	Accounting Terms.	29
	1.04	Rounding.	29
	1.05	Times of Day.	29
	1.06	Letter of Credit Amounts	29
ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS			30
	2.01	Committed Loans	30
	2.02	Borrowings, Conversions and Continuations of Committed Loans	30
	2.03	Letters of Credit	31
	2.04	Swing Line Loans	42
	2.05	Prepayments	44
	2.06	Termination of Reduction of Commitments	45
	2.07	Repayment of Loans	46
	2.08	Interest	46
	2.09	Fees	47
	2.10	Computation of Interest and Fees; Retroactive Adjustment of Applicable Rate	47
	2.11	Evidence of Debt	48
	2.12	Payments Generally; Agent's Clawback	48
	2.13	Sharing of Payments by Lenders	50
	2.14	Increase in Commitments	51
	2.15	Cash Collateral	52
	2.16	Defaulting Lenders	53
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY			56
	3.01	Taxes	56
	3.02	Illegality	60
	3.03	Inability to Determine Rates	61
	3.04	Increased Costs	62
	3.05	Compensation for Losses	63
	3.06	Mitigation Obligations; Replacement of Lenders	64
	3.07	Survival	64
ARTICLE IV. CONDITIONS PRECEDENT TO EFFECTIVENESS AND Credit Extensions			64
	4.01	Conditions of Effectiveness	64
	4.02	Conditions to all Credit Extensions	66
ARTICLE V. REPRESENTATIONS AND WARRANTIES			66
	5.01	Organization	66
	5.02	Financial Statements	67
	5.03	Actions Pending	67
	5.04	Outstanding Debt	67
	5.05	Title to Properties	68
	5.06	Taxes	68

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	5.07	Conflicting Agreements and Other Matters	68
	5.08	[Intentionally omitted]	68
	5.09	ERISA	68
	5.10	Government Consent	69
	5.11	Investment Company Status, Etc.	69
	5.12	Real Property Matters	69
	5.13	Possessions of Franchises, Licenses, Etc.	69
	5.14	Environmental and Safety Matters	69
	5.15	Hostile Tender Offers	69
	5.16	Employee Relations	70
	5.17	OFAC	70
	5.18	Disclosure	70
	5.19	Anti-Corruption Laws	70
ARTICLE VI. AFFIRMATIVE COVENANTS			71
	6.01	Financial Information	71
	6.02	Inspection of Property	73
	6.03	Covenant to Secure Obligations Equally	73
	6.04	Maintenance of Properties; Insurance	73
	6.05	Environmental and Safety Laws	74
	6.06	Use of Proceeds	74
	6.08	[Reserved]	74
	6.09	Additional Guarantors	74
	6.10	Anti-Corruption Laws	74
ARTICLE VII. NEGATIVE COVENANTS			75
	7.01	Financial Covenants	75
	7.02	Liens	75
	7.03	Loans and Advances	77
	7.04	Merger and Sale of Assets	78
	7.05	Priority Debt	79
	7.06	[Reserved]	79
	7.07	[Reserved]	79
	7.08	Transactions with Holders of Partnership or Other Equity Interests	79
	7.09	Use of Proceeds	79
	7.10	Transfer of Assets to Subsidiaries	79
	7.11	[Reserved]	79
	7.12	Restricted Payments	80
	7.13	Sanctions	80
	7.14	Anti-Corruption Laws	80
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES			80
	8.01	Events of Default	80
	8.02	Remedies Upon Event of Default	82
	8.03	Application of Funds	83
ARTICLE IX. AGENT			84
	9.01	Appointment and Authority	84
	9.02	Rights as a Lender	84
	9.03	Exculpatory Provisions	84
	9.04	Reliance by Agent	85

CHAR1\1436963v5



	9.05	Delegation of Duties	85
	9.06	Resignation of Agent	85
	9.07	Non-Reliance on Agent and Other Lenders	87
	9.08	No Other Duties, Etc.	87
ARTICLE X. MISCELLANEOUS			87
	10.01	Amendments, Etc.	87
	10.02	Notices; Effectiveness; Electronic Communication	89
	10.03	No Waiver; Cumulative Remedies	91
	10.04	Expenses; Indemnity; Damage Waiver	92
	10.05	Payments Set Aside	94
	10.06	Successors and Assigns	94
	10.07	Treatment of Certain Information; Confidentiality	98
	10.08	Right of Setoff	99
	10.09	Interest Rate Limitation	100
	10.10	Counterparts; Integration; Effectiveness; Amendment and Restatement	100
	10.11	Survival of Representations and Warranties	100
	10.12	Severability	101
	10.13	Replacement of Lenders	101
	10.14	Governing Law; Jurisdiction; Etc.	101
	10.15	Waiver of Jury Trial	103
	10.16	No Advisory or Fiduciary Responsibility	103
	10.17	Electronic Execution of Assignments and Certain Other Documents	103
	10.18	USA PATRIOT Act	104

iii

CHAR1\1436963v5

SCHEDULES



1.01	Existing Letters of Credit
2.01	Commitments and Applicable Percentages
5.01	Subsidiaries of Holdings and Ownership of Subsidiary Equity
5.07	Conflicting Agreements
7.00	Existing Liens
10.02	Agent's Office; Certain Addresses for Notices

EXHIBITS



A	Committed Loan Notice
B	Swing Line Loan Notice
C	Note
D	Forms of U.S. Tax Compliance Certificates
E-1	Assignment and Assumption
E-2	Administrative Questionnaire
F	Compliance Certificate
G	Guaranty
H	Notice of Loan Prepayment
I	Letter of Credit Report

CHAR1\1436963v5

AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT (“ Agreement ”) is entered into as of December 10, 2015, among ALEXANDER & BALDWIN, LLC, a Hawaii limited liability company, and GRACE PACIFIC LLC, a Hawaii limited liability company (each individually, a “ Borrower ” and collectively, the “ Borrowers ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), BANK OF AMERICA, N.A., as Agent, Swing Line Lender and L/C Issuer, and FIRST HAWAIIAN BANK, as L/C Issuer.

The Loan Parties originally entered into a Credit Agreement dated as of June 4, 2012 (as amended, supplemented or otherwise modified from time to time until (but not including) the Closing Date, the “ Existing Credit Agreement ”) with the lenders party thereto and Bank of America, N.A., as administrative agent.

The parties to this Agreement desire to amend the Existing Credit Agreement as set forth herein and to restate the Existing Credit Agreement in its entirety to read as follows. This Agreement is not a novation of the Existing Credit Agreement.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms . As used in this Agreement, the following terms shall have the meanings set forth below:

“ Accredited Appraiser ” means an appraiser selected by the Agent and reasonably acceptable to the Required Lenders.

“ Additional Guarantor ” has the meaning set forth in Section 6.09 .

“ Administrative Questionnaire ” means an Administrative Questionnaire in substantially the form of Exhibit E-2 or any other form approved by the Agent.

“ Affiliate ” means, without duplication, any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, another Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of the Loan Documents, the term “Affiliate,” when used in reference to the Borrowers, shall not include Subsidiaries of the Borrowers.

“ Agent ” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

CHAR1\1436963v5

“ Agent’s Office ” means the Agent’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Agent may from time to time notify to the Company and the Lenders in writing.

“ Aggregate Commitments ” means, as of any date of determination, the Commitments of all the Lenders. The initial amount of the Aggregate Commitments in effect on the Closing Date is $350,000,000. The Aggregate Commitments may be increased or decreased from time to time as provided herein.

“ Agreement ” means this Credit Agreement.

“ Agricultural Land ” means land owned in fee by Holdings or its Subsidiaries which is located in the State of Hawaii and zoned exclusively for agricultural purposes, but excluding watershed land, conservation land and pastureland.

“ Applicable Cap Rates ” means (i) 7.25% for Investment Properties, (ii) 9.00% for Agricultural Land which is leased to third parties, (iii) 8.00% for Leased Non-Agricultural Land which is located in the continental United States, and (iv) 7.50% for Leased Non-Agricultural Land which is located in the State of Hawaii.

“ Applicable Percentage ” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at such time. If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption or other documentation pursuant to which such Lender becomes a party hereto, as applicable. The Applicable Percentages shall be subject to adjustment as provided in Section 2.16 .

“ Applicable Rate ” means with respect to the commitment fee payable pursuant to Section 2.09(a) , the Eurodollar Rate, the Base Rate and the Letter of Credit Fee, from time to time, the following percentages per annum, based upon the Total Debt to Total Adjusted Asset Value Ratio as set forth below:



Pricing Level	Total Debt to Total Adjusted Asset Value Ratio	Commitment Fee	Eurodollar Rate	Base Rate	Letter of Credit Fee
I	> 0.45 to 1.0	0.30%	2.15%	1.15%	2.15%
II	< 0.45 to 1.0 but > 0.35 to 1.0	0.25%	1.95%	0.95%	1.95%
III	< 0.35 to 1.0 but > 0.25 to 1.0	0.20%	1.75%	0.75%	1.75%
IV	< 0.25 to 1.0 but > 0.15 to 1.0	0.20%	1.55%	0.55%	1.55%
V	< 0.15 to 1.0	0.15%	1.35%	0.35%	1.35%

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The Applicable Rate in effect on the Closing Date through the date on which the first Compliance Certificate is received by the Agent after the Closing Date shall be based on Pricing Level III. Thereafter the Applicable Rate shall be determined by reference to the Total Debt to Total Adjusted Asset Value Ratio as set forth in the most recent Compliance Certificate received by the Agent pursuant to Section 6.01(c) . Any increase or decrease in the Applicable Rate resulting from a change in the Total Debt to Total Adjusted Asset Value Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.01(c) ; provided , however , that if such Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Lenders, Pricing Level I shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered in accordance with Section 6.01(c) , whereupon the Applicable Rate shall be adjusted based upon the calculation of the Total Debt to Total Adjusted Asset Value Ratio contained in such Compliance Certificate.

“ Applicable Value ” means, as of any date of determination with respect to the calculation of Non-Recourse Debt, (i) if the amount of such excluded Non-Recourse Debt is equal to or less than 70% of the book value of the associated Development Real Properties, the book value of the associated Development Real Properties or (ii) if the amount of such excluded Non-Recourse Debt exceeds 70% of the book value of the associated Development Real Properties but is equal to or less than 70% of the Appraised Value of the associated Development Real Properties, the Appraised Value of the associated Development Real Properties.

“ Appraised Value ” means, to the extent elected by the Borrowers, an appraisal performed by an Accredited Appraiser at the Borrowers’ option, which appraisal assumes no greater than a twelve month marketing time frame.

“ Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Arrangers ” means each of (a) Merrill Lynch, Pierce, Fenner & Smith Incorporated and (b) First Hawaiian Bank, each in its capacity as a joint lead arranger and co-bookrunner.

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b) ), and accepted by the Agent, in substantially the form of Exhibit E-1 or any other form (including electronic documentation generated by MarkitClear or other electronic platform) approved by the Agent.

“ Audited Financial Statements ” means the audited consolidated balance sheet of Holdings and its Subsidiaries for the fiscal year ended December 31, 2014, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Holdings and its Subsidiaries, including the notes thereto.

“ Authorized Officer ” means, with respect to any Loan Party, any officer of such Loan Party designated as an “Authorized Officer” for the purpose of this Agreement in a certificate executed by one of such Loan Party’s then existing Authorized Officers (as previously identified to the Agent). Any action taken under this Agreement on behalf of a Loan Party by any individual who on or after the

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Closing Date shall have been an Authorized Officer of such Loan Party and whom the Agent or any of the Lenders in good faith believes to be an Authorized Officer of such Loan Party at the time of such action shall be binding on such Loan Party even though such individual shall have ceased to be an Authorized Officer of such Loan Party, unless such Borrower or such Loan Party shall have provided the Agent with a certificate executed by one of such Loan Party’s then existing Authorized Officers (as previously identified to the Agent) indicating that such individual is no longer an “Authorized Officer.”

“ Availability Period ” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.06 , and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02 .

“ Bank of America ” means Bank of America, N.A. and its successors.

“ Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Base Rate Loan ” means a Committed Loan that bears interest based on the Base Rate.

“ Borrower ” and “ Borrowers ” have the meaning specified in the introductory paragraph hereto.

“ Borrower Materials ” has the meaning specified in Section 6.01 .

“ Borrowing ” means a Committed Borrowing or a Swing Line Borrowing, as the context may require.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the state where the Agent’s Office is located and, if such day relates to any Eurodollar Loan, means any such day that is also a London Banking Day.

“ Capitalized Lease Obligation ” means, with respect to any Person, any rental obligation of such Person which, under GAAP in effect as of the Closing Date, is or will be required to be capitalized on the books of such Person, taken at the amount thereof accounted for as indebtedness (net of interest expense) in accordance with such principles.

“ Cash Collateralize ” means to pledge and deposit with or deliver to the Agent, for the benefit of one or more of the L/C Issuer or the Lenders, as collateral for L/C Obligations or obligations of the Lenders to fund participations in respect of L/C Obligations, cash or deposit account balances or, if the Agent and the L/C Issuer shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Agent and the L/C Issuer. “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such Cash Collateral and other credit support.

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“ Change in Law ” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith by any Governmental Authority and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“ Change of Control ” means:

(a) the acquisition, after the date hereof, by any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934) (but excluding any employee benefit plan of such persons or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) of outstanding shares of voting stock representing more than 50% of voting control of Holdings; or

(b) the failure of Holdings to own 100% of the Equity Interests of the Company at any time thereafter; or

“ Closing Date ” means December 10, 2015.

“ Code ” means the Internal Revenue Code of 1986.

“ Commitment ” means, as to each Lender, its obligation to (a) make Committed Loans to the Borrowers pursuant to Section 2.01 , (b) purchase participations in L/C Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption or other documentation pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

“ Committed Borrowing ” means a borrowing consisting of simultaneous Committed Loans of the same Type and, in the case of Eurodollar Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01 .

“ Committed Loan ” has the meaning specified in Section 2.01 .

“ Committed Loan Notice ” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Eurodollar Loans, pursuant to Section 2.02(a) , which, if in writing, shall be substantially in the form of Exhibit A or such other form as may be approved by the Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Agent), appropriately completed and signed by a Responsible Officer of the applicable Borrower.

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“ Company ” means Alexander & Baldwin, LLC, a Hawaii limited liability company.

“ Compliance Certificate ” means a certificate signed in the name of the Borrowers by an Authorized Officer of the Borrowers in substantially the form of Exhibit F .

“ Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“ Consolidated Interest Expense ” means, for any period of determination, for Holdings and its Subsidiaries on a consolidated basis the sum of all amounts that would, in accordance with GAAP, be deducted in computing Consolidated Net Income for the fiscal periods in question on account of interest, including without limitation, imputed interest in respect of Capitalized Lease Obligations, fees in respect of letters of credit and bankers’ acceptance financing and amortization of debt discount and expense.

“ Consolidated Net Income ” means, for any period of determination, the net income from continuing operations of Holdings and its Subsidiaries on a consolidated basis as determined in accordance with GAAP, provided that the proceeds of any sale or condemnation of real estate that is treated as a discontinued operation pursuant to GAAP shall be treated as income from continuing operations to the extent the net proceeds of such sale or condemnation have been reinvested in real estate within twelve months from the date of such sale or condemnation.

“ Consolidated Net Income Before Taxes ” means, for any period of determination, Consolidated Net Income for Holdings and its Subsidiaries on a consolidated basis for such period plus the sum of all deferred and current Federal, state, local and foreign taxes on income that are deducted in accordance with GAAP in computing Consolidated Net Income for such period.

“ Consolidated Shareholders’ Equity ” means, at any time of determination thereof, for Holdings and its Subsidiaries on a consolidated basis determined in accordance with GAAP, the sum of (i) consolidated shareholders’ equity, and (ii) any consolidated mezzanine equity (or other temporary or non-permanent equity) resulting from the application of the Financial Accounting Standards Board Accounting Standards Codification Topic 718, and related stock based compensation awards issued to management which are puttable upon a change of control; provided , that any determination of Consolidated Shareholders’ Equity shall exclude all non-cash adjustments to Consolidated Shareholders’ Equity resulting from the application of the Financial Accounting Standards Board Accounting Standards Codification Topic 960.

“ Consolidated Total Assets ” means, at any time of determination thereof, the consolidated total assets of Holdings and its Subsidiaries on a consolidated basis determined in accordance with GAAP.

“ Credit Extension ” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

“ Debt ” means, as to any Person at the time of determination thereof without duplication, (a) any indebtedness of such Person (i) for borrowed money, including commercial paper and revolving credit lines, (ii) evidenced by bonds, debentures or notes or otherwise representing extensions of credit, whether or not representing obligations for borrowed money or (iii) for the payment of the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, regardless of when such liability or other obligation is due and payable, (b) Capitalized Lease Obligations of such Person, (c) Guarantees, assumptions and endorsements by such Person (other than endorsements

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of negotiable instruments for collection in the ordinary course of business) of Debt of another Person of the types described in clauses (a) and (b) hereof, and (d) Debt of another Person (whether or not assumed) that is secured by Liens on the property or other assets of such Person. “Debt” shall not include a reimbursement obligation incurred in connection with a standby Letter of Credit issued (i) in support of trade payables or (ii) as condition to receiving (A) a governmental entitlement, (B) a performance bond or (C) a performance guaranty, in each case under the immediately preceding clauses (i) and (ii) to the extent such reimbursement obligation is contingent and to the extent the aggregate amount of such standby letters of credit does not exceed $10,000,000.

“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“ Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“ Default Rate ” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided , however , that with respect to a Eurodollar Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.

“ Defaulting Lender ” means, subject to Section 2.16(b) , any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Agent and the Company in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Agent, the L/C Issuer, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Line Loans) within two Business Days of the date when due, (b) has notified the Company, the Agent, the L/C Issuer or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Agent or the Company, to confirm in writing to the Agent and the Company that it will comply with its prospective funding obligations hereunder ( provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Agent and the Company), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the

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United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.16(b) ) as of the date established therefor by the Agent in a written notice of such determination, which shall be delivered by the Agent to the Company, the L/C Issuer, the Swing Line Lender and each other Lender promptly following such determination.

“ Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.

“ Development Real Properties ” means, at any time of determination for Holdings and its Subsidiaries, any real property asset under development, construction, renovation or rehabilitation that (i) is then treated as an asset under development under GAAP, (ii) is located in the State of Hawaii, the Territory of Guam or the continental United States, and (iii) has been designated by the Borrowers in a written notice to the Agent as a “Development Real Property.”

“ Dollar ” and “ $ ” mean lawful money of the United States.

“ EBITDA ” means, for any period, for Holdings and its Subsidiaries on a consolidated basis, Consolidated Net Income Before Taxes for such period plus, to the extent deducted in the calculation thereof, (i) to the extent added back in calculating Adjusted EBITDA (as defined in the Note Purchase Agreement) under the Note Purchase Agreement, fees and expenses paid in cash and incurred in connection with the negotiation, execution and delivery of this Agreement and any amendment, extension, renewal or other modification or supplement hereof or thereof, (ii) Consolidated Interest Expense, (iii) depreciation and amortization expense, (iv) non-cash stock-based compensation expense and (v) non-cash pension, non-cash postretirement and non-cash nonqualified expenses; provided that EBITDA shall exclude non-cash gains or losses resulting from the write-up or write-down of assets.

“ Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) and (v) (subject to such consents, if any, as may be required under Section 10.06(b)(iii) ).

“ Environmental and Safety Laws ” means all Federal, state and local laws, regulations and ordinances, relating to the discharge, handling, disposition or treatment of Hazardous Materials and other substances or the protection of the environment or of employee health and safety, including, without limitation, CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et. seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et. seq.), the Clean Air Act (42 U.S.C. Section 7401 et. seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et. seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et. seq.) and the Emergency Planning and Community Right-To-Know Act (42 U.S.C. Section 11001 et. seq.).

“ Environmental Liabilities and Costs ” means as to any Person, all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, contribution, cost recovery, costs and expenses (including all fees, disbursements and expenses of counsel, expert and consulting fees, and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand, by any Person, whether based in

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contract, tort, implied or express warranty, strict liability, criminal or civil statute, permit, order or agreement with any Federal, state or local governmental authority or other Person, arising from environmental, health or safety conditions, or the release or threatened release of a contaminant, pollutant or Hazardous Material into the environment, resulting from the operations of such Person or its subsidiaries, or breach of any Environmental and Safety Law or for which such Person or its Subsidiaries is otherwise liable or responsible.

“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” means any corporation which is a member of the same controlled group of corporations as the Borrowers within the meaning of section 414(b) of the Code, or any trade or business which is under common control with the Borrowers within the meaning of section 414(c) of the Code.

“ Eurodollar Loan ” means a Committed Loan that bears interest at a rate based on clause (a) of the definition of “Eurodollar Rate.”

“ Eurodollar Rate ” means:

(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to the London Interbank Offered Rate (“ LIBOR ”), or a comparable or successor rate which rate is approved by the Agent, as published by Bloomberg (or such other commercially available source providing such quotations as may be designated by the Agent from time to time) (in such case, the “ LIBOR Rate ”) at or about 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; and

(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to the LIBOR Rate, at or about 11:00 a.m., London time, two (2) Business Days prior to such date for Dollar deposits with a term of one (1) month commencing that day;

provided that (i) to the extent a comparable or successor rate is approved by the Agent in connection herewith, the approved rate shall be applied in a manner consistent with market practice; provided , further that to the extent such market practice is not administratively feasible for the Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Agent and (ii) if the Eurodollar Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.

“ Event of Default ” has the meaning specified in Section 8.01 .

“ Excluded Taxes ” means, any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i)

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imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrowers under Section 10.13 ) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii) or 3.01(c) , amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

“ Existing Credit Agreement ” has the meaning specified in the recitals hereto.

“ Existing Letters of Credit ” means those letters of credit set forth on Schedule 1.01 .

“ FATCA ” means Sections 1471 through 1474 of the Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any applicable intergovernmental agreements.

“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Agent.

“ Fee Letter ” means the fee letter agreement dated as of the Closing Date among the Company and the Agent.

“ Fixed Charges ” means as of any date of determination for Holdings and its Subsidiaries on a consolidated basis, Consolidated Interest Expense for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date, plus preferred dividends of Holdings accrued during the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date, plus scheduled principal payments (excluding any “balloon payment” and amounts outstanding under this Agreement that are classified as current liabilities under GAAP but only to the extent that no Default or Event of Default then exists under this Agreement or the Note Purchase Agreement) of Holdings and its Subsidiaries for the period of four consecutive fiscal quarters next succeeding such date of determination.

“ Fixed Charge Coverage Ratio ” means, as of any date of determination, the ratio of (a) prior to the Triggering Event, (i) EBITDA for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to (ii) Fixed Charges as of such date, and (b) on and after the Triggering Event, (i) Triggering Event EBITDA for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to (ii) Fixed Charges as of such date.

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“ Foreign Lender ” means a Lender that is not a U.S. Person.

“ Foreign Subsidiary ” means any Subsidiary that is incorporated or organized under the laws of a country other than the United States or any state thereof or the District of Columbia; provided that any Subsidiary that is not described in the preceding clause, but which owns voting stock in one or more Foreign Subsidiaries but owns no other material assets and does not engage in any trade or business (other than acting as a holding company for such voting stock in Foreign Subsidiaries) shall be deemed to be a Foreign Subsidiary hereunder; provided further that any Subsidiary that is disregarded as separate from its owner for United States federal income tax purposes and which owns voting stock in one or more Foreign Subsidiaries shall be deemed to be a Foreign Subsidiary.

“ FRB ” means the Board of Governors of the Federal Reserve System of the United States.

“ Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.

“ Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“ GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, and rules, regulations and interpretations of the SEC, consistently applied.

“ Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Grace ” means Grace Pacific LLC, a Hawaii limited liability company.

“ Grace Holdings ” means A&B II, LLC, a Hawaii limited liability company, the direct holding company of Grace.

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payment for such materials, supplies or other property or services be made regardless of whether or not delivery of such materials, supplies or other property or services is ever made or tendered; (c) to rent or lease (as lessee) any real or personal property (except for leases in effect on December 31, 2010) if such obligation is absolute and unconditional under conditions not customarily found in commercial leases then in general use; or (d) of any partnership or joint venture in which such Person is a general partner or joint venturer if such obligation is not expressly non-recourse to such Person; but excluding (i) a completion guarantee issued in connection with a real estate development project to the extent contingent and not constituting a direct or indirect obligation to re-pay Debt and (ii) environmental indemnification agreements.

“ Guarantor ” means Holdings, Grace Holdings and each Additional Guarantor.

“ Guaranty ” means the Guaranty, dated as of the Closing Date, executed by the Guarantors in favor of the Agent, substantially in the form of Exhibit G and any additional guaranty in favor of the Agent provided pursuant to the terms of this Agreement.

“ Hazardous Materials ” means (a) any material or substance defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “toxic substances” or any other formulations intended to define, list or classify substances by reason of their deleterious properties, (b) any oil, petroleum or petroleum derived substance, (c) any flammable substances or explosives, (d) any radioactive materials, (e) asbestos in any form, (f) electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million, (g) pesticides or (h) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental agency or authority or which may or could pose a hazard to the health and safety of persons in the vicinity thereof.

“ Holdings ” means Alexander & Baldwin, Inc., a Hawaii corporation.

“ Honor Date ” means the date of any payment by the L/C Issuer under a Letter of Credit.

“ Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“ Indemnitees ” has the meaning specified in Section 10.04(b) .

“ Information ” has the meaning specified in Section 10.07 .

“ Interest Payment Date ” means, (a) as to any Eurodollar Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurodollar Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the first Business Day after the end of each March, June, September and December and the Maturity Date.

“ Interest Period ” means, as to each Eurodollar Loan, the period commencing on the date such Eurodollar Loan is disbursed or converted to or continued as a Eurodollar Loan and ending on the date one week or one, two, three or six months thereafter, as selected by the applicable Borrower in its Committed Loan Notice; provided that:

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(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period shall extend beyond the Maturity Date.

“ Investment Properties ” means developed real estate investment properties located in the State of Hawaii or the continental United States and owned in fee by Holdings or its Subsidiaries, but excluding Development Real Properties, Agricultural Land (whether leased to third parties or operated by Holdings or any of its Subsidiaries), Leased Non-Agricultural Land and agriculture-related properties such as hydroelectric facilities and solar equipment.

“ IFRS ” means international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements delivered under or referred to herein.

“ IRS ” means the United States Internal Revenue Service.

“ ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

“ Issuer Documents ” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor the L/C Issuer and relating to such Letter of Credit.

“ Joint Venture Entity ” has the meaning set forth in the definition of Total Adjusted Asset Value.

“ L/C Advance ” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.

“ L/C Borrowing ” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing.

“ L/C Credit Extension ” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

“ L/C Issuer ” means, as the context requires, (a) First Hawaiian Bank in its capacity as issuer of Letters of Credit hereunder (including certain Existing Letters of Credit), (b) Bank of America, N.A. in its capacity as issuer of Letters of Credit hereunder (including certain Existing Letters of Credit), and (c) any successor issuer of Letters of Credit hereunder. The term “L/C Issuer” when used with respect to a Letter of Credit or the L/C Obligations relating to a Letter of Credit shall refer to the L/C Issuer that issued such Letter of Credit.

“ L/C Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including

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all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06 . For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“ Leased Non-Agricultural Land ” means land owned in fee by Holdings or its Subsidiaries, other than Agricultural Land, located in the State of Hawaii or the continental United States and leased to Third Parties on arms’-length terms, which land has improvements situated thereon in which none of Holdings or its Subsidiaries has an ownership interest.

“ Lender ” has the meaning specified in the introductory paragraph hereto and, unless the context requires otherwise, includes the Swing Line Lender.

“ Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Company and the Agent.

“ Letter of Credit ” means any letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder and shall include the Existing Letters of Credit. A Letter of Credit may be a commercial letter of credit or a standby letter of credit. Notwithstanding anything to the contrary contained herein, a letter of credit issued by an L/C Issuer other than Bank of America shall not be a "Letter of Credit" for purposes of the Loan Documents until such time as the Agent has been notified of the issuance thereof by the applicable L/C Issuer and has confirmed with the L/C Issuer that there exists adequate availability under the Aggregate Commitments to issue such letter of credit.

“ Letter of Credit Application ” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

“ Letter of Credit Expiration Date ” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

“ Letter of Credit Fee ” has the meaning specified in Section 2.03(i) .

“ Letter of Credit Report ” means a certificate substantially in the form of Exhibit I or any other form approved by the Agent.

“ Letter of Credit Sublimit ” means an amount equal to the lesser of (a) $100,000,000 and (b) the Aggregate Commitments. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

“ Lien ” means any mortgage, deed of trust, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any purchase money mortgage, conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement (exclusive of filings for precautionary purposes only) under the Uniform Commercial Code of any jurisdiction).

“ Loan ” means an extension of credit by a Lender to a Borrower under Article II in the form of a Committed Loan or a Swing Line Loan.

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“ Loan Documents ” means this Agreement, each Note, each Issuer Document, the Guaranty, any additional guaranty provided by an Additional Guarantor pursuant to the terms of Section 6.09 , any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.15 and the Fee Letter.

“ Loan Parties ” means, collectively, each Borrower, Holdings, Grace Holdings and any Additional Guarantor.

“ London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, on the business, condition (financial or otherwise) or operations of the Holdings and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document; or (c) a material adverse effect on the material rights and remedies of the Lenders taken as a whole, which material adverse effect was not caused by any Lender.

“ Maturity Date ” means December 10, 2020. If such date is not a Business Day, the Maturity Date shall be the next Business Day.

“ Minimum Collateral Amount ” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender, an amount equal to 100% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (ii) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.15(a)(i) , (a)(ii) or (a)(iii) , an amount equal to 100% of the Outstanding Amount of all L/C Obligations, and (iii) otherwise, an amount equal to 100% of the stated amount of the applicable Letter of Credit.

“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.

“ Multiemployer Plan ” means any Plan which is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).

“ Net Operating Income from Investment Properties ” means, for any period of determination thereof for Holdings and its Subsidiaries on a consolidated basis, the consolidated cash revenues attributable to all Investment Properties less operating expenses, real property taxes, taxes on gross revenue, common area maintenance expenses, ground and other rents, other rental expenses, and charges for property management related thereto for the most recently ended two fiscal quarters multiplied by two, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ Net Operating Income from Leased Agricultural Land ” means, for any period of determination thereof for Holdings and its Subsidiaries on a consolidated basis, the consolidated cash revenues attributable to all Agricultural Land which is leased to third parties on arms’-length terms less operating expenses, real property taxes, taxes on gross revenue, and charges for property management related thereto for the most recently ended two fiscal quarters multiplied by two, but in no event shall take into

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account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ Net Operating Income from Leased Non-Agricultural Land ” means, for any period of determination thereof for Holdings and its Subsidiaries, the consolidated cash revenues attributable to all Leased Non-Agricultural Land less operating expenses, real property taxes, taxes on gross revenue, and charges for property management related thereto for the most recently ended two fiscal quarters multiplied by two, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ Net Operating Income from Unencumbered Investment Properties ” means, for any period of determination thereof for Holdings and its Subsidiaries on a consolidated basis, the consolidated cash revenues attributable to Unencumbered Investment Properties less operating expenses, real property taxes, taxes on gross revenue, common area maintenance expenses, ground and other rents, other rental expenses, and charges for property management related thereto for the most recently ended two fiscal quarters multiplied by two, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ Net Operating Income from Unencumbered Leased Agricultural Land ” means, for any period of determination thereof for Holdings and its Subsidiaries on a consolidated basis, the consolidated cash revenues attributable to Unencumbered Leased Agricultural Land, less operating expenses, real property taxes, taxes on gross revenue, and charges for property management related thereto for the most recently ended two fiscal quarters multiplied by two, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ Net Operating Income from Unencumbered Leased Non-Agricultural Land ” means, for any period of determination thereof for Holdings and its Subsidiaries, the consolidated cash revenues attributable to all Unencumbered Leased Non-Agricultural Land less operating expenses, real property taxes, taxes on gross revenue, and charges for property management related thereto for the most recently ended two fiscal quarters multiplied by two, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

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“ Non-Consenting Lender ” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.01 and (ii) has been approved by the Required Lenders.

“ Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

“ Non-Recourse Debt ” means, with respect to any Loan Party or Subsidiary, any (i) Debt that is not Recourse Debt, and (ii) fully recourse mortgage and similar financings obtained by a Subsidiary of a Borrower if the mortgaged real property constitutes substantially all of the assets of such Subsidiary; provided that solely with respect to the definition of Principal Credit Facility and Section 7.10 , Non-Recourse Debt shall also include loans and credit facilities at all times during which the recourse portion of such loans and credit facilities (including commitments in respect thereof) is not in excess of $40,000,000.

“ Note ” means a promissory note made by the Borrowers in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit C .

“ Note Purchase Agreement ” means that certain Second Amended and Restated Note Purchase and Private Shelf Agreement dated as of the Closing Date among Holdings, the Company and the noteholders party thereto, as such agreement may be amended, restated, modified or supplemented from time to time in accordance with the terms hereof.

“ Notice Date ” has the meaning set forth in Section 2.03(c)(i) .

“ Notice of Loan Prepayment ” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit H or such other form as may be approved by the Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Agent), appropriately completed and signed by a Responsible Officer of the applicable Borrower.

“ Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising under any Loan Document and including interest and fees that accrue after the commencement by or against any Borrower or any Subsidiary or Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“ OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

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“ Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).

“ Outstanding Amount ” means (i) with respect to Committed Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be, occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the applicable Borrower of Unreimbursed Amounts.

“ Participant ” has the meaning specified in Section 10.06(d) .

“ Participant Register ” has the meaning specified in Section 10.06(d) .

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Permitted Assets ” means (a) where any Property Sub or any assets of a Property Sub or of a Borrower have been sold or otherwise transferred, assets, including real estate, to be used by any Borrower or any Property Sub in conducting Property Development Activities, the Property Management Business or the agribusiness and (b) in all other instances, assets, including real estate, to be used in conducting Property Development Activities, the Property Management Business, the agribusiness.

“ Permitted Debt ” means (a) any unsecured Debt of a Borrower or a Subsidiary (exclusive of Debt owed to a Borrower or a Subsidiary) as selected by the Borrowers, so long as the aggregate amount of all proceeds from sales or other dispositions which are made after December 31, 2014 pursuant to clauses (d), (e) or (f) of Section 7.04 and that are applied to the prepayment such unsecured debt pursuant to this clause (a), do not exceed $150,000,000 and (b) after the $150,000,000 basket in clause (a) has been fully utilized, all unsecured Debt of the Borrowers and Subsidiaries (exclusive of any Debt owed to a Borrower or a Subsidiary thereof) on a pro rata basis.

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Plan ” means any “employee pension benefit plan” (as such term is defined in section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by any Borrower or any ERISA Affiliate.

“ Platform ” has the meaning specified in Section 6.01 .

“ Public Lender ” has the meaning specified in Section 6.01 .

“ Principal Credit Facility ” means (a) the Note Purchase Agreement or (b) any other credit agreement, loan agreement, note purchase agreement or similar agreement under which credit facilities in the aggregate principal or commitment amount of at least $40,000,000 are provided for, in each case, as any of the same may be amended, restated, supplemented or otherwise modified from time to time;

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provided that the immediately preceding clause (b) shall exclude (i) all purchase money debt, (ii) all construction and other project financings, and (iii) all Non-Recourse Debt.

“ Priority Debt ” means, with respect to the Borrowers, Holdings and their Subsidiaries, at any time of determination and without duplication, the sum of (a) Debt of the Company, Grace, Holdings and the other Guarantors secured by a Lien, plus (b) Debt of Subsidiaries of Holdings (other than the Company, Grace and the Subsidiaries of Holdings which are Guarantors), regardless of whether such Debt is secured or unsecured.

“ Priority Debt Limit ” means, at any time of determination, an amount equal to 20% of Total Adjusted Asset Value (as of the end of the most-recent fiscal quarter of Holdings).

“ Property Development Activities ” means land acquisition and development activities, the principal objective of which is to acquire and develop real property for sale or other disposition.

“ Property Management Business ” means the managing, leasing, selling and purchasing of real property.

“ Property Subs ” means Subsidiaries that exist on the date hereof or that are subsequently formed or acquired and, in each case, whose principal business activities are to engage in Property Development Activities.

“ Recipient ” means the Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.

“ Recourse Debt ” means, with respect to any Loan Party or Subsidiary, any Debt, in respect of which contractual recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, and other similar exceptions to recourse liability) is to such Person.

“ Register ” has the meaning specified in Section 10.06(c) .

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“ Request for Credit Extension ” means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

“ Required Lenders ” means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 , Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition); provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders (except that the amount of any participation in any Swing Line Loan and Unreimbursed Amounts that such Defaulting Lender has failed to fund that has not been reallocated to and funded by another Lender shall be deemed to be “held” by the Lender that is the Swing Line Lender or L/C Issuer, as the case may be, in making such determination).

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“ Responsible Officer ” means each of the treasurer, the chief financial officer, principal accounting officer, controller and chief legal officer of the applicable Borrower and any other officer of such Borrower whose responsibilities include monitoring such Borrower’s compliance with the provisions of this Agreement or matters referenced herein or any other officer or employee of such Borrower designated in or pursuant to an agreement between such Borrower and the Agent. Any document delivered hereunder that is signed by a Responsible Officer of such Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Borrower.

“ Restricted Payments ” has the meaning specified in Section 7.12 .

“ S&P ” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw Hill Companies, Inc. and any successor thereto.

“ Sanction(s) ” means any sanction administered or enforced by the United States Government, including OFAC, the United Nations Security Council, the European Union, Her Majesty’s Treasury (“ HMT ”) or other relevant sanctions authority.

“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“ Significant Line of Business ” means a line of business or an operating division, the book value of which is, on the date of determination, equal to 5% or more of Consolidated Shareholders’ Equity.

“ Significant Subsidiary ” means any direct or indirect Subsidiary of Holdings (other than the Company or Grace), the net worth of which is, on the date of determination, 5% or more of Consolidated Shareholders’ Equity.

“ Subsidiary ” means, as to any Person, any company, whether operating as a corporation, joint venture, partnership, limited liability company or other entity, which is consolidated with such Person in accordance with GAAP. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Holdings.

“ Swing Line Borrowing ” means a borrowing of a Swing Line Loan pursuant to Section 2.04 .

“ Swing Line Lender ” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

“ Swing Line Loan ” has the meaning specified in Section 2.04(a) .

“ Swing Line Loan Notice ” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b) , which, if in writing, shall be substantially in the form of Exhibit B or such other form as approved by the Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Agent pursuant), appropriately completed and signed by a Responsible Officer of the applicable Borrower.

“ Swing Line Sublimit ” means an amount equal to the lesser of (a) $80,000,000 and (b) the Aggregate Commitments. The Swing Line Sublimit is part of, and not in addition to, the Aggregate Commitments.

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“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Third Party ” means any Person other than Holdings and its Subsidiaries.

“ Total Adjusted Asset Value ” means, at any date of determination thereof, without duplication, (a) real estate leasing property value (which shall be deemed to equal the sum of (i) Net Operating Income from Investment Properties divided by the Applicable Cap Rates, (ii) Net Operating Income from Leased Agricultural Land divided by the Applicable Cap Rates and (iii) Net Operating Income from Leased Non-Agricultural Land divided by the Applicable Cap Rates, plus (b) the greater of (x) EBITDA for the period of four (4) consecutive fiscal quarters most recently ended generated from the agricultural division of Holdings and its Subsidiaries (excluding, as an abundance of caution, Net Operating Income from Leased Agricultural Land and including, as an abundance of caution, income generated from electricity producing assets) divided by 20.0%, and (y) the Appraised Value of Agricultural Land which is not leased to third parties ( provided that the determination of whether or not to obtain the appraisal necessary to determine the Appraised Value shall be made at the option of the Borrowers and if the Borrowers do not elect to have an appraisal performed, then clause (x) will be deemed to be greater than clause (y)), plus (c) the book value of Development Real Properties owned by Holdings or any of its Subsidiaries (with such book value, in the case of a less than wholly-owned subsidiary or any other entity (other than a Subsidiary) in which Holdings or any of its Subsidiaries owns an equity interest (each, a “ Joint Venture Entity ”), to be (i) with respect to a consolidated Joint Venture Entity, equal to the net assets of such Joint Venture Entity less the noncontrolling interest in such Joint Venture Entity as reflected on the consolidated balance sheet of Holdings required to be delivered pursuant to Section 6.01(a) or (b) , or (ii) with respect to an unconsolidated Joint Venture Entity, equal to the book value of Holdings’ direct or indirect investment in such Joint Venture Entity), provided that the aggregate amount under this clause (c) shall not comprise more than 30% of consolidated total assets of Holdings and its Subsidiaries (less cash, cash equivalents, marketable securities, goodwill, noncontrolling interest and pension assets) in accordance with GAAP for the most recent fiscal quarter plus (d) the value of the assets of Grace and its Subsidiaries (which shall be deemed to be equal to EBITDA generated solely by Grace Holdings and its Subsidiaries for the period of four (4) consecutive fiscal quarters most recently ended divided by 16.67%).

Notwithstanding anything to the contrary in the foregoing portions of this definition or Section 1.02(e) , any asset or Person (together with such Person’s Subsidiaries) acquired by Holdings or any of its Subsidiaries, for purpose of determining the “Total Adjusted Asset Value,” shall be valued at net book value during the period from the consummation of such acquisition until the last day of the first four full fiscal quarters occurring after the consummation of such acquisition.

“ Total Debt to Total Adjusted Asset Value Ratio ” means, as at any time of determination thereof, the ratio of (i) all Debt of Holdings and its Subsidiaries on a consolidated basis as of such time to (ii) Total Adjusted Asset Value as of such time.

“ Total Outstandings ” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

“ Triggering Event ” means the date, occurring on or before June 30, 2016, on which Holdings or the Company publicly announces it intends to cease the business of cultivating and producing raw sugar.

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“ Triggering Event EBITDA ” means, for any period, for Holdings and its Subsidiaries on a consolidated basis, Consolidated Net Income Before Taxes for such period plus, to the extent deducted in the calculation thereof, (i) to the extent added back in calculating Triggering Event EBITDA (as defined in the Note Purchase Agreement) under the Note Purchase Agreement, fees and expenses paid in cash and incurred in connection with the negotiation, execution and delivery of this Agreement and any amendment, extension, renewal or other modification or supplement hereof or thereof, (ii) Consolidated Interest Expense, (iii) depreciation and amortization expenses, (iv) non-cash stock-based compensation expense, (v) non-cash pension, non-cash postretirement and non-cash nonqualified expenses, and (vi) non-recurring one-time expenses (whether cash or non-cash) incurred in accordance with GAAP in connection with or as a result of the Triggering Event; provided that the aggregate amount added back under this clause (vi) for all periods shall not exceed $45,000,000 and shall only be permitted to be added back for so long as incurred no later than the date that is 18 months after the Triggering Event; provided that Triggering Event EBITDA shall exclude non-cash gains or losses resulting from the write-up or write-down of assets.

“ Type ” means, with respect to a Committed Loan, its character as a Base Rate Loan or a Eurodollar Loan.

“ Undeveloped Land ” means (a) land owned in fee by any Borrower or any Subsidiary as of December 31, 2014 which at the time of determination has not been developed for commercial or residential purposes, (b) land acquired by any Borrower or any Subsidiary subsequent to December 31, 2014 pursuant to a Code section 1031 like-kind exchange (in exchange for land described in clause (a) or (b) of this definition) which at the time of determination has not been developed for commercial or residential purposes, or (c) capital stock or other equity interests of a Subsidiary which owns as its principal asset, directly or indirectly, Undeveloped Land described in clause (a) or (b) of this definition.

“ UCP ” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ ICC ”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).

“ Unencumbered Agricultural Division Assets ” means assets of the agricultural division of Holdings and its Subsidiaries which: (i) are not subject to a mortgage or any other Lien, other than (a) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, and (b) Liens incidental to the conduct of the owner of such asset’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of the applicable asset, or materially impair the use thereof; (ii) are not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such asset, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that prohibits or limits the ability of Holdings or any Subsidiary, as the case may be, to create, incur, assume or suffer to exist any Lien upon any assets or equity interest of Holdings, or any Subsidiary except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) are not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such asset, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including

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pursuant to an “equal and ratable” clause). No such asset owned by a Subsidiary of Holdings shall be deemed to be an Unencumbered Agricultural Division Asset unless (1) both such asset and all equity interests of the Subsidiary which holds legal title to such asset is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in Section 8.01(f) or 8.01(g) (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

“ Unencumbered Agricultural Land ” means Agricultural Land which: (i) is not subject to a mortgage or any other Lien, other than (a) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, and (b) Liens incidental to the conduct of the owner of such property’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of the applicable property, or materially impair the use thereof; (ii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that prohibits or limits the ability of Holdings or any Subsidiary, as the case may be, to create, incur, assume or suffer to exist any Lien upon any assets or equity interest of Holdings, or any Subsidiary except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such land owned by a Subsidiary of Holdings shall be deemed to be Unencumbered Agricultural Land unless (1) both such land and all equity interests of the Subsidiary which holds legal title to such land is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in Section 8.01(f) or 8.01(g) (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

“ Unencumbered EBITDA ” means, for any period, with respect to Holdings and its Subsidiaries on a consolidated basis, without duplication, EBITDA derived from (i) Unencumbered Investment Properties, (ii) Unencumbered Leased Agricultural Land, (iii) EBITDA generated from the agricultural division of Holdings and its Subsidiaries but only to the extent the assets in the agricultural division are Unencumbered Agricultural Division Assets and (iv) EBITDA calculated solely with respect to Grace Holdings and its Subsidiaries, provided that the amount of EBITDA under this clause (iv) shall be excluded from the calculation of Unencumbered EBITDA if, at any time during such period of determination, any Debt of Grace Holdings or its Subsidiaries is secured by a consensual Lien except that only EBITDA of GLP Asphalt LLC shall be excluded from the calculation of Unencumbered EBITDA if the only Debt of Grace Holdings or its Subsidiaries which is secured by a consensual Lien consists of (1) the bank facility from Wells Fargo Bank, N.A. in favor of GLP Asphalt LLC in an aggregate commitment or outstanding principal amount not to exceed $30,000,000, or any extensions, refinancings, replacements, amendments or amendments and restatements of such bank facility in an aggregate commitment or outstanding principal amount not to exceed $30,000,000, and/or (2) the term loan from Bank of Hawaii in favor of GLP Asphalt LLC in an aggregate outstanding principal amount not to exceed the original aggregate principal amount of $14,000,000, as reduced from time to time in accordance with its originally scheduled principal amortization (and only until its final maturity date of March 1, 2021).

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“ Unencumbered Fixed Charge Coverage Ratio ” means, as of any date of determination, the ratio of (a) Unencumbered EBITDA for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date to (b) Unencumbered Fixed Charges as of such date.

“ Unencumbered Fixed Charges ” means, as of any period of determination, with respect to Holdings and its Subsidiaries on a consolidated basis, the portion of Consolidated Interest Expense attributable to Unsecured Debt for the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date, plus preferred dividends of Holdings with respect to Unsecured Debt accrued during the period of four (4) consecutive fiscal quarters ending on or immediately prior to such date, plus scheduled principal payments with respect to Unsecured Debt (excluding any “balloon payment” and amounts outstanding under this Agreement that are classified as current liabilities under GAAP but only to the extent that no Default or Event of Default then exists under this Agreement or the Note Purchase Agreement) of Holdings and its Subsidiaries for the period of four consecutive fiscal quarters next succeeding such date of determination.

“ Unencumbered Income Producing Assets Value ” means, at any time of determination thereof, without duplication, the sum of (i) the Net Operating Income from Unencumbered Investment Properties divided by the Applicable Cap Rates, (ii) the Net Operating Income from Unencumbered Leased Agricultural Land divided by the Applicable Cap Rates, (iii) the Net Operating Income from Unencumbered Leased Non-Agricultural Land divided by the Applicable Cap Rate, (iv) the greater of (x) EBITDA for the period of four (4) consecutive fiscal quarters most recently ended generated from the agricultural division of Holdings and its Subsidiaries but only to the extent the assets in the agricultural division are Unencumbered Agricultural Division Assets (excluding, as an abundance of caution, Net Operating Income from Leased Agricultural Land) divided by 20.0%, and (y) the Appraised Value of Unencumbered Agricultural Land which is not leased to third parties ( provided that the determination of whether or not to obtain the appraisal necessary to determine the Appraised Value shall be made at the option of the Borrowers and if the Borrowers do not elect to have an appraisal performed, then clause (x) will be deemed to be greater than clause (y)), (v) the value of the assets of Grace and its Subsidiaries (which shall be deemed to be equal to EBITDA generated solely by Grace Holdings and its Subsidiaries for the period of four (4) consecutive fiscal quarters most recently ended divided by 16.67%), provided that the amount of EBITDA under this clause (v) shall be excluded from the calculation of Unencumbered Income Producing Assets Value if, at such time of determination or at any time during such then or most recently ended period of four consecutive fiscal quarters, any Debt of Grace Holdings or its Subsidiaries is or was secured by a consensual Lien, except that only the value of GLP Asphalt LLC (which shall be deemed to be equal to EBITDA (but calculated solely with respect to GLP Asphalt LLC and its Subsidiaries for the then or most recently ended period of four consecutive fiscal quarters) divided by 16.67%) shall be excluded from the calculation of Unencumbered Income Producing Assets Value if the only Debt of Grace Holdings or its Subsidiaries which is or was secured by a consensual Lien consists or consisted of (1) the bank facility from Wells Fargo Bank, N.A. in favor of GLP Asphalt LLC in an aggregate commitment or outstanding principal amount not to exceed $30,000,000, or any extensions, refinancings, replacements, amendments or amendments and restatements of such bank facility in an aggregate commitment or outstanding principal amount not to exceed $30,000,000, and/or (2) the term loan from Bank of Hawaii in favor of GLP Asphalt LLC in an aggregate outstanding principal amount not to exceed the original aggregate principal amount of $14,000,000, as reduced from time to time in accordance with its originally scheduled principal amortization (and only until its final maturity date of March 1, 2021), (vi) the net book value (i.e., the book value net of liabilities, whether secured or unsecured) of Development Real Properties owned by Holdings or any of its Subsidiaries (with such net book value, for the avoidance of doubt, in the case of a Joint Venture Entity, to be included in the determination of “Unencumbered Income Producing Assets Value”, but only (I) in the case of a

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consolidated Joint Venture Entity, to the extent of the applicable ownership percentage held by Holdings and its Subsidiaries multiplied by such net book value and (II) in the case of an unconsolidated Joint Venture Entity, to the extent of such net book value, provided that (A) such aggregate net book value of Development Real Properties owned by Holdings or any of its wholly-owned Subsidiaries shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent it comprises 10% or less of the Unencumbered Income Producing Assets Value, and (B) such aggregate net book value of Development Real Properties held by Joint Venture Entities shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent it comprises 5% or less of the Unencumbered Income Producing Assets Value, and (vii) the book value of notes receivable held directly by Holdings or its Subsidiaries (or indirectly through a Person other than Holdings or its Subsidiaries) from Persons other than Holdings or any of its Subsidiaries, and the book value of mezzanine equity investments held directly by Holdings or its Subsidiaries (or indirectly through a Person other than Holdings or its Subsidiaries) in other Persons (but (I) without duplication of the immediately preceding clause (vi) and (II) in the case of any note receivable or mezzanine equity investment held by a Person other than Holdings or a wholly-owned Subsidiary, the book value thereof shall be included in the determination of Unencumbered Income Producing Asset Value only to the extent of the amount of such book value multiplied by the applicable percentage of such Person which is owned by Holdings and its Subsidiaries in the aggregate), provided that the aggregate book value of such notes receivable and mezzanine investments shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent it comprises 5% or less of the Unencumbered Income Producing Assets Value, provided further that the aggregate of the net book value and the book value (as applicable) of the assets described in the immediately preceding clauses (vi) and (vii) shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent it comprises 15% or less of the Unencumbered Income Producing Assets Value.

Notwithstanding anything to the contrary in the foregoing portions of this definition or in Section 1.02(e) any asset or Person (together with such Person’s Subsidiaries) acquired by Holdings or any of its Subsidiaries, for purpose of determining the “Unencumbered Income Producing Asset Value,” shall be valued at net book value during the period from the consummation of such acquisition until the last day of the first four full fiscal quarters occurring after the consummation of such acquisition.

“ Unencumbered Income Producing Assets Value to Unsecured Debt Ratio ” means, as at any time of determination thereof, the ratio of (i) Unencumbered Income Producing Assets Value to (ii) Unsecured Debt as of such time.

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agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such project, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such Investment Property owned by a Subsidiary of Holdings shall be deemed to be an Unencumbered Investment Property unless (1) both such project and all equity interests of the Subsidiary which holds legal title to such project is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in Section 8.01(f) or 8.01(g) (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

“ Unencumbered Leased Agricultural Land ” means Agricultural Land which is leased to third parties on arms’-length terms and which: (i) is not subject to a mortgage or any other Lien, other than (a) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) Liens incidental to the conduct of the owner of such property’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of the applicable property, or materially impair the use thereof, and (c) arms’-length operating leases with third-party lessees; (ii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that prohibits or limits the ability of Holdings or any Subsidiary, as the case may be, to create, incur, assume or suffer to exist any Lien upon any assets or equity interest of Holdings, or any Subsidiary except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such land owned by a Subsidiary of Holdings shall be deemed to be Unencumbered Leased Agricultural Land unless (1) both such land and all equity interests of the Subsidiary which holds legal title to such land is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in Section 8.01(f) or 8.01(g) (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

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organizational documents of Holdings or any Subsidiary) that prohibits or limits the ability of Holdings or any Subsidiary, as the case may be, to create, incur, assume or suffer to exist any Lien upon any assets or equity interest of Holdings, or any Subsidiary except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such land owned by a Subsidiary of Holdings shall be deemed to be Unencumbered Leased Non-Agricultural Land unless (1) both such land and all equity interests of the Subsidiary which holds legal title to such land is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in Section 8.01(f) or 8.01(g) (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

“ United States ” and “ U.S. ” mean the United States of America.

“ Unreimbursed Amount ” has the meaning specified in Section 2.03(c)(i) .

“ Unsecured Debt ” means, at any time of determination thereof, the consolidated Debt of Holdings or its Subsidiaries not secured by any Lien.

“ U.S. Person ” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

“ U.S. Tax Compliance Certificate ” has the meaning specified in Section 3.01(e)(ii)(B)(III) .

“ Voting Stock ” means any shares of stock (or comparable equity securities) whose holders are entitled under ordinary circumstances to vote for the election of directors (or comparable persons), irrespective of whether at the time stock (or comparable equity securities) of any other class or classes shall have or might have voting power by reason of the happening of any contingency.

“ Withholding Agent ” means the Borrowers, any Loan Party and the Agent.

1.02 Other Interpretive Provisions . With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.” The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any articles of incorporation, bylaws or similar organizational documents) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and

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assigns, (iii) the words “ hereto ,” “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later specified date, the word “ from ” means “ from and including ;” the words “ to ” and “ until ” each mean “ to but excluding ;” and the word “ through ” means “ to and including .”

(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

(d) All covenants hereunder shall be given independent effect so that if a particular action or condition is prohibited by any one of such covenants, the fact that it would be permitted by an exception to, or otherwise be in compliance within the limitations of, another covenant shall not (i) avoid the occurrence of a Default if such action is taken or such condition exists or (ii) in any way prejudice an attempt by the Agent to prohibit, through equitable action or otherwise the taking of any action by any Borrower or any Subsidiary that would result in a Default. For the avoidance of doubt, if a particular action or condition is expressly permitted by an exception to a covenant and is not expressly prohibited by another provision in the same covenant, the taking of such action or the existence of such condition shall not result in a Default under such covenant.

(e) For purposes of all calculations made under the financial covenants set forth in Section 7.01 and the Priority Debt covenant set forth in Section 7.05 for an applicable period, (i) if during such period Holdings, any Borrower or any Subsidiary shall have consummated an acquisition of a Significant Subsidiary or a Significant Line of Business, (x) EBITDA or Unencumbered EBITDA, as the case may be, for such period shall be calculated after giving pro forma effect thereto as if such transaction occurred on the first day of such period; provided , that if the aggregate purchase price for any such acquisition is greater than or equal to $25,000,000, EBITDA or Unencumbered EBITDA, as the case may be, shall only be calculated on a pro forma basis to the extent such pro forma calculations are based on audited financial statements or other financial statements reasonably satisfactory to the Required Lenders (subject to adjustments set forth in the second paragraphs of each of the definitions of Total Adjusted Asset Value and Unencumbered Income Producing Assets Value, as applicable) and (y) any Debt incurred or assumed by any Loan Party or Subsidiary (including the Person or property acquired) in connection with such transaction and any Debt of the Person or property acquired which is not retired in connection with such transaction (1) shall be deemed to have been incurred as of the last day of the previous period and (2) if such Debt has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Debt

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as at the relevant date of determination, and (ii) if during such period Holdings, any Borrower or any Subsidiary shall have consummated a disposition of all or substantially all of the assets of Holdings, a Borrower or a Subsidiary or of a majority of the equity interests of a Subsidiary or of a Significant Line of Business, (x) EBITDA or Unencumbered EBITDA, as the case may be, for such period shall be calculated after giving pro forma effect thereto as if such transaction occurred on the last day of the previous period and (y) any Debt which is retired in connection with such transaction shall be excluded and deemed to have been retired as of the last day of the previous period.

1.03 Accounting Terms .

(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, except as otherwise specifically prescribed herein.

(b) Changes in GAAP . If at any time any change in GAAP (including the adoption of IFRS) would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrowers or the Required Lenders shall so request, the Agent, the Lenders and the Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, (A) until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (B) until so amended, the Borrowers shall provide to the Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested by the Agent hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the Audited Financial Statements for all purposes of this Agreement, notwithstanding any change in GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.

1.04 Rounding . Any financial ratios required to be maintained by the Borrowers pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.05 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to Pacific time (daylight or standard, as applicable).

1.06 Letter of Credit Amounts . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , however , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

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ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 Committed Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “ Committed Loan ”) to the Borrowers from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided , however , that after giving effect to any Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed the amount of such Lender’s Commitment. Subject to the terms and conditions hereof, each Borrower may borrow Committed Loans under this Section 2.01 , repay or prepay under Section 2.05 such Committed Loans, reborrow such Committed Loans and borrow other Committed Loans under this Section 2.01 . Committed Loans may be Base Rate Loans or Eurodollar Loans, as further provided herein.

2.02 Borrowings, Conversions and Continuations of Committed Loans .

(a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Eurodollar Loans shall be made upon the applicable Borrower’s irrevocable notice to the Agent, which may be given by: (A) telephone or (B) a Committed Loan Notice; provided that any telephonic notice must be confirmed immediately by delivery to the Agent of a Committed Loan Notice. Each such notice must be received by the Agent not later than 12:00 p.m. (i) three Business Days prior to the requested date of any Borrowing of Eurodollar Loans, of any conversion to or continuation of Eurodollar Loans or of any conversion of Eurodollar Loans to Base Rate Loans and (ii) one Business Day prior to the requested date of any Borrowing of Base Rate Loans. Each Borrowing of, conversion to or continuation of Eurodollar Loans shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c) , each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice shall specify (i) whether the applicable Borrower is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Eurodollar Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the applicable Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or if such Borrower fails to give a timely notice requesting a conversion or continuation of a Eurodollar Loan, then the applicable Committed Loan shall be made as, or converted to, Base Rate Loans, unless such Committed Loan was a Eurodollar Loan, in which case such Committed Loan shall be continued as a Eurodollar Loan with an Interest Period of one month. Any such automatic conversion to a Base Rate Loan and any such continuation of a Eurodollar Loan, in either case, shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Loans. If the applicable Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Loans in any such Committed Loan Notice, but such Borrower fails to specify an Interest Period for such Committed Loan or

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continuation of a Eurodollar Loan, it will be deemed to have specified an Interest Period of one month.

(b) Following receipt of a Committed Loan Notice, the Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the applicable Borrower, the Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans or continuation of Eurodollar Loans described in the preceding subsection. In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Agent in immediately available funds at the Agent’s Office not later than 11:00 a.m. on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01 ), the Agent shall make all funds so received available to the applicable Borrower in like funds as received by the Agent either by (i) crediting the account of such Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Agent by such Borrower; provided , however , that if, on the date the Committed Loan Notice with respect to such Borrowing is given by such Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and second, shall be made available to such Borrower as provided above.

(c) Except as otherwise provided herein, a Eurodollar Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Loans without the consent of the Required Lenders.

(d) The Agent shall promptly notify the applicable Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Loans upon determination of such interest rate. At any time that Base Rate Loans are outstanding, the Agent shall notify the applicable Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

(e) After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than ten Interest Periods in effect at any single time with respect to Eurodollar Loans.

2.03 Letters of Credit .

(a) The Letter of Credit Commitment .

(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03 , (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrowers or any of their Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in

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Letters of Credit issued for the account of any Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the Aggregate Commitments, (y) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the applicable Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by such Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully revolving, and accordingly any Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

(ii) The L/C Issuer shall not issue any Letter of Credit, if:

(A) subject to Section 2.03(b)(iii) , the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

(B) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date; provided that Letters of Credit with an expiry date after the Letter of Credit Expiration Date may be issued (but the L/C Issuer shall have no obligation to issue) so long as the Borrowers Cash Collateralize such Letter of Credit in accordance with the terms of this Agreement pursuant to this clause (B). Each Borrower hereby agrees that on or before the Letter of Credit Expiration Date it shall Cash Collateralize any Letter of Credit existing and not expiring on the Letter of Credit Expiration Date in an amount equal to at least 100% of the face amount of such Letter of Credit (and in the event such Borrower fails to do so, the Agent may require each Lender to fund its participation interest in an amount equal to such Lender’s Applicable Percentage of the outstanding Letters of Credit for purposes of Cash Collateralizing the Letters of Credit). For the avoidance of doubt, the parties hereto agree that the obligations of the Lenders hereunder to reimburse the L/C Issuer for any Unreimbursed Amount with respect to any Letter of Credit shall terminate on the Maturity Date with respect to drawings occurring after that date.

(iii) The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

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(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

(B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;

(D) any Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the applicable Borrower or such Defaulting Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.16(a)(iv) ) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion.

(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.

(v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(vi) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit .

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(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the applicable Borrower delivered to the L/C Issuer (with a copy to the Agent) in the form of a Letter of Credit Application, appropriately completed and signed by an Authorized Officer of such Borrower. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the L/C Issuer, by personal delivery or by any other means acceptable to the L/C Issuer. Such Letter of Credit Application must be received by the L/C Issuer and the Agent not later than 11:00 a.m. at least three Business Days (or such later date and time as the Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the stated amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C Issuer may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may reasonably require. Additionally, the applicable Borrower shall furnish to the L/C Issuer and the Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Agent may reasonably require.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Agent (by telephone or in writing) that the Agent has received a copy of such Letter of Credit Application from the applicable Borrower and, if not, the L/C Issuer will provide the Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, the Agent or the applicable Borrower, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the applicable Borrower or the applicable Subsidiary or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.

(iii) If the applicable Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the L/C

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Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the applicable Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided , however , that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Agent that the Required Lenders have elected not to permit such extension or (2) from the Agent, any Lender or any Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.

(iv) If the applicable Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an “ Auto-Reinstatement Letter of Credit ”). Unless otherwise directed by the L/C Issuer, the applicable Borrower shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the “ Non-Reinstatement Deadline ”), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Reinstatement Deadline (A) from the Agent that the Required Lenders have elected not to permit such reinstatement or (B) from the Agent, any Lender or any Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.

(v) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the applicable Borrower and the Agent a true and complete copy of such Letter of Credit or amendment and any other Issuer Documents related thereto.

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(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the applicable Borrower and the Agent thereof. Not later than 11:00 a.m. on the Business Day following the Honor Date (each such date of notice, a “ Notice Date ”), the applicable Borrower shall reimburse the L/C Issuer through the Agent in an amount equal to the amount of such drawing (together with any interest thereon for such period from the Honor Date to the date such reimbursement is made). If the applicable Borrower fails to so reimburse the L/C Issuer by such time, the Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing including any applicable interest thereon (the “ Unreimbursed Amount ”), and the amount of such Lender’s Applicable Percentage thereof. In such event, and in lieu of the obligation of the applicable Borrower to reimburse the L/C Issuer as provided in the two immediately preceding sentences such Borrower shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Notice Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii) Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer at the Agent’s Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Agent, whereupon, subject to the provisions of Section 2.03(c)(iii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the applicable Borrower in such amount. The Agent shall remit the funds so received to the L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the applicable Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03 .

(iv) Until each Lender funds its Committed Loan or its L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.

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(v) Each Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the applicable Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the applicable Borrower of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of such Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii) , then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such Lender (acting through the Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any Lender (through the Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

(d) Repayment of Participations by the Lenders .

(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c) , if the Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the applicable Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Agent), the Agent will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Agent.

(ii) If any payment received by the Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Agent, plus interest thereon from the date of such demand to the date such amount is returned by such

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Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e) Obligations Absolute . The obligation of the applicable Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right that any Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of any Borrower or any waiver by the L/C Issuer which does not in fact materially prejudice any Borrower;

(v) honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;

(vi) any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable;

(vii) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

(viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Borrower or any Subsidiary.

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The applicable Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with such Borrower’s instructions or other irregularity, such Borrower will immediately notify the L/C Issuer. The applicable Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

(f) Role of L/C Issuer . Each Lender and each Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , however , that this assumption is not intended to, and shall not, preclude a Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (viii) of Section 2.03(e) ; provided , however , that anything in such clauses to the contrary notwithstanding, a Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to such Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by such Borrower which such Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication ("SWIFT") message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary. The L/C Issuer shall provide to the Agent a list of outstanding Letters of Credit (together with type, amounts and denominated currency) issued by it on a monthly basis.

(g) Letters of Credit Issued for Subsidiaries . Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrowers shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. Each Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of such Borrower, and that such Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

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(h) Applicability of ISP and UCP . Unless otherwise expressly agreed by the L/C Issuer and the applicable Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, the L/C Issuer shall not be responsible to any Borrower for, and the L/C Issuer’s rights and remedies against any Borrower shall not be impaired by, any action or inaction of the L/C Issuer required under any law or practice that is required to be applied to any Letter of Credit, including the law of a jurisdiction where the L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

(i) Letter of Credit Fees . The Borrowers shall pay to the Agent for the account of each Lender in accordance, subject to Section 2.16 , with its Applicable Percentage a Letter of Credit fee (the “ Letter of Credit Fee ”) for each Letter of Credit equal to the Applicable Rate times the daily amount available to be drawn under such Letter of Credit. Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand, (ii) computed on a quarterly basis in arrears and (iii) computed for the actual number of days that such Letters of Credit are outstanding during the applicable quarter. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer .

(i) With respect to any Letter of Credit issued by Bank of America, N.A., in its capacity as L/C Issuer, the applicable Borrower shall pay directly to Bank of America, N.A. in such capacity for its own account a fronting fee (A) with respect to each commercial Letter of Credit, at a rate specified in the Fee Letter, computed on the amount of such Letter of Credit, and payable upon the issuance thereof, (B) with respect to any amendment of a commercial Letter of Credit increasing the amount of such Letter of Credit, at a rate separately agreed between such Borrower and Bank of America, N.A., in its capacity as L/C Issuer, computed on the amount of such increase, and payable upon the effectiveness of such amendment, and (C) with respect to each standby Letter of Credit, at the rate per annum specified in the Fee Letter, computed on the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. In addition, the applicable Borrower shall pay directly to the Bank of America, N.A., in its capacity as L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other

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standard costs and charges, of Bank of America, N.A., in its capacity as L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(ii) With respect to any Letter of Credit issued by an L/C Issuer other than Bank of America, N.A., the applicable Borrower shall pay directly to such L/C Issuer for its own account a fronting fee with respect to each issuance or amendment of a Letter of Credit, at a rate and at the times separately agreed between such Borrower and such L/C Issuer. In addition, the applicable Borrower shall pay directly to such L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(iii) For the purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06 .

(k) Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

(l) L/C Issuer Reports to the Agent . Unless otherwise agreed by the Agent, each L/C Issuer shall, in addition to its notification obligations set forth elsewhere in this Section, provide the Agent a Letter of Credit Report, as set forth below:

(i) reasonably prior to the time that such L/C Issuer issues, amends, renews, increases or extends a Letter of Credit, the date of such issuance, amendment, renewal, increase or extension and the stated amount of the applicable Letters of Credit after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed);

(i) on each Business Day on which such L/C Issuer makes a payment pursuant to a Letter of Credit, the date and amount of such payment;

(ii) on any Business Day on which the Borrower fails to reimburse a payment made pursuant to a Letter of Credit required to be reimbursed to such L/C Issuer on such day, the date of such failure and the amount of such payment;

(iii) on any other Business Day, such other information as the Agent shall reasonably request as to the Letters of Credit issued by such L/C Issuer; and

(iv) for so long as any Letter of Credit issued by an L/C Issuer is outstanding, such L/C Issuer shall deliver to the Agent (A) on the last Business Day of each calendar month, (B) at all other times a Letter of Credit Report is required to be delivered pursuant to this Agreement, and (C) on each date that (1) an L/C Credit Extension occurs or (2) there is any expiration, cancellation and/or disbursement, in each case, with respect to any such Letter of Credit, a Letter of Credit Report appropriately completed with the information for every outstanding Letter of Credit issued by such L/C Issuer.

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2.04 Swing Line Loans .

(a) The Swing Line . Subject to the terms and conditions set forth herein, the Swing Line Lender agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.04 , to make loans (each such loan, a “ Swing Line Loan ”) to the Borrowers from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit; provided , however , that (i) after giving effect to any Swing Line Loan, (A) the Total Outstandings shall not exceed the Aggregate Commitments, and (B) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, (ii) that the applicable Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan and (iii) the Swing Line Lender shall not be under any obligation to make any Swing Line Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure. Prior to a refinancing of a Swing Line Loan or the funding of a risk participation in Swing Line Loans, in either case, pursuant to Section 2.04(c) , it is understood and agreed that the outstanding Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Committed Loans and L/C Obligations of the Swing Line Lender, may exceed the amount of such Lender’s Commitment. Subject to the other terms and conditions hereof, a Borrower may borrow Swing Line Loans under this Section 2.04 , repay or prepay such Swing Line Loans, reborrow such Swing Line Loans and borrow other Swing Line Loans under this Section 2.04 . Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan.

(b) Borrowing Procedures . Each Swing Line Borrowing shall be made upon the applicable Borrower’s irrevocable notice to the Swing Line Lender and the Agent, which may be given by: (A) telephone or (B) a Swing Line Loan Notice; provided that any telephonic notice must be confirmed immediately by delivery to the Swing Line Lender and the Agent of a Swing Line Loan Notice. Each such notice must be received by the Swing Line Lender and the Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swing Line Lender of any Swing Line Loan Notice, the Swing Line Lender will confirm with the Agent (by telephone or in writing) that the Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Agent (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the proviso to the first sentence of Section 2.04(a) , or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the applicable Borrower.

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(i) The Swing Line Lender at any time in its sole discretion may request, on behalf of the applicable Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding (which Base Rate Loans shall be used to refinance such Swing Line Loans). Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02 , without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 . The Swing Line Lender shall furnish the applicable Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Agent. Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Agent in immediately available funds (and the Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Agent’s Office not later than 10:00 a.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the applicable Borrower in such amount. The Agent shall remit the funds so received to the Swing Line Lender. To the extent that a Swing Line Loan has been refinanced with a Borrowing of Base Rate Loans pursuant to this Section 2.04(c)(i) , such Swing Line Loan shall be deemed repaid for all purposes herein.

(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i) , the request for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.

(iii) If any Lender fails to make available to the Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i) , the Swing Line Lender shall be entitled to recover from such Lender (acting through the Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

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(iv) Each Lender’s obligation to make Committed Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, any Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02 . No such funding of risk participations shall relieve or otherwise impair the obligation of any Borrower to repay Swing Line Loans, together with interest as provided herein.

(d) Repayment of Participations .

(i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Swing Line Lender.

(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e) Interest for Account of Swing Line Lender . The Swing Line Lender shall be responsible for invoicing the applicable Borrower for interest on the Swing Line Loans. Until each Lender funds its Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.

(f) Payments Directly to Swing Line Lender . The applicable Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

2.05 Prepayments .

(a) Any Borrower may, upon delivery of a Notice of Loan Prepayment to the Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Loans and (B) one Business Day prior to any date of prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in

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excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Committed Loans to be prepaid and, if Eurodollar Loans are to be prepaid, the Interest Period(s) of such Loans. The Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If the applicable Borrower gives a prepayment notice, then such Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein; provided , any notice of prepayment given in connection with a notice of termination of the Commitments given by such Borrower may state that such prepayment notice is conditioned upon the effectiveness of other credit facilities or capital raising, in which case such notice may (subject to compliance by such Borrower with the requirements of Section 3.05 ) be revoked by such Borrower (by notice to the Agent on or prior to the specified effective date) if such condition is not satisfied. Any prepayment of a Eurodollar Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 . Any prepayment of a Eurodollar Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 . Subject to Section 2.16 , each such prepayment shall be applied to the Committed Loans of the Lenders in accordance with their respective Applicable Percentages.

(b) Any Borrower may, upon notice to the Swing Line Lender (with a copy to the Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the applicable Borrower, such Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

(c) If for any reason the Total Outstandings at any time exceed the Aggregate Commitments, the Borrowers shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided , however , that the Borrowers shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the Loans the Total Outstandings exceed the Aggregate Commitments then in effect.

2.06 Termination or Reduction of Commitments .

The Borrowers may, upon notice to the Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (a) any such notice shall be received by the Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (b) any such reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (c) the Borrowers shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments and (d) if, after giving effect to any reduction of the Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be automatically reduced by the amount of such excess; provided , any notice of termination of the Aggregate Commitments given by the Borrowers

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may state that such notice is conditioned upon the effectiveness of other credit facilities or capital raising, in which case such notice may be revoked by the Borrowers (by notice to the Agent on or prior to the specified effective date) if such condition is not satisfied. The Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

2.07 Repayment of Loans .

(a) The Borrowers shall repay to the Lenders on the Maturity Date the aggregate principal amount of Committed Loans outstanding on such date.

(b) Except to the extent previously refinanced with a Base Rate Loan pursuant to Section 2.04(c) , the Borrowers shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.

2.08 Interest .

(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate equal to the Eurodollar Rate plus the Applicable Rate plus 0.60%.

(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such overdue amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.

(ii) If any amount (other than principal of any Loan) payable by any Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.

(iii) Upon the request of the Required Lenders, while any Event of Default exists (other than as set forth in clauses (b)(i) and (b)(ii) above), the Borrowers shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.

(iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

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(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

2.09 Fees . In addition to certain fees described in subsections (i) and (j) of Section 2.03 :

(a) Commitment Fee . The Borrowers shall pay to the Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Rate times the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Committed Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.16 . For the avoidance of doubt, the Outstanding Amount of Swing Line Loans shall not be counted towards or considered usage of the Aggregate Commitments for purposes of determining the commitment fee. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(b) Other Fees . The Borrowers shall pay to the Arranger and the Agent for their own accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

2.10 Computation of Interest and Fees; Retroactive Adjustment of Applicable Rate .

(a) All computations of interest for Base Rate Loans shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a) , bear interest for one day. Each determination by the Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

(b) If, as a result of any restatement of or other adjustment to the financial statements of Holdings or for any other reason, the Borrowers or the Lenders determine that (i) the Total Debt to Total Adjusted Asset Value Ratio as calculated by the Borrowers as of any applicable date while this Agreement is in effect was inaccurate and (ii) a proper calculation of the Total Debt to Total Adjusted Asset Value Ratio would have resulted in higher pricing for such period, the Borrowers shall immediately and retroactively be obligated to pay to the Agent for the account of the applicable Lenders or the L/C Issuer, as the case may be, promptly on demand by the Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Agent, any Lender or the L/C Issuer), an amount equal to the excess of the

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amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Agent, any Lender or the L/C Issuer, as the case may be, under Section 2.03(c)(iii) , 2.03(i) or 2.08(b) or under Article VIII . The Borrowers’ obligations under this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder until the date that is one year after such termination and repayment. Upon payment by the Borrowers of any shortfall as provided in this clause (b), any Default or Event of Default resulting solely from the failure to pay such amounts when the interest or fees for the relevant period were due and payable or any representations and warranties made in this regard shall be deemed cured for all purposes.

2.11 Evidence of Debt .

(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Agent in the ordinary course of business. The accounts or records maintained by the Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of any Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Agent in respect of such matters, the accounts and records of the Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Agent, each Borrower shall execute and deliver to such Lender (through the Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in subsection (a), each Lender and the Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Agent shall control in the absence of manifest error.

2.12 Payments Generally; Agent’s Clawback .

(a) General . All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made to the Agent, for the account of the respective Lenders to which such payment is owed, at the Agent’s Office in Dollars and in immediately available funds not later than 11:00 a.m. on the date specified herein. The Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Agent after 11:00 a.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by a Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

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(b) (i) Funding by Lenders; Presumption by Agent . Unless the Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Eurodollar Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 9:00 a.m. on the date of such Committed Borrowing) that such Lender will not make available to the Agent such Lender’s share of such Committed Borrowing, the Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02 ) and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to the Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to the Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Agent in connection with the foregoing, and (B) in the case of a payment to be made by such Borrower, the interest rate applicable to Base Rate Loans. If the applicable Borrower and such Lender shall pay such interest to the Agent for the same or an overlapping period, the Agent shall promptly remit to such Borrower the amount of such interest paid by such Borrower for such period. If such Lender pays its share of the applicable Committed Borrowing to the Agent, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing. Any payment by any Borrower shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to the Agent.

(ii) Payments by Borrower; Presumptions by Agent . Unless the Agent shall have received notice from the applicable Borrower prior to the date on which any payment is due to the Agent for the account of the Lenders or the L/C Issuer hereunder that such Borrower will not make such payment, the Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if the applicable Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Agent, at the greater of the Federal Funds Rate and a rate determined by the Agent in accordance with banking industry rules on interbank compensation.

A notice of the Agent to any Lender or any Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent . If any Lender makes available to the Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the applicable Borrower by the Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied

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or waived in accordance with the terms hereof, the Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment under Section 10.04(c) .

(e) Funding Source . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

2.13 Sharing of Payments by Lenders . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, provided that:

(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of any Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.15 , or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to any Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

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2.14 Increase in Commitments .

(a) Request for Increase . Provided there exists no Default, upon notice to the Agent (which shall promptly notify the Lenders), the Borrowers may from time to time, after the Closing Date, but no more than one time in any calendar year, request an increase in the Aggregate Commitments by an amount (for all such requests) not exceeding $100,000,000; provided that any such request for an increase shall be in a minimum amount of $10,000,000. At the time of sending such notice, the Borrowers (in consultation with the Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).

(b) Lender Elections to Increase . Each Lender shall notify the Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase. Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.

(c) Notification by Agent; Additional Lenders . The Agent shall notify the Borrowers and each Lender of the Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase and subject to the approval of the Agent, the L/C Issuer and the Swing Line Lender (which approvals shall not be unreasonably withheld), the Borrowers may also invite additional Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance satisfactory to the Agent and its counsel.

(d) Effective Date and Allocations . If the Aggregate Commitments are increased in accordance with this Section, the Agent and the Borrowers shall determine the effective date (the “ Increase Effective Date ”) and the final allocation of such increase. The Agent shall promptly notify the Borrowers and the Lenders of the final allocation of such increase and the Increase Effective Date.

(e) Conditions to Effectiveness of Increase . As a condition precedent to such increase, the Borrowers shall deliver to the Agent a certificate dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer (i) certifying and attaching the resolutions adopted by the Borrowers and the Guarantors approving or consenting to such increase, and (ii) certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.14 , the representations and warranties contained in subsections (a) and (b) of Section 5.02 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 , and (B) no Default exists. The Borrowers shall prepay any Committed Loans outstanding on the Increase Effective Date (and pay any additional amounts required pursuant to Section 3.05 ) to the extent necessary to keep the outstanding Committed Loans ratable with any revised Applicable Percentages arising from any nonratable increase in the Commitments under this Section.

(f) Conflicting Provisions . This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.

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2.15 Cash Collateral .

(a) Certain Credit Support Events . If (i) the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, (iii) the Borrowers shall be required to provide Cash Collateral pursuant to Section 8.02(c) , or (iv) there shall exist a Defaulting Lender, the Borrowers shall immediately (in the case of clause (iii) above) or within one Business Day (in all other cases) following any request by the Agent or the L/C Issuer, provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iv) above, after giving effect to Section 2.16(a)(iv) and any Cash Collateral provided by the Defaulting Lender). For purposes of clarification, if Fronting Exposure remains after giving effect to Section 2.16(a)(iv) , the Agent shall first request that the Defaulting Lender deliver to the Agent Cash Collateral in an amount sufficient to cover the remaining Fronting Exposure and, second , to the extent Fronting Exposure remains after giving effect to Cash Collateral provided by the Defaulting Lender, the Agent shall request that the Borrowers deliver to the Agent Cash Collateral in an amount sufficient to cover the remaining Fronting Exposure. Such Cash Collateralization may be effected by means of a Borrowing of Committed Loans or a funding of participation interests (assuming for such purposes that the Letters of Credit that will survive the Maturity Date had been fully drawn on the Letter of Credit Expiration Date).

(b) Grant of Security Interest . All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America. Each Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Agent, for the benefit of the Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.15(c) . If at any time the Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Agent or the L/C Issuer as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the relevant Defaulting Lender and, to the extent Fronting Exposure remains thereafter, the Borrowers will promptly upon demand by the Agent, pay or provide to the Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. The relevant Defaulting Lender or, to the extent not paid by the relevant Defaulting Lender, the Borrowers shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

(c) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.15 or Sections 2.03 , 2.04 , 2.05 , 2.16 or 8.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

(d) Release . Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of

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the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi) )) or (ii) the Agent’s and the L/C Issuer’s good faith determination that there exists excess Cash Collateral; provided , however , (x) that Cash Collateral furnished by or on behalf of any Borrower shall not be released during the continuance of a Default (and following application as provided in this Section 2.15 may be otherwise applied in accordance with Section 8.03 ), and (y) the Person providing Cash Collateral and the L/C Issuer, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations. Between a Defaulting Lender and a Borrower as to any particular Cash Collateral, the Cash Collateral furnished by such Borrower shall be released prior to any Cash Collateral furnished by the Defaulting Lender.

2.16 Defaulting Lenders .

(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and in Section 10.01 .

(ii) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Agent from a Defaulting Lender pursuant to Section 10.08 shall be applied at such time or times as may be determined by the Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third , to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.15 ; fourth , as the Borrowers may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; fifth , if so determined by the Agent and the Borrowers, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.15 ; sixth , to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swing Line Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by any Borrower against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which such Defaulting Lender has

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not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swing Line Loans are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 2.16(a)(iv) . Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees .

(A) No Defaulting Lender shall be entitled to receive any fee payable under Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Borrowers shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.15 .

(C) With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrowers shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the L/C Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure . All or any part of such Defaulting Lender’s participation in L/C Obligations and Swing Line Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 4.02 are satisfied at the time of such reallocation (and, unless the Borrowers shall have otherwise notified the Agent at such time, the Borrowers shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause any Non-Defaulting Lender’s share of the Total Outstandings to exceed such Non-Defaulting Lender’s Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting

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Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(v) Cash Collateral, Repayment of Swing Line Loans . If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Borrowers shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, (x) first, prepay Swing Line Loans in an amount equal to the Swing Line Lenders’ Fronting Exposure and (y) second, Cash Collateralize the L/C Issuers’ Fronting Exposure in accordance with the procedures set forth in Section 2.15 .

(b) Defaulting Lender Cure . If the Borrowers, the Agent, the Swing Line Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Committed Loans of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Committed Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.16(a)(iv) ), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of any Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(c) Notification of Defaulting Lender . Upon becoming aware that a Lender is a Defaulting Lender, the Agent shall reasonably promptly notify the Borrowers that such Lender is a Defaulting Lender.

Section 2.17 Joint and Several Obligations .

Except as specifically provided herein, the Obligations of the Borrowers shall be joint and several in nature regardless of which such Person actually receives Credit Extensions hereunder or the amount of such Credit Extensions received or the manner in which the Lender accounts for such Credit Extensions on its books and records. Notwithstanding the foregoing, Grace hereby irrevocably appoints the Company to act as its agent for all purposes of this Agreement and the other Loan Documents and agrees that (i) the Company may execute such documents on behalf of Grace (in its capacity as a Borrower) as the Company deems appropriate in its sole discretion and Grace shall be obligated by all of the terms of any such document executed on its behalf (ii) any notice or communication delivered by the Agent or the Lender to the Company shall be deemed delivered to Grace and (iii) the Agent or the Lenders may accept, and be permitted to rely on, any document, instrument or agreement executed by the Company on behalf of Grace.

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ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes .

(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.

(i) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable laws. If any applicable laws (as determined in the good faith discretion of the applicable Withholding Agent) require the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

(ii) If any Withholding Agent shall be required by the Code to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding Taxes, from any payment, then (A) the Agent shall withhold or make such deductions as are determined by the Withholding Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01 ) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction for Indemnified Taxes been made.

(iii) If any Withholding Agent shall be required by any applicable laws other than the Code to withhold or deduct any Taxes from any payment, then (A) the Withholding Agent, as required by such laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) such Withholding Agent, to the extent required by such laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01 ) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction for Indemnified Taxes been made.

(b) Payment of Other Taxes by the Borrowers . Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in

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accordance with applicable law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes

(i) Each of the Loan Parties shall, and does hereby, jointly and severally indemnify each Recipient, and shall make payment in respect thereof within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01 ) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto (except for any such penalties, interest and reasonable expenses to the extent attributable to the gross negligence or willful misconduct of such Recipient), whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Company by a Lender or the L/C Issuer (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error. Each of the Loan Parties shall, and does hereby, jointly and severally indemnify the Agent, and shall make payment in respect thereof within 10 days after demand therefor, for any amount which a Lender or the L/C Issuer for any reason fails to pay indefeasibly to the Agent as required pursuant to Section 3.01(c)(ii) below.

(ii) Each Lender and the L/C Issuer shall, and does hereby, severally indemnify, and shall make payment in respect thereof within 10 days after written demand therefor, (x) the Agent against any Indemnified Taxes attributable to such Lender or the L/C Issuer (but only to the extent that any Loan Party has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (y) the Agent and the Loan Parties, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.06(d) relating to the maintenance of a Participant Register and (z) the Agent and the Loan Parties, as applicable, against any Excluded Taxes attributable to such Lender or the L/C Issuer, in each case, that are payable or paid by the Agent or a Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender and the L/C Issuer hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Agent under this clause (ii).

(d) Evidence of Payments . Upon request by a Borrower or the Agent, as the case may be, after any payment of Taxes by any Borrower or by the Agent to a Governmental Authority as provided in this Section 3.01 , the applicable Borrower shall deliver to the Agent or the Agent shall deliver to the applicable Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by laws to report such payment or other evidence of such payment reasonably satisfactory to the applicable Borrower or the Agent, as the case may be.

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(e) Status of Lenders; Tax Documentation .

(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrowers and the Agent, at the time or times reasonably requested by the Borrowers or the Agent, such properly completed and executed documentation reasonably requested by the Borrowers or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrowers or the Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrowers or the Agent as will enable the Borrowers or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(e)(ii)(A) , (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing, in the event that a Borrower is a U.S. Person,

(A) any Lender that is a U.S. Person shall deliver to such Borrower and the Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding Tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to such Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Agent), whichever of the following is applicable:

(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(II) executed copies of IRS Form W-8ECI;

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(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit D-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of such Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E; or

(IV) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-2 or Exhibit D-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to such Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of such Borrower or the Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit such Borrower or the Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to such Borrower and the Agent at the time or times prescribed by law and at such time or times reasonably requested by such Borrower or the Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by such Borrower or the Agent as may be necessary for such Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the Closing Date.

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(iii) Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify such Borrower and the Agent in writing of its legal inability to do so.

(iv) For the purposes of this Section 3.01(e) , the term Lender includes any L/C Issuer.

(f) Treatment of Certain Refunds . Unless required by applicable laws, at no time shall the Agent have any obligation to file for or otherwise pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or the L/C Issuer, as the case may be. If any Recipient determines in good faith that it has received a refund of any Taxes (including any application thereof to another amount owed to the refunding Governmental Authority) as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 3.01 , it shall pay to the Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by a Loan Party under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to the Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to the Loan Party pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This subsection shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Loan Party or any other Person.

(g) Survival . Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

3.02 Illegality . If any Lender determines that any law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Committed Loans whose interest is determined by reference to the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Company through the Agent, (i) any obligation of such Lender to make or continue Eurodollar Loans or to convert Base Rate Loans to Eurodollar Loans shall be suspended and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender, shall, if necessary to avoid such illegality, be determined by the Agent without reference to the Eurodollar Rate component of the Base Rate, in each case until such Lender notifies the

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Agent and the Company that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrowers shall, upon demand from such Lender (with a copy to the Agent), prepay or, if applicable, convert all Eurodollar Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Agent without reference to the Eurodollar Rate component of the Base Rate), either (i) if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, on the last day of the Interest Period therefor, or (ii) if such Lender may not lawfully continue to maintain such Eurodollar Loans to the last day of the Interest Period therefor, on the last day that such Lender may lawfully continue to maintain such Eurodollar Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate, the Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurodollar Rate component thereof until the Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurodollar Rate. Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.

3.03 Inability to Determine Rates .

(a) If in connection with any request for a Eurodollar Loan or a conversion to or continuation thereof, (i) the Agent determines that (A) deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Loan or (B) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Loan or in connection with an existing or proposed Base Rate Loan (in each case with respect to clause (i), “ Impacted Loans ”), or (ii) the Agent or the Required Lenders determine that for any reason Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Agent will promptly so notify the Company and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Loans shall be suspended (to the extent of the affected Eurodollar Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence with respect to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component in determining the Base Rate shall be suspended, in each case until the Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Loans (to the extent of the affected Eurodollar Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

(b) Notwithstanding the foregoing, if the Agent has made the determination described in clause (a)(i) of this Section, the Agent in consultation with the Borrowers and the Required Lenders, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Agent revokes the notice delivered with respect to the Impacted Loans under clause (a)(i) of this Section, (2) the Agent or the Required Lenders notify the Agent and the Company that such alternative interest rate does not adequately and fairly reflect the cost to the Lenders of funding the Impacted Loans, or (3) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Agent and the Company written notice thereof.

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3.04 Increased Costs .

(a) Increased Costs Generally . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e) ) or the L/C Issuer;

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Committed Loan the interest on which is determined by reference to the Eurodollar Rate (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements . If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Line Loans held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and

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delivered to the Company shall be conclusive absent manifest error. The Borrowers shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

(d) Delay in Requests . Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than three months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the three‑month period referred to above shall be extended to include the period of retroactive effect thereof).

(e) Delay in Requests . Reserves on Eurodollar Loans . The Borrowers shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Company shall have received at least 10 Business Days’ prior notice (with a copy to the Agent) of such additional interest from such Lender. If a Lender fails to give notice Business Days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 Business Days from receipt of such notice.

3.05 Compensation for Losses . Upon demand of any Lender (with a copy to the Agent) from time to time, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Eurodollar Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by a Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow or continue a Eurodollar Loan or to convert any Base Rate Loan to a Eurodollar Loan on the date or in the amount notified by a Borrower; or

(c) any assignment of a Eurodollar Loan on a day other than the last day of the Interest Period therefor as a result of a request by a Borrower pursuant to Section 10.13 ;

including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained (but excluding any loss of anticipated profits). The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each Eurodollar Loan made by it at the Eurodollar Rate for

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such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded.

3.06 Mitigation Obligations; Replacement of Lenders .

(a) Designation of a Different Lending Office . If any Lender requests compensation under Section 3.04 , or requires the Borrowers to pay any Indemnified Taxes or additional amounts to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then at the request of the Borrowers such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be, (as compared to actions taken by such Lender with respect to other similarly situated borrowers). The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.

(b) Replacement of Lenders . If any Lender requests compensation under Section 3.04 , or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a) , the Borrowers may replace such Lender in accordance with Section 10.13 .

3.07 Survival . All of the Borrowers’ obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Agent.

ARTICLE IV.

CONDITIONS PRECEDENT TO EFFECTIVENESS AND CREDIT EXTENSIONS

4.01 Conditions of Effectiveness . This Agreement shall become effective upon satisfaction of the following conditions precedent:

(a) The Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the applicable Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Agent and each of the Lenders:

(i) executed counterparts of this Agreement;

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(ii) an executed counterpart of the Guaranty;

(iii) a Note executed by each Borrower in favor of each Lender requesting a Note;

(iv) such certificates of resolutions or other action, incumbency certificates (including specimen signatures) and/or other certificates of the secretary or assistant secretary of each Loan Party as the Agent may require evidencing the identity, authority and capacity of each Authorized Officer thereof authorized to act as an Authorized Officer in connection with the execution of this Agreement and the other Loan Documents;

(v) such documents and certifications as the Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing and in good standing in its jurisdiction of organization;

(vi) a favorable opinion of (I) Stradling Yocca Carlson & Rauth, P.C., as legal counsel to the Loan Parties and (II) General Counsel to the Loan Parties addressed to the Agent and each Lender, as to such customary matters concerning the Loan Parties and the Loan Documents as the Agent may reasonably request;

(vii) a certificate of a Responsible Officer of the Borrowers either (A) attaching copies of all documents evidencing other necessary actions, approval or consents with respect to the Loan Documents or (B) stating that no such actions, approvals or consents are so required; and

(viii) a certificate signed by a Responsible Officer of the Borrowers certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, provided that for the purposes of this clause (vi), any references to Credit Extensions in such Sections shall be disregarded and (B) that there has been no event or circumstance since December 31, 2014 that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect.

(b) Any fees required to be paid under the Fee Letter to the Agent, Arranger or the Lenders on or before the Closing Date shall have been paid.

(c) The Agent shall have received (i) a copy, certified by a Responsible Officer of the Borrowers as true and complete, of the Note Purchase Agreement, in form and substance reasonably satisfactory to the Agent and (ii) evidence that the Note Purchase Agreement is effective (or will become effective concurrently with the Closing Date).

(d) Unless waived by the Agent, the Borrowers shall have paid all fees, reasonable and documented out-of-pocket expenses, charges and disbursements of Moore & Van Allen PLLC, as counsel to the Agent (directly to such counsel if requested by the Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the Closing Date ( provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrowers and the Agent).

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Without limiting the generality of the provisions of the last paragraph of Section 9.03 , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

4.02 Conditions to all Credit Extensions . The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type, or a continuation of Eurodollar Loans) is subject to the following conditions precedent:

(a) The representations and warranties of the Borrowers contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect which such representation and warranty shall be true and correct in all respects) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 4.02 , the representations and warranties contained in subsections (a) and (b) of Section 5.02 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 .

(b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

(c) The Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type or a continuation of Eurodollar Loans) submitted by a Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Each Borrower represents and warrants to the Agent and the Lenders that:

5.01 Organization . Each Loan Party is duly organized, validly existing and in good standing under the laws of the state of its organization. Each Significant Subsidiary is duly organized, validly existing and in good standing under the laws of the state of its organization, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect. Each Loan Party and each Significant Subsidiary has the full power and authority to own its properties and to carry on its business as now being conducted, and is duly qualified in every state where the nature of its business requires that it do so, and is in good standing under the laws of every jurisdiction outside the state of its organization in which it owns or leases property or conducts business and in which the failure to so qualify would have a

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Material Adverse Effect. Each Loan Party and each Significant Subsidiary has complied in all material respects with (or is exempt from the application of) all material federal, state and local laws, regulations and orders that are, or in the absence of any exemption could be, applicable to the operations of its business, including public utility, bank holding company, state agricultural and Environmental and Safety Laws, in each case except to the extent that the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Loan Party has full power, authority and right to execute and deliver, and to perform and observe, the provisions of this Agreement and the other Loan Documents to which such Loan Party is a party and to carry out the transactions contemplated hereby and thereby. The execution, delivery and performance of the Loan Documents by each Loan Party have been authorized by all necessary corporate and other action, and, when duly executed and delivered, will be the legal, valid and binding obligations of such Loan Party, enforceable against it in accordance with their respective terms. Each of the Borrowers and Holdings represents and warrants that Schedule 5.01 contains complete and correct lists, as of the Closing Date, of the Subsidiaries of Holdings, showing, as to each Subsidiary, the name thereof, the jurisdiction of its organization, and the percentage of equity outstanding owned by Holdings and each other Subsidiary.

5.02 Financial Statements .

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of Holdings and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of Holdings and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Debt.

(b) The unaudited combined balance sheet of Holdings and its Subsidiaries dated September 30, 2015, and the related combined statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of Holdings and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject to the absence of footnotes and to normal year-end audit adjustments.

(c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

5.03 Actions Pending . There is no action, suit, investigation or proceeding pending or, to the knowledge of any Borrower, threatened against any Loan Party or any Subsidiary or any properties or rights of any Loan Party or any Subsidiary, by or before any court, arbitrator or administrative or governmental body which could reasonably be expected to result in a Material Adverse Effect.

5.04 Outstanding Debt . No Loan Party nor any Subsidiary has any Debt outstanding except as permitted by this Agreement. There exists no event of default under the provisions of any instrument evidencing any such Debt or of any agreement relating thereto.

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5.05 Title to Properties . Each Loan Party and each Significant Subsidiary has such title to its properties and assets as is appropriate and sufficient for the conduct of the business which such Loan Party or Significant Subsidiary presently undertakes or contemplates undertaking, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect. There are no Liens on such properties and assets that (a) materially restrict any Loan Party’s or Significant Subsidiary’s intended use and enjoyment thereof in the ordinary course of business or (b) are not permitted by Section 7.02 . There is no default, nor any event that, with notice or lapse of time or both, would constitute such a default under any lease to which any Loan Party or any such Significant Subsidiary is a lessee, lessor, sublessee or sublessor, except to the extent any of the foregoing defaults could not reasonably be expected to result in a Material Adverse Effect.

5.06 Taxes . Each Loan Party and each Significant Subsidiary has filed all Federal and state income and other material tax and informational returns which are required to be filed by it. Each Loan Party and each such Subsidiary has paid all material taxes as shown on its returns and on all assessments received to the extent that such taxes have become due, except such assessments as are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP. The Loan Parties and their Subsidiaries do not have any unpaid tax obligations which collectively could reasonably be expected to have a Material Adverse Effect.

5.07 Conflicting Agreements and Other Matters . Neither the execution nor delivery of this Agreement or the other Loan Documents, nor the making of Credit Extensions hereunder, nor fulfillment of nor compliance with the terms and provisions of this Agreement or the other Loan Documents will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien upon any of the properties or assets of any Loan Party or any Subsidiary pursuant to, their respective articles of incorporation, bylaws or similar organizational documents, any award of any arbitrator or any agreement, instrument, order, judgment, decree, and, after due investigation and to any Borrower’s best knowledge, any statute, law, rule or regulation to which any Loan Party or any Subsidiary is subject. No Loan Party nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing any of their respective Debt, any agreement relating thereto or any other contract or agreement which restricts or otherwise limits the incurring of Debt pursuant hereto, except as set forth on Schedule 5.07 hereto.

5.08 [Intentionally omitted] .

5.09 ERISA . No accumulated funding deficiency (as defined in section 302 of ERISA and section 412 of the Code), whether or not waived, exists with respect to any Plan (other than a Multiemployer Plan). No liability to the PBGC has been or is expected by any Borrower or any ERISA Affiliate to be incurred with respect to any Plan (other than a Multiemployer Plan) by any Borrower, any Subsidiary or any ERISA Affiliate which is or would be materially adverse to the business, condition (financial or otherwise) or operations of the Borrowers and their Subsidiaries taken as a whole. Neither any Borrower, any of its Subsidiaries or any ERISA Affiliate has incurred or presently expects to incur any withdrawal liability under Title IV of ERISA with respect to any Multiemployer Plan which is or would be materially adverse to the Loan Parties and its Subsidiaries taken as a whole. The execution and delivery of this Agreement and the other Loan Documents and the Credit Extensions hereunder will be exempt from, or will not involve any transaction which is subject to the prohibitions of, section 406 of ERISA and will not involve any transaction in connection with which a penalty could be imposed under section 502(i) of ERISA or a tax could be imposed pursuant to section 4975 of the Code.

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5.10 Government Consent . Neither the nature of any Loan Party nor any of its Subsidiaries, nor any of their respective businesses or properties, nor any relationship between any Loan Party or any Subsidiary and any other Person, nor any circumstance in connection with the Credit Extensions hereunder is such as to require any authorization, consent, approval, exemption or other action by, notice to or filing with any court, administrative or governmental body (other than routine filings after the date of closing with the SEC and/or state blue sky authorities) in connection with (a) the execution and delivery of this Agreement and the other Loan Documents or (b) fulfillment of or compliance with the terms and provisions of this Agreement and the other Loan Documents.

5.11 Investment Company Status, Etc . (a) Neither the Company, Grace, Holdings nor any other Loan Party is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, or an “investment adviser” within the meaning of the Investment Advisers Act of 1940. (b) Neither the Company, Grace, Holdings nor any Subsidiary is a “bank holding company” within the meaning of the Federal Deposit Insurance Act (12 U.S.C. Section 1811, et. seq.).

5.12 Real Property Matters . Except as could not reasonably be expected to have a Material Adverse Effect: (a) each Loan Party and each Significant Subsidiary has, or is in the process of procuring, for the real property which it owns or uses, such authorizations, consents, approvals, licenses and permissions (collectively, “ Consents ”) that such Loan Party or such Significant Subsidiary believes or has been advised by counsel to be now necessary for it to own, hold, develop, use or operate such real property in its current or intended manner, all in material compliance with applicable laws and regulations, and (b) no Loan Party nor any Significant Subsidiary has received any notice that any such Consent is necessary which has not been obtained, or is in the process of being obtained, other than applications for the same that have been or will be timely filed and are being or will be diligently pursued with the appropriate governmental authorities and agencies.

5.13 Possession of Franchises, Licenses, Etc . Except as could not reasonably be expected to have a Material Adverse Effect: (a) Holdings, the Borrowers and their Subsidiaries possess all franchises, certificates, licenses, development and other permits and other authorizations from governmental political subdivisions or regulatory authorities and all patents, trademarks, service marks, trade names, copyrights, licenses, easements, rights of way and other rights, free from burdensome restriction, that are necessary in the judgment of the Borrowers in any material respect for the ownership, maintenance and operation of their business, properties and assets, (ii) no Loan Party nor any of its Subsidiaries is in violation of any such rights and (iii) no event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, or which adversely affects the rights of any Loan Party or its Subsidiaries thereunder.

5.14 Environmental and Safety Matters . Each Loan Party and its Subsidiaries and all of their respective properties and facilities have complied at all times and in all respects with all Environmental and Safety Laws except where failure to comply could not result in a Material Adverse Effect.

5.15 Hostile Tender Offers . None of the proceeds of the Credit Extensions will be used to finance any offer to purchase, or any purchase of, shares of capital stock of any corporation or equity interests in any other entity, or securities convertible into or representing the beneficial ownership of, or rights to acquire, any such shares or equity interests, if such shares, equity interests, securities or rights are of a class which is publicly traded on any securities exchange or in any over-the-counter market, other than purchases for portfolio investment purposes of such shares, equity interests, securities or rights

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which, together with any shares, equity interests, securities or rights then owned, represent less than 5% of the equity interests or beneficial ownership of such corporation or other entity, and such offer or purchase has not been duly approved by the board of directors of such corporation or the equivalent governing body of such other entity.

5.16 Employee Relations . No Loan Party nor any Subsidiary is the subject of (a) any material strike, work slowdown or stoppage, union organizing drive or other similar activity or (b) any material action, suit, investigation or other proceeding involving alleged employment discrimination, unfair termination, employee safety or similar matters, that in either case would reasonably be expected to have a Material Adverse Effect nor, to the best knowledge of any Borrower, is any such event imminent or likely to occur.

5.17 OFAC . None of the Loan Parties, nor any of their Subsidiaries, nor, to the knowledge of the Loan Parties and their Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by any individual or entity that is (i) currently the subject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii) located, organized or resident in a Designated Jurisdiction.

5.18 Disclosure . Neither this Agreement nor any other document, certificate or statement furnished to the Agent or any Lender by or on behalf of the Borrowers in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact peculiar to any Loan Party or any Subsidiary which materially adversely affects, or in the future may (so far as any Borrower can now foresee) materially adversely affect, the consolidated business, property, assets, prospects or financial condition of any Loan Party and the Subsidiaries and which has not been set forth in this Agreement or in the other documents, certificates and statements furnished to the Agent and each Lender by or on behalf of a Borrower prior to the date this representation is made or confirmed in connection with the transactions contemplated hereby; provided , that with respect to projections and other pro forma financial information included in such information, each Borrower only represents that such information was based upon good faith estimates and assumptions believed by the preparer thereof to be reasonable at the time made, it being recognized by the Agent and the Lenders that such financial information as it relates to future events is not to be viewed as a fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount.

5.19 Anti-Corruption Laws .

The Loan Parties and their Subsidiaries have conducted their businesses in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010, and other similar anti-corruption legislation in other jurisdictions and have instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.

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ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder (other than any contingent indemnification Obligation) shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding:

6.01 Financial Information . The Borrowers shall deliver to the Agent and each Lender:

(a) as soon as practicable and in any event within 60 days after the end of each quarterly period (other than the last quarterly period) (commencing with the fiscal quarter ending September 30, 2015) in each fiscal year (or if earlier, 10 Business Days after the date required to be filed with the SEC), or the date on which another creditor of any Borrower first receives such information, consolidated statements of income and cash flows of Holdings and its Subsidiaries for the period from the beginning of the current fiscal year to the end of such quarterly period, and a consolidated balance sheet of Holdings and its Subsidiaries as at the end of such quarterly period, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and certified by an authorized financial officer of the Borrowers, subject only to changes resulting from year-end adjustments;

(b) as soon as practicable and in any event within the earlier to occur of 120 days after the end of each fiscal year of the Borrowers (or if earlier, 10 Business Days after the date required to be filed with the SEC) or the date on which another creditor of any Borrower first receives such information, consolidated statements of income and cash flows of Holdings and its Subsidiaries for such year and a consolidated balance sheet of Holdings and its Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form corresponding figures from the preceding annual audit, all in reasonable detail and reasonably satisfactory in scope to the Required Lenders and certified by independent public accountants of recognized standing whose opinion shall be unqualified and otherwise satisfactory in scope and substance to the Required Lenders, provided that such opinion shall be deemed otherwise satisfactory if prepared in accordance with GAAP and generally accepted accounting standards;

(c) together with each delivery of financial statements required by clauses (a) and (b) above, a Compliance Certificate (i) setting forth the aggregate amount of Restricted Payments made during such fiscal period and computations showing the calculation of the covenants in Sections 7.01 7.03(c) , 7.04(d) , 7.04(e) and 7.05 ; and (ii) stating that to the best of his or her knowledge, after due inquiry, there exists no Default, or if any such Default exists, specifying the nature and period of existence thereof and what action the Borrowers propose to take with respect thereto;

(d) promptly upon transmission thereof, copies of all such financial, proxy and information statements, notices and other reports as are sent to Holdings’ stockholders and copies of all registration statements (with such exhibits as any holder reasonably requests) and all reports which are filed with the SEC;

(e) promptly upon receipt thereof, a copy of each other material report submitted to Holdings or any of its Subsidiaries by independent accountants in connection with any material

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annual, interim or special audit made by them of the books of Holdings or such Subsidiary pursuant to a request by Holdings’ board of directors;

(f) promptly after the furnishing thereof, copies of any certificate, statement or report furnished to any other holder of the debt securities of any Loan Party pursuant to the terms of the Note Purchase Agreement or any other indenture, loan, credit or similar agreement or instrument and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 6.01 ;

(g) at the time of delivery of the financial statements referenced in Section 6.01(b) , an annual forecast of Holdings for the then current fiscal year;

(h) annually, a report with respect to the real property of the Loan Parties substantially in form and substance similar to that certain Real Estate Supplement reported as of and for the fiscal year ended December 31, 2014 and filed with the SEC; and

(i) with reasonable promptness, such other financial data as the Agent or any Lender may reasonably request.

Each Borrower also covenants that forthwith upon a Responsible Officer obtaining actual knowledge of a Default, it will deliver to the Agent and the Lenders an Officers’ Certificate specifying the nature and period of existence thereof and what action the Borrowers propose to take with respect thereto.

Documents required to be delivered pursuant to Section 6.01(a) , (b) , (d) or (h) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrowers post such documents, or provides a link thereto on the Borrowers’ website on the Internet at the website address listed on Schedule 10.02 ; or (ii) on which such documents are posted on a Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Agent have access (whether a commercial, third-party website or whether sponsored by the Agent); provided that: (i) the Borrowers shall deliver paper copies of such documents to the Agent or any Lender that requests the Borrowers to deliver such paper copies until a written request to cease delivering paper copies is given by the Agent or such Lender and (ii) the Company shall notify the Agent and each Lender (by facsimile or electronic mail) of the posting of any such documents and provide to the Agent by electronic mail electronic versions of such documents. The Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Company with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

Each Borrower hereby acknowledges that (a) the Agent and/or the Arranger may, but shall not be obligated to, make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of such Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on Debt Domain, IntraLinks, Syndtrak or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to such Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. Each Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the

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first page thereof; (x) by marking Borrower Materials “PUBLIC,” such Borrower shall be deemed to have authorized the Agent, the Arranger, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to such Borrower or its securities for purposes of United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07 ); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” Notwithstanding the foregoing, no Borrower shall be under any obligation to mark any Borrower Materials “PUBLIC.”

6.02 Inspection of Property . Holdings shall, and shall cause its Subsidiaries to, permit any employees or designated representatives of the Agent, any of its Related Parties or any other Lender with a Commitment in excess of $5,000,000, at such Person’s expense, to visit and inspect any of the properties of Holdings and its Subsidiaries, to examine their books and financial records and to make copies thereof or extracts therefrom and to discuss their affairs, finances and accounts with the Responsible Officers and the Loan Parties’ independent certified public accountants, all at such times as the applicable Borrower and such Person reasonably agree and as often as such Person may reasonably request; provided that a Responsible Officer of the Company shall have reasonable prior notice of, and may elect to be present during, discussions with the Borrowers’ independent public accountants.

6.03 Covenant to Secure Obligations Equally . If (x) Holdings, any Borrower or any Subsidiary shall create assume or otherwise incur any Lien upon any of its property or assets, whether now owned or hereafter acquired other than Liens permitted under Section 7.02 or (y) Holdings or such Borrower shall create, assume or otherwise incur any Lien upon any of its property or assets, whether now owned or hereafter acquired, to secure a Principal Credit Facility, then, in each case, Holdings, such Borrower or such Subsidiary, as applicable, shall make effective provision whereby the Obligations will be simultaneously secured by such Lien equally and ratably with any and all other Debt secured pursuant to terms and provisions, including an intercreditor agreement, reasonably satisfactory to the Agent so long as any such other Debt shall be so secured; provided that (i) to the extent the provision in the Note Purchase Agreement which requires ratable security for the obligations under the Note Purchase Agreement (or any similar provision therein relating to the provision of security) is deleted or otherwise no longer of any force or effect then Holdings and its Subsidiaries shall not be required to secure the Obligations or take any other action pursuant to this Section 6.03 and (ii) the terms hereof shall exclude any purchase money or capital lease indebtedness permitted to be incurred under the terms of this Agreement.

6.04 Maintenance of Properties; Insurance . Holdings shall, and shall cause its Subsidiaries to (a) maintain or cause to be maintained in good repair, working order and condition all material properties used or useful at that time in its business and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof and (b) maintain insurance with reputable and financially sound insurers in such amounts and against such liabilities and hazards as is customarily maintained by other companies operating similar businesses and together with each delivery of financial statements under Section 6.01(b) , upon the request of the Agent, deliver certificates of insurance to the foregoing effect to the Agent.

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6.05 Environmental and Safety Laws .

(a) The Company shall deliver promptly to the Agent notice of (i) any material enforcement, cleanup, removal or other material governmental or regulatory action instituted or, to the Borrowers’ best knowledge, threatened against Holdings, any Borrower or any Significant Subsidiary pursuant to any Environmental and Safety Laws, (ii) all material Environmental Liabilities and Costs against or in respect of Holdings, any Borrower or any Significant Subsidiary or any of its properties and (iii) Holdings’, any Borrower’s or any Significant Subsidiary’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of any of its properties that Holdings, any Borrower or such Significant Subsidiary has reason to believe could cause such property or any material part thereof to be subject to any material restrictions on its ownership, occupancy, transferability or use under any Environmental and Safety Laws.

(b) Holdings and each Borrower shall, and shall cause its Significant Subsidiaries to, keep and maintain its properties and conduct its and their operations in compliance with all applicable Environmental and Safety Laws except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

6.06 Use of Proceeds . Holdings shall, and shall cause its Subsidiaries to, use the proceeds of the Credit Extensions (a) to finance working capital, capital expenditures (including acquisitions) and other lawful corporate purposes, (b) to refinance certain existing indebtedness of the Borrowers, (c) for support of commercial paper issued by the Borrowers, (d) to finance permitted acquisitions and (e) to pay fees and expenses incurred in connection with this Agreement; provided that in no event shall the proceeds of any Credit Extension be used in contravention of any law or of any Loan Document.

6.07 [Reserved.]

6.08 [Reserved.] .

6.09 Additional Guarantors .

Each of Holdings and each Borrower covenants that concurrently with any such time as any Person becomes a guarantor or other obligor under any Principal Credit Facility (other than a Principal Credit Facility under which one or more Foreign Subsidiaries are the primary obligors), such Borrower shall cause such Person (each, an “ Additional Guarantor ”) to (i) become a party to a guaranty in form and substance satisfactory to the Agent and (ii) deliver to the Agent such organization documents, resolutions and favorable opinions of counsel, all in form, content and scope similar to those delivered on the Closing Date with respect to Holdings or otherwise reasonably satisfactory to the Agent.

6.10 Anti-Corruption Laws .

Each Loan Party covenants that it shall an shall cause each Subsidiary to conduct its businesses in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other similar anti-corruption legislation in other jurisdictions and maintain policies and procedures designed to promote and achieve compliance with such laws.

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ARTICLE VII.

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding (with respect to Section 7.01 , from and after the Closing Date):

7.01 Financial Covenants .

(a) Minimum Consolidated Shareholders’ Equity . Holdings shall not permit the Consolidated Shareholders’ Equity at any time to be less than (x) prior to the Triggering Event, the sum of (i) $869,540,000, plus (ii) to the extent positive, 25% of Consolidated Net Income for each fiscal quarter ended after September 30, 2015 (such required minimum consolidated shareholders’ equity amount not to be reduced by any consolidated net loss during any such fiscal quarter) and (y) on and after the Triggering Event, the sum of (i) $869,540,000, plus (ii) to the extent positive, 25% of Consolidated Net Income for each fiscal quarter ended after September 30, 2015 (such required minimum consolidated shareholders’ equity amount not to be reduced by any consolidated net loss during any such fiscal quarter), minus (iii) non-recurring one-time expenses (whether cash or non-cash) incurred in accordance with GAAP in connection with or as a result of the Triggering Event and determined on an after tax basis; provided that the aggregate amount deducted under this clause (iii) for all periods shall not exceed $70,000,000 and shall only be permitted to be deducted for so long as incurred no later than the date that is 18 months after the Triggering Event.

(b) Minimum Fixed Charge Coverage Ratio . Holdings shall not permit the Fixed Charge Coverage Ratio as of the last day of any fiscal quarter to be less than 1.50 to 1.0.

(c) Maximum Total Debt to Total Adjusted Asset Value Ratio . Holdings shall not permit the Total Debt to Total Adjusted Asset Value Ratio at any time to exceed 0.50 to 1.0.

(d) Maximum Unsecured Debt to Unencumbered Income Producing Assets Value Ratio . No Borrower shall permit the Unsecured Debt to Unencumbered Income Producing Assets Value Ratio at any time to exceed 0.60 to 1.0.

(e) Minimum Unencumbered Fixed Charge Coverage Ratio . In the event the Borrowers elect, for purpose of (and as provided in) clause (b) of the definition of Total Adjusted Asset Value, to have an appraisal performed to determine the Appraised Value of Agricultural Land which is not leased to third parties, then thereafter, as of the last day of any fiscal quarter, the Borrowers may elect to test the Unencumbered Fixed Charge Coverage Ratio and if such election is made, Holdings and its Subsidiaries shall maintain, as of the last day of such fiscal quarter, a minimum Unencumbered Fixed Charge Coverage Ratio of at least 1.50 to 1.00; provided that for purposes of calculating the minimum Unencumbered Fixed Charge Coverage Ratio, the appraisal, and the Appraised Value reflected therein, shall have been performed, or updated, as applicable, within the last 24 months.

7.02 Liens . Holdings shall not, and shall not permit any Subsidiary to, create, assume or suffer to exist at any time any Lien on or with respect to any of its property or assets, whether now owned

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or hereafter acquired (whether or not provision is made for the equal and ratable securing of the Obligations in accordance with the provisions of Section 6.03 ), except:

(a) Liens for taxes not yet delinquent or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP;

(b) Liens (other than Liens pursuant to ERISA) incidental to the conduct of its business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of its property or assets, taken as a whole, or materially impair the use thereof in the operation of its business;

(d) subject to compliance with Section 7.05 , any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of any real property (or any improvement thereon) or tangible personal property (or any improvement thereon) acquired or constructed or capital lease transaction by a Borrower or a Subsidiary after the date of this Agreement, provided that

(i) any such Lien shall extend solely to the item or items of such property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed property (or improvement thereon) or which is real property being improved by such acquired or constructed property (or improvement thereon),

(ii) the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the fair market value of such property (or improvement thereon) at the time of such acquisition or construction, and

(iii) except with respect to any capital lease transaction, any such Lien shall be created contemporaneously with, or within 365 days after, the acquisition or construction of such property;

(e) subject to compliance with Section 7.05 , other Liens of the Borrowers and Subsidiaries existing on the Closing Date and listed on Schedule 7.02 ;

(f) subject to compliance with Section 7.05 , Liens securing Debt other than as set forth in the foregoing clauses (a) ‑ (e); provided that there shall not exist any Lien of any kind on the shares of the Voting Stock of any Subsidiary, unless Holdings and its Subsidiaries continue to own shares of Voting Stock of such Subsidiary which are not subject to any Lien and which represent a majority of the Voting Stock of such Subsidiary;

(g) materialmen’s, mechanic’s, carrier’s, repairmen’s and warehousemen’s Liens in the ordinary course of business;

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(h) judgment Liens to the extent such Liens have not caused an Event of Default under Section 8.01(i) ;

(i) utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrowers or the Subsidiaries;

(j) Liens (other than any Lien imposed by ERISA) arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation, including, without limitation, imposed by ERISA;

(k) deposits to secure the performance of bids, trade contracts and leases (other than Debt), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; and

(l) Liens securing commercial letter of credits; provided that no such Lien shall extend to or cover any assets of any Borrower or any of its Subsidiaries other than the inventory (and bills of lading and other documents related thereto) being financed by any such commercial letter of credits.

7.03 Loans and Advances . Holdings shall not permit, and shall not permit any Subsidiary to, create, or permit to remain outstanding at any time any loan or advance to any Person, except (i) Holdings may make loans or advances to any Borrower and (ii) any Borrower and its Subsidiaries may:

(a) subject to Section 7.05 , make or permit to remain outstanding loans and advances to the Borrowers and Subsidiaries;

(b) make or permit to remain outstanding travel and other like advances and customary employee benefits in reasonable amounts to employees in the ordinary course of business;

(c) make or permit to remain outstanding Third Party loans and advances on standard arm’s-length terms, provided that the aggregate amount of all such loans may not exceed at any one time an amount equal to 5% of the Total Adjusted Asset Value at such time;

(d) advances of payroll payments to employees in the ordinary course of business; and

(e) make or permit to remain outstanding purchase money loans to Persons to whom it sells real property in the ordinary course of its Property Development Activities and its Property Management Business, provided that the aggregate amount of all such purchase money loans may not exceed at any one time an amount equal to 15% of Consolidated Total Assets of Holdings at the end of the fiscal quarter most recently-ended as of any date of determination.

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7.04 Merger and Sale of Assets . Holdings shall not, and shall not permit any Subsidiary to, merge with or into or consolidate with any other Person or sell, lease, transfer or otherwise dispose of its assets, except that:

(a) (i) any Subsidiary of a Borrower may merge with a Borrower, so long as such Borrower is the surviving Person, (ii) Grace may merge with the Company, so long as the Company is the surviving Person and (iii) Grace Holdings may merge with the Company, so long as the Company is the surviving Person;

(b) any Subsidiary of Holdings may merge with another Subsidiary of Holdings (provided that any merger with a Borrower shall be done in accordance with Section 7.04(a) ), or sell, lease, transfer or otherwise dispose of its assets to another Subsidiary of Holdings or to Holdings;

(c) Holdings or any of its Subsidiaries may sell, exchange, lease, transfer or otherwise dispose of assets (other than Undeveloped Land) in the ordinary course of business;

(d) Holdings or any of its Subsidiaries may sell, lease, transfer or otherwise dispose of assets (other than Undeveloped Land) to Third Parties so long as (i) the fair market value thereof on the date sold, leased, transferred or otherwise disposed of, together with the fair market value of all other assets sold, leased, transferred or otherwise disposed of to Third Parties pursuant to this clause (d) within the prior 12 months, does not represent more than 20% of the Consolidated Total Assets of Holdings and (ii) such assets, together with all other assets sold or otherwise disposed of to Third Parties pursuant to this clause (d) did not contribute more than 10% of EBITDA, determined as of the four quarter period ending as of the most recent fiscal quarter with respect to which financial statements are required to be delivered pursuant to Section 6.01(a) or (b); provided that, notwithstanding the percentage limitations appearing in clauses (i) and (ii), above, sales or dispositions in excess thereof in a twelve month period may be made for cash if the proceeds of each such excess sale or disposition (net of taxes thereon) are fully utilized in the acquisition of Permitted Assets and/or applied to the repayment of Permitted Debt, in each case within 365 days from the date of such sale or disposition;

(e) Holdings or any of its Subsidiaries may (i) engage in Code §1031 like-kind exchanges with respect to Undeveloped Land, and (ii) sell, lease, transfer or otherwise dispose of Undeveloped Land to (A) any Borrower or any of its Subsidiaries, (B) a Person which is not (and after giving effect thereto will not be) a Subsidiary of a Borrower, solely in exchange for an equity interest in such Person (unless at the time thereof the intention was that such Person would sell such land in its undeveloped state or that any proceeds would be received on or with respect to such equity interest prior to the time such land is developed for commercial or residential purposes), or (C) Third Parties; provided that if in any twelve month period the aggregate fair market value of Undeveloped Land which is sold, leased, transferred or otherwise disposed of pursuant to this clause (C), is greater than $100,000,000, then, within 365 days from the date of each sale, lease, transfer or other disposition which resulted in the $100,000,000 threshold being exceeded, an amount equal to such excess (net of taxes thereon) shall be fully utilized in the acquisition of Permitted Assets and/or applied to the repayment of Permitted Debt; and

(f) any Borrower may merge or consolidate with another corporation or other Person if (i) such Borrower will be the continuing or surviving entity and (ii) no Default would exist immediately after giving effect to such merger or consolidation.

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7.05 Priority Debt . Holdings shall not, and shall not permit any Subsidiary to, permit the aggregate amount of Priority Debt to exceed the Priority Debt Limit.

At the Borrowers’ option, Non-Recourse Debt of Holdings or its Subsidiaries with respect to Development Real Properties owned by Holdings or such Subsidiary may be excluded from the calculation of Priority Debt (solely for purpose of the Priority Debt covenant set forth in this Section 7.05 ); provided that: (i) if the amount of such excluded Non-Recourse Debt exceeds 70% of the book value of the associated Development Real Properties, then the Borrowers may not elect to exclude the amount of such Non-Recourse Debt from the calculation of Total Debt unless the amount of such excluded Non-Recourse Debt is equal to or less than 70% of the Appraised Value of the associated Development Real Properties; (ii) the aggregate amount of Non-Recourse Debt excluded shall not at any time exceed 15% of the total assets of Holdings and its Subsidiaries (less cash, cash equivalents, marketable securities, goodwill, noncontrolling interest and pension assets) in accordance with GAAP for the most recent fiscal quarter; and (iii) the exclusion of the Applicable Value of the associated Development Real Properties from Total Adjusted Asset Value referred to in clause (b) of this sentence shall be calculated only after giving effect to the reduction, if any, in Total Adjusted Asset Value required by the proviso in clause (c) of the definition of Total Adjusted Asset Value.

7.06 [Reserved] .

7.07 [Reserved] .

7.08 Transactions with Holders of Partnership or Other Equity Interests . Holdings shall not, and shall not permit any Subsidiary to, directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise deal with, in the ordinary course of business or otherwise (a) any Affiliate (other than in the capacity of an employee, director or officer), or (b) any Person owning, beneficially or of record, directly or indirectly, 5% or more of the outstanding voting stock of Holdings or any executive officer (as such term is defined under the Securities Exchange Act of 1934) of any Loan Party (other than in such Person’s capacity as an employee); provided , however , that such acts and transactions may be performed or engaged in if (i) they are entered into upon terms no less favorable to Holdings, such Borrower or such Subsidiary than if no such relationship described in clauses (a) or (b) above existed and such acts or transactions are otherwise permitted by this Agreement, (ii) they are between or among Holdings and/or any of its wholly-owned Subsidiaries, or (iii) they are otherwise permitted under Section 7.12 .

7.09 Use of Proceeds . No Borrower shall use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

7.10 Transfer of Assets to Subsidiaries . Holdings shall not, and shall not permit any Borrower to, transfer (other than in the ordinary course of business or with respect to similarly situated real estate companies) any assets to a Subsidiary for the sole purpose of improving the credit position of such Subsidiary in connection with a financing transaction, except that this restriction shall not apply to any asset the financing of which constitutes Non-Recourse Debt.

7.11 [Reserved] .

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7.12 Restricted Payments . Holdings covenants that it will not declare or pay any dividend or other distribution on any class of its capital stock or other equity interests, redeem or repurchase any such interests or make any other distribution on account of any such interests (all of the foregoing being “ Restricted Payments ”) except that Holdings may make a Restricted Payment in any amount so long as (a) no Default shall then exist or would exist after giving effect to any such Restricted Payment and (b) any such Restricted Payment will not violate any applicable law or regulation.

7.13 Sanctions . No Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly use any Credit Extension or the proceeds of any Credit Extension, or lend, contribute or otherwise make available such Credit Extension or the proceeds of any Credit Extension to any Person, to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as Lender, Arranger, Agent, L/C Issuer, Swing Line Lender, or otherwise) of Sanctions.

7.14 Anti-Corruption Laws . No Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly use the proceeds of any Credit Extension for any purpose which would breach the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 or other similar anti-corruption legislation in other jurisdictions.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default . Any of the following shall constitute an Event of Default:

(a) Non-Payment . Any Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein or in any other Loan Document, any amount of principal of any Loan or any L/C Obligation, or (ii) within five days after the same becomes due, any interest on any Loan or on any L/C Obligation, any fee due hereunder or any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants . Any Borrower or any other Loan Party fails to perform or observe any agreement contained in Sections 6.01(a)-6.01(c) , 6.03 , and 6.06 or Article VII hereof;

(c) Other Defaults . Any Borrower or any other Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure shall not be remedied within 30 days after any Responsible Officer obtains actual knowledge thereof; or

(d) Representations and Warranties . Any representation or warranty made by any Loan Party herein or in any other Loan Document or by any Loan Party or any of its officers in any writing furnished in connection with or pursuant to this Agreement shall be false or misleading in any material respect on the date as of which made; provided that to the extent that such breach of representation or warranty relates to clause (c) of the definition of Material Adverse Effect, such breach of representation or warranty shall only constitute an Event of Default under this subsection (d) if such Loan Party knowingly breached such representation or warranty; or

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(e) Cross‑Default . Any Loan Party or any Subsidiary defaults in any payment of principal of, or premium or interest on, any obligation for money borrowed (or of any obligation under conditional sale or other title retention agreement or of any obligation issued or assumed as full or partial payment for property whether or not secured by a purchase money mortgage or of any obligation under notes payable or drafts accepted representing extensions of credit) other than the Obligations beyond any period of grace provided with respect thereto, or any Loan Party or any Subsidiary fails to perform or observe any other agreement, term or condition contained in any agreement (or any other event thereunder or under any such agreement occurs and is continuing) and the effect of such payment default or other failure or event is to cause, or to permit the holder or holders of such obligation to cause, with the giving of notice if required, such obligation to be demanded or to become due (or such obligation becomes subject to required repurchase or an offer to repurchase by any Loan Party or any Subsidiary) prior to any stated maturity; provided that the aggregate amount of all obligations as to which such a payment default or other failure or event shall occur exceeds $30,000,000; or

(f) Insolvency Proceedings, Etc .

(i) Any Loan Party or any Significant Subsidiary makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; or

(ii) any decree or order for relief in respect of any Loan Party or any Significant Subsidiary is entered under any Debtor Relief Laws of any jurisdiction; or

(iii) any Loan Party or any Significant Subsidiary petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official of any Loan Party or any such Significant Subsidiary, or of any substantial part of the assets of any Loan Party or any such Significant Subsidiary, or commences a voluntary case under the Bankruptcy Code of the United States or any proceedings (other than proceedings for the voluntary liquidation and dissolution of a Significant Subsidiary) relating to any Loan Party or any Significant Subsidiary under any other Debtor Relief Laws; or

(iv) any petition or application of the type described in clause (iii) above is filed, or any such proceedings are commenced, against any Loan Party or any Significant Subsidiary and such Loan Party or such Significant Subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order, judgment or decree remains unstayed and in effect for more than 45 days; or

(g) Dissolution, Etc .

(i) Any order, judgment or decree is entered in any proceedings against any Loan Party or any Significant Subsidiary decreeing the dissolution of such Loan Party or such Significant Subsidiary and such order, judgment or decree remains unstayed and in effect for more than 45 days; or

(ii) any order, judgment or decree is entered in any proceedings against any Loan Party or any Significant Subsidiary decreeing a split-up of such Loan Party or such

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Significant Subsidiary which requires the divestiture of (A) assets representing a substantial part, or the stock of, or other ownership interest in, a Significant Subsidiary whose assets represent a substantial part of Consolidated Total Assets or (B) assets or the stock of or other ownership interest in a Significant Subsidiary that has contributed a substantial part of Consolidated Net Income for any of the three fiscal years then most recently ended, and such order, judgment or decree remains unstayed and in effect for more than 45 days; or

(h) ERISA . (i) Any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified any Borrower or any ERISA Affiliate that a Plan may become a subject of such proceedings, (iii) the aggregate amount under all Plans of the fair market value of the assets (within the meaning of Section 303 of ERISA) is less than 70% of the “Funding Target” (within the meaning of Section 303 of ERISA), (iv) any Borrower or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV or ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) any Borrower or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) any Loan Party or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of any Loan Party or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect of the type described in clause (a) or (b) of the definition thereof; or

(i) Judgments . Any judgment or decree in the amount of $25,000,000 or more shall be entered against any Loan Party or any of its Subsidiaries that is not paid or fully covered (beyond any applicable deductibles) by insurance and such judgment or decree shall not have been vacated, discharged or stayed or bonded pending appeal within 60 days from the entry thereof; or

(j) Invalidity of Loan Documents . Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

(k) Change of Control . There occurs any Change of Control.

8.02 Remedies Upon Event of Default . If any Event of Default occurs and is continuing, the Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

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(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by each Borrower;

(c) require that the Borrowers Cash Collateralize the L/C Obligations (in an amount equal to the Minimum Collateral Amount with respect thereto); and

(d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;

provided , however , that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrowers to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Agent or any Lender.

8.03 Application of Funds . After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.15 and 2.16 , be applied by the Agent in the following order:

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Agent and amounts payable under Article III ) payable to the Agent in its capacity as such;

Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer and amounts payable under Article III ), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third , to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;

Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Fourth held by them;

Fifth , to the Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrowers pursuant to Sections 2.03 and 2.15 ; and

Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrowers or as otherwise required by law.

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Subject to Sections 2.03(c) and 2.15 , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

ARTICLE IX.

AGENT

9.01 Appointment and Authority . Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Agent hereunder and under the other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Agent, the Lenders and the L/C Issuer, and no Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

9.02 Rights as a Lender . The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Agent hereunder and without any duty to account therefor to the Lenders.

9.03 Exculpatory Provisions . The Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

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(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Borrower, its Subsidiaries or any of its Affiliates that is communicated to or obtained by the Person serving as the Agent or any of its Affiliates in any capacity.

The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02 ) or (ii) in the absence of its own gross negligence or willful misconduct. The Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default in writing is given to the Agent by a Borrower, a Lender or the L/C Issuer.

The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent.

9.04 Reliance by Agent . The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

9.05 Delegation of Duties . The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Agent. The Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent. The Agent may consult with legal counsel (who may be counsel for the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

9.06 Resignation of Agent .

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(a) The Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and the Company. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuer, appoint a successor Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b) If the Person serving as Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Company and such Person remove such Person as Agent and, in consultation with the Borrowers, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents, in each case solely in its capacity as Agent and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Agent, all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time, if any, as the Required Lenders appoint a successor Agent as provided for above. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section) . The fees payable by the Borrowers to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After the retiring or removed Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent.

(d) Any resignation by Bank of America as Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender. If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed

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Amounts pursuant to Section 2.03(c) . If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment by the Borrowers of a successor L/C Issuer or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable, (ii) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

9.07 Non-Reliance on Agent and Other Lenders . Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

9.08 No Other Duties, Etc . Anything herein to the contrary notwithstanding, none of the Bookrunners, Arrangers or other titles listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Agent, a Lender or the L/C Issuer hereunder.

ARTICLE X.

MISCELLANEOUS

10.01 Amendments, Etc . No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrowers or the applicable Loan Party, as the case may be, and acknowledged by the Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that no such amendment, waiver or consent shall:

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02 ) without the written consent of such Lender;

(b) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

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(c) reduce the principal of, or the rate of interest specified herein on, any Loan or Unreimbursed Amounts under Letters of Credit, or (subject to clause (iv) of the second proviso to this Section 10.01 ) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided , however , that only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest or Letter of Credit Fees at the Default Rate and (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;

(d) change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

(e) release all or substantially all of the value of the Guaranty without the written consent of each Lender; or

(f) change any provision of this Section or the definition of “Required Lenders” without the written consent of each Lender;

and, provided, further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above, affect the rights or duties of the Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.

Notwithstanding the foregoing, the Borrowers may, by written notice to the Agent from time to time, make one or more offers (each, a “ Loan Modification Offer ”) to all the Lenders to make one or more amendments or modifications to (A) allow the maturity of the Committed Loans of the accepting Lenders to be extended and (B) increase the Applicable Rate and/or fees payable with respect to the Committed Loans and Commitments of the accepting Lenders (“ Permitted Amendments ”) pursuant to procedures reasonably specified by the Agent and reasonably acceptable to the Borrowers. Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Committed Loans and/or Commitments of the Lenders that accept the applicable Loan Modification Offer (such Lenders, the “ Accepting Lenders ”) and, in the case of any Accepting Lender, only with respect to such Lender’s Committed Loans and/or Commitments as to which such Lender’s acceptance has been made. Each Borrower, each other Loan Party and each Accepting Lender shall execute and deliver to the Agent a Loan Modification Agreement and such other

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documentation as the Agent shall reasonably specify to evidence the acceptance of the Permitted Amendments and the terms and conditions thereof, and the Loan Parties shall also deliver such resolutions, opinions and other documents as reasonably requested by the Agent. The Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each of the parties hereto hereby agrees that (1) upon the effectiveness of any Loan Modification Agreement, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Permitted Amendment evidenced thereby and only with respect to the Committed Loans and Commitments of the Accepting Lenders as to which such Lenders’ acceptance has been made and (2) any applicable Lender who is not an Accepting Lender may be replaced by the Borrowers in accordance with Section 10.13 .

In addition, notwithstanding anything to the contrary contained in this Section 10.01 or any other Loan Document, if the Agent and the Borrowers have jointly identified an obvious error or any error or omission of a technical nature, in each case, in any provision of the Loan Documents, then the Agent and the Borrowers shall be permitted to amend such provision without the consent of any Lender if such amendment, supplement or waiver is delivered in order to cure ambiguities, omissions, mistakes or defects in such respective Loan Document and so long as such amendment, supplement or waiver does not adversely affect the rights of any Lender.

10.02 Notices; Effectiveness; Electronic Communication .

(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to any Borrower or any other Loan Party, the Agent, the L/C Issuer or the Swing Line Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 ; and

(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrowers).

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b) .

(b) Electronic Communications . Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail, FpML messaging and Internet or intranet websites) pursuant to procedures

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approved by the Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Agent that it is incapable of receiving notices under such Article by electronic communication. The Agent or any Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement) and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) , if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to any Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of any Borrower’s, any Loan Party’s or the Agent’s transmission of Borrower Materials through the Platform, any other electronic platform or electronic messaging service, or through the Internet, except to the extent that such losses, claims, damages, liabilities or expense are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party or any of its Related Parties.

(d) Change of Address, Etc . Each of the Borrowers, the Agent, the L/C Issuer and the Swing Line Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Company, the Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender agrees to notify the Agent from time to time to ensure that the Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to

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enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable law, including United States Federal and state securities laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrowers or their securities for purposes of United States Federal or state securities laws.

(e) Reliance by Agent, L/C Issuer and Lenders . The Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices, Letter of Credit Applications and Swing Line Loan Notices) purportedly given by or on behalf of a Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Each Borrower shall indemnify the Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of such Borrower, except to the extent such losses, costs, expenses and liabilities resulted from the gross negligence or willful misconduct of such Person. All telephonic notices to and other telephonic communications with the Agent may be recorded by the Agent, and each of the parties hereto hereby consents to such recording.

10.03 No Waiver; Cumulative Remedies . No failure by any Lender, the L/C Issuer or the Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided , however , that the foregoing shall not prohibit (a) the Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under the other Loan Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.13 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b) , (c) and (d) of the preceding proviso and subject to Section 2.13 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

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10.04 Expenses; Indemnity; Damage Waiver .

(a) Costs and Expenses . The Borrowers shall pay (i) except as provided in Section 10.06(b)(iv) , all reasonable and documented out-of-pocket expenses incurred by the Agent and its Affiliates (including the reasonable fees, charges and disbursements of Moore & Van Allen PLLC, as counsel for the Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by the Agent, any Lender or the L/C Issuer (including the fees, charges and disbursements of any counsel for the Agent, any Lender or the L/C Issuer), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit; provided, however, that this Section 10.04(a) shall not apply with respect to Taxes.

(b) Indemnification by the Borrowers . Each Borrower shall indemnify the Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including, without limitation, the fees, charges and disbursements of one primary legal counsel to the Agent, the Arrangers and their Affiliates and the Lenders and, if required, one local counsel in each relevant jurisdiction (and, in the case of an actual or perceived conflict of interest where the Indemnitee informs the Company of such conflict and retains its own counsel, of one additional counsel for each such affected Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including any Borrower or any other Loan Party) other than such Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) result from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any

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Borrower against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. Without limiting the provisions of Section 3.01(c) , this Section 10.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(c) Reimbursement by Lenders . To the extent that any Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Agent (or any sub-agent thereof), the L/C Issuer, the Swing Line Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Agent (or any such sub-agent), the L/C Issuer, the Swing Line Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the outstanding Loans, unfunded Commitments and participation interests in Swing Line Loans and L/C Obligations of all Lenders at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lenders’ Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided , further that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agent (or any such sub-agent) or the L/C Issuer or the Swing Line Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d) .

(d) Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable law, neither any Loan Party nor any Indemnitee shall assert, and each party hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee or any Loan Party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof (except that an Indemnitee may assert, and does not waive, a claim against any Loan Party, in respect of any such damages incurred or paid by an Indemnitee to a third party). No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee.

(e) Payments . All amounts due under this Section shall be payable not later than ten Business Days after written demand therefor.

(f) Survival . The agreements in this Section and the indemnity provisions of Section 10.02(e) shall survive the resignation of the Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

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10.05 Payments Set Aside . To the extent that any payment by or on behalf of any Borrower is made to the Agent, the L/C Issuer or any Lender, or the Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

10.06 Successors and Assigns .

(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither any Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Loans at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

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(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Agent and, so long as no Event of Default has occurred and is continuing, the Borrowers otherwise consent (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans;

(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrowers (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;

(B) the consent of the Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender;

(C) the consent of the L/C Issuer and the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided , however , that the Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. Such processing and recordation fees, together with the costs and expenses of the Agent incurred in connection with the execution and delivery of such Assignment and Assumption, shall be paid by either the assignor or the assignee. The assignee, if it is not a Lender, shall deliver to the Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons . No such assignment shall be made to (A) any Borrower or any of its Subsidiaries or Affiliates, (B) a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person) or (C) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (C).

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(vi) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrowers and the Agent, the applicable pro rata share of Committed Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Agent, the L/C Issuer or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Committed Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 , and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided , that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, and upon receipt of the original Note from the assignor marked “Cancelled,” each Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register . The Agent, acting solely for this purpose as an agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive, and the Borrowers, the Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by any Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

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(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrowers or the Agent, sell participations to any Person (other than a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person), a Defaulting Lender or the Borrowers or any of the Borrowers’ Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain the holder of its Loans and owner of its participations or other interest in any Letter of Credit for all purposes hereunder, (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iv) the Borrowers, the Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 10.04(c) without regard to the existence of any participation.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. Each Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation); provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 10.13 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04 , with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrowers’ request and expense, to use reasonable efforts to cooperate with the Borrowers to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For

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the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.

(e) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(f) Resignation as L/C Issuer or Swing Line Lender after Assignment . Notwithstanding anything to the contrary contained herein, if at any time a Lender acting as L/C Issuer or Swing Line Lender assigns all of its Commitment and Loans pursuant to subsection (b) above, such Lender may, (i) upon 30 days’ notice to the Company and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Company, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Borrowers shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided , however , that no failure by the Borrowers to appoint any such successor shall affect the resignation of the applicable Lender as L/C Issuer or Swing Line Lender, as the case may be. Any such appointment of a successor L/C Issuer or Swing Line Lender by the Borrowers pursuant to this Section 10.06 shall not become effective until acceptance of the appointment by the successor L/C Issuer or Swing Line Lender. If a Lender resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit issued by it and outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) ). If a Lender resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the applicable resigning L/C Issuer to effectively assume the obligations of such L/C Issuer with respect to such Letters of Credit.

10.07 Treatment of Certain Information; Confidentiality . Each of the Agent, the Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective

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assignee of or Participant in, any of its rights or obligations under this Agreement (or any Eligible Assignee invited to be a Lender pursuant to Section 2.14 ) or (ii) any actual or prospective counterparty (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to a Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating a Borrower or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of a Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than a Borrower (only to the extent that such availability of information is not to the Agent, such Lender, or such L/C Issuer’s knowledge in breach of the confidentiality requirements provided herein).

For purposes of this Section, “ Information ” means all information received from any Borrower or any Subsidiary (or any Affiliate of a Borrower or any Related Party of a Borrower or any such Subsidiary or Affiliate) relating to any Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by any Borrower or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of the Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning a Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable law, including Federal and state securities laws.

10.08 Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of any Borrower or any other Loan Party against any and all of the obligations of such Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or their respective Affiliates, irrespective of whether or not such Lender, the L/C Issuer or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of such Borrower or such Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or the L/C Issuer different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided , that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of Section 2.16 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or

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their respective affiliates may have. Each Lender and the L/C Issuer agrees to notify the Company and the Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

10.09 Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “ Maximum Rate ”). If the Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the applicable Borrower. In determining whether the interest contracted for, charged, or received by the Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

10.10 Counterparts; Integration; Effectiveness; Amendment and Restatement .

(a) This Agreement and each of the other Loan Documents may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Agent or the L/C Issuer constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Agent and when the Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by fax transmission or e-mail transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement or such other Loan Document or certificate. Without limiting the foregoing, to the extent a manually executed counterpart is not specifically required to be delivered under the terms of any Loan Document, upon the request of any party, such fax transmission or e-mail transmission shall be promptly followed by such manually executed counterpart.

(b) The parties to the Existing Credit Agreement each hereby agree that, at such time as this Agreement shall have become effective pursuant to the terms of Section 4.01 , (i) the Existing Credit Agreement automatically shall be deemed amended and restated in its entirety by this Agreement, and (ii) the Commitments under the Existing Credit Agreement and as defined therein automatically shall be replaced with the Commitments hereunder. This Agreement is not a novation of the Existing Credit Agreement.

10.11 Survival of Representations and Warranties . All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Agent and each Lender, regardless of any investigation made by the Agent or any Lender or on their behalf and notwithstanding that the Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

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10.12 Severability . If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.12 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Agent, the L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

10.13 Replacement of Lenders . If the Borrowers are entitled to replace a Lender pursuant to the provisions of Section 3.06 , or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06 ), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a) the Borrowers shall have paid to the Agent the assignment fee (if any) specified in Section 10.06(b) ;

(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter;

(d) such assignment does not conflict with applicable laws; and

(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

10.14 Governing Law; Jurisdiction; Etc .

(a) GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF

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ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION . EACH BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE AGENT, ANY LENDER, THE L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE . EACH BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

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10.15 Waiver of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.16 No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Borrower and each other Loan Party acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Agent, the Arrangers and the Lenders are arm’s-length commercial transactions between each Borrower, each other Loan Party and their respective Subsidiaries and Affiliates, on the one hand, and the Agent, the Arrangers and the Lenders, on the other hand, (B) each of the Borrowers and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) each Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Agent, each Arranger and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Borrower, any other Loan Party or any of their respective Subsidiaries and Affiliates, or any other Person and (B) neither the Agent, any Arranger nor any Lender has any obligation to any Borrower, any other Loan Party or any of their respective Subsidiaries and Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Agent, the Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrowers, the other Loan Parties and their respective Subsidiaries and Affiliates, and neither the Agent, any Arranger nor any Lender has any obligation to disclose any of such interests to any Borrower, any other Loan Party or any of their respective Subsidiaries and Affiliates. To the fullest extent permitted by law, each of the Borrowers and each other Loan Party hereby waives and releases any claims that it may have against the Agent, the Arrangers or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

10.17 Electronic Execution of Assignments and Certain Other Documents. The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement, any other document executed in connection herewith and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other modifications, Committed Loan Notices, Swing Line Loan Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in

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Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Agent pursuant to procedures approved by it; provided further without limiting the foregoing, upon the request of any party, any electronic signature shall be promptly followed by such manually executed counterpart.

10.18 USA PATRIOT Act . Each Lender that is subject to the Act (as hereinafter defined) and the Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107‑56 (signed into law October 26, 2001)) (the “ Act ”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender or the Agent, as applicable, to identify the Loan Parties in accordance with the Act. The Borrowers shall, promptly following a request by the Agent or any Lender, provide all documentation and other information that the Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

ALEXANDER & BALDWIN, LLC

By: /s/Paul Ito

Name: Paul Ito

Title: Senior Vice President, Chief Financial Officer and Treasurer

GRACE PACIFIC LLC

By: /s/Paul Ito

Name: Paul Ito

Title: Treasurer

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BANK OF AMERICA, N.A.,

as Agent

By: /s/ Brenda Schriner

Name: Brenda Schriner

Title: Vice President

AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

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AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

CHAR1\1436963v5

BANK OF AMERICA, N.A.,

as Lender, L/C Issuer and Swing Line Lender

By: /s/ Elisa M. Kang

Name: Elisa M. Kang

Title: Senior Vice President

AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

CHAR1\1436963v5

FIRST HAWAIIAN BANK,

as a Lender and L/C Issuer

By: /s/Darlene Blakeney

Name: Darlene Blakeney

Title: Vice President

AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

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AMERICAN AGCREDIT, PCA,

as a Lender

By: /s/ Janice T Thede

Name: Janice T Thede

Title: Vice President

AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

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WELLS FARGO BANK, NATIONAL ASSOCIATION,

as a Lender

By: /s/ Guy Churchill

Name: Guy Churchill

Title: Senior Vice President

AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

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AMERICAN SAVINGS BANK, F.S.B.,

as a Lender

By: /s/ Edward Chin

Name: Edward Chin

Title: First Vice President

AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

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BANK OF HAWAII,

as a Lender

By: /s/ Terry Okada

Name: Terry Okada

Title: Senior Vice President

AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

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CENTRAL PACIFIC BANK,

as a Lender

By: /s/ Fernando Lopez

Name: Fernando Lopez

Title: Vice President

AMENDED AND RESTATED CREDIT AGREEMENT

ALEXANDER & BALDWIN, INC.

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ALEXANDER & BALDWIN, LLC

ALEXANDER & BALDWIN, INC.

SECOND AMENDED AND RESTATED NOTE PURCHASE

AND PRIVATE SHELF AGREEMENT

December 10, 2015

TABLE OF CONTENTS

Page



1.	BACKGROUND; AUTHORIZATION OF ISSUE OF SHELF NOTES		1
	1A.	Amendment and Restatement of Prior Agreement	1
	1B.	Existing Notes	1
	1C.	Authorizations of Issue of Shelf Notes	2
2.	PURCHASE AND SALE OF NOTES		2
	2A.	[Intentionally Omitted]	2
	2B.	Purchase and Sale of Shelf Notes	2
	2C.	Closings	5
	2D.	Fees	5
3.	CCONDITIONS OF CLOSING		7
	3A.	Conditions to Effectiveness of Agreement	7
	3B.	Conditions - Each Closing Day	7
4.	PREPAYMENTS		8
	4B.	Optional Prepayment With Yield-Maintenance Amount	9
	4C.	Notice of Optional Prepayment	9
	4D.	Application of Prepayments	10
	4E.	Retirement of Notes	10
5.	AFFIRMATIVE COVENANTS		10
	5A.	Financial Statements	10
	5B.	Inspection of Property	12
	5C.	Covenant to Secure Notes Equally	12
	5D.	Information Required by Rule 144A	13
	5E.	Maintenance of Properties; Insurance	13
	5F.	Environmental and Safety Laws	13
	5G.	Guarantors	13
	5H.	Certain Other Provisions	14
6.	NEGATIVE COVENANTS		14
	6A.	Financial Covenants	14
	6B.	Lien and Other Restrictions	16
	6C.	Restricted Payments	30



	i

TABLE OF CONTENTS

(continued)

Page



	6D.	Terrorism Sanctions Regulations	20
7.	EVENTS OF DEFAULT		20
	7A.	Acceleration	20
	7B.	Rescission of Acceleration	23
	7C.	Notice of Acceleration or Rescission	24
	7D.	Other Remedies	24
8.	REPRESENTATIONS, COVENANTS AND WARRANTIES		24
	8A.	Organization	24
	8B.	Financial Statements	25
	8C.	Actions Pending	25
	8D.	Outstanding Debt	25
	8E.	Title to Properties	26
	8F.	Taxes	26
	8G.	Conflicting Agreements and Other Matters	26
	8H.	Offering of the Notes	26
	8I.	Regulation U, Etc.	26
	8J.	ERISA	27
	8K.	Governmental Consent	28
	8L.	Utility Company Status	28
	8M.	Investment Company Status	28
	8N.	Real Property Matters	28
	8O.	Possessions of Franchises, Licenses, Etc.	29
	8P.	Environmental and Safety Matters	29
	8Q.	Hostile Tender Offers	29
	8R.	Employee Relations	29
	8S.	Regulations and Legislation	29
	8T.	Foreign Assets Control Regulations, Etc.	29
	8U.	Disclosure	31
9.	REPRESENTATIONS OF THE PURCHASERS		31
	9A.	Nature of Purchase	31



	ii

TABLE OF CONTENTS

(continued)

Page



	9B.	Source of Funds	32
10.	DEFINITIONS; ACCOUNTING MATTERS		33
	10A.	Yield-Maintenance Terms	33
	10B.	Other Terms	35
	10C.	Accounting Principles, Terms and Determinations	54
11.	MULTIPARTY GUARANTY		54
	11A.	Unconditional Guaranty	54
	11B.	Reimbursement of Expenses	55
	11C.	Guaranteed obligations Unaffected	55
	11D.	Joint and Several Liability	55
	11E.	Enforcement of Guaranteed Obligations	55
	11F.	Tolling of Statute of Limitations	56
	11G.	Rights of Contribution	56
	11H.	Subrogation	56
	11I.	Amendments, Etc., With Respect to Guaranteed Obligations	57
	11J.	Guaranty Absolute and Unconditional; Termination	57
	11K.	Reinstatement	58
	11L.	Payments	58
	11M.	Bound by Other Provisions	58
	11N.	Additional Guarantors	59
12.	MISCELLANEOUS		59
	12A.	Note Payments	59
	12B.	Expenses	59
	12C.	Consent to Amendments	60
	12D.	Form, Registration, Transfer and Exchange of Notes; Transfer Restriction	60
	12E.	Person Deemed Owners; Participations	61
	12F.	Survival of Representations and Warranties; Entire Agreement; No Novation	61
	12G.	Successors and Assigns	62
	12H.	Independence of Covenants	62



	iii

TABLE OF CONTENTS

(continued)

Page



12I.	Notices	62
12J.	Descriptive Headings	63
12K.	Satisfaction Requirement	63
12L.	Governing Law	63
12M.	Payments Due on Non-Business Days	63
12N.	Severability	63
12O.	Severalty of Obligations	63
12P.	Jurisdiction and Process; Waiver of Jury Trial	64
12Q.	Counterparts	64
12R.	Binding Agreement	65



	iv

Schedules and Exhibits

Information Schedule



Exhibit A	--	Form of Shelf Note
Exhibit B	--	Form of Request for Purchase
Exhibit C	--	Form of Confirmation of Acceptance
Exhibit D	--	Form of Joinder Agreement
Schedule 6B(1)	--	Existing Liens
Schedule 8A	--	Subsidiaries of Holdings and Ownership of Subsidiary Equity



	v

ALEXANDER & BALDWIN, LLC
ALEXANDER & BALDWIN, INC.
822 Bishop Street
Honolulu, Hawaii 96801-3440

As of December 10, 2015

Prudential Investment Management, Inc.
Each Prudential Affiliate which is a signatory hereof
or hereafter becomes bound by certain provisions hereof as hereinafter provided

c/o Prudential Capital Group
2029 Century Park East, Suite 715
Los Angeles, CA 90067

Ladies and Gentlemen:

Each of the undersigned, Alexander & Baldwin, LLC, a Hawaii limited liability company (the “ Company ”), Alexander & Baldwin, Inc., a Hawaii corporation (“ Holdings ”) and the Persons which are Guarantors hereby agrees with you as follows:

1. BACKGROUND; AUTHORIZATION OF ISSUE OF SHELF NOTES .

1A. Amendment and Restatement of Prior Agreement . This Agreement amends, restates and replaces in its entirety that certain Amended and Restated Note Purchase and Private Shelf Agreement, dated as of June 4, 2012 (as amended, restated, supplemented or otherwise modified until the time immediately prior to the execution and delivery of this Agreement, the “ Prior Agreement ”), by and among the parties hereto.

Certain capitalized terms used in this Agreement are defined in paragraph 10; references to a “paragraph” are, unless otherwise specified, to one of the paragraphs of this Agreement, and references to an “Exhibit” or “Schedule” are, unless otherwise specified, to one of the exhibits or schedules to this Agreement.

1B. Existing Notes . Pursuant to the terms of the Prior Agreement or a predecessor agreement thereto, the Company has issued: (i) its 5.53% senior notes due July 25, 2024 (as amended, restated, supplemented or otherwise modified from time to time, the “ Series AX Notes ”, such term to include any such notes issued in substitution therefor pursuant to paragraph 12D of this Agreement or the Prior Agreement) in the original aggregate principal amount of $37,500,000 ($31,500,000 aggregate principal amount of which is currently outstanding); (ii) its 5.55% senior notes due January 25, 2026 (as amended, restated, supplemented or otherwise modified from time to time, the “ Series BX Notes ”, such term to include any such notes issued in substitution therefor pursuant to paragraph 12D of this Agreement or the Prior Agreement) in the original aggregate principal amount of $50,000,000 ($47,000,000 aggregate principal amount of which is currently outstanding); (iii) its 5.56% senior notes due July 25, 2026 (as amended, restated, supplemented or otherwise modified from time to time, the “ Series CX Notes ”, such term to include any such notes issued in substitution therefor pursuant to paragraph 12D of this Agreement or the Prior Agreement) in the original

aggregate principal amount of $25,000,000 (all of which is currently outstanding); (iv) its 6.90% senior notes due March 9, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “ Series D Notes ”, such term to include any such notes issued in substitution therefor pursuant to paragraph 12D of this Agreement, the Prior Agreement or a predecessor agreement thereto) in the original aggregate principal amount of $100,000,000 ($75,000,000 aggregate principal amount of which is currently outstanding); (v) its 3.90% senior notes due November 30, 2024 (as amended, restated, supplemented or otherwise modified from time to time, the “ Series E Notes ”, such term to include any such notes issued in substitution therefor pursuant to paragraph 12D of this Agreement or the Prior Agreement) in the original aggregate principal amount of $75,000,000 (all of which is currently outstanding); and (vi) 4.35% senior notes due September 1, 2026 (as amended, restated, supplemented or otherwise modified from time to time, the “ Series F Notes ”, such term to include any such notes issued in substitution therefor pursuant to paragraph 12D of this Agreement or the Prior Agreement) in the original aggregate principal amount of $25,000,000 ($23,375,000 aggregate principal amount of which is currently outstanding).

1C. Authorization of Issue of Shelf Notes . The Company may authorize the issue of its senior promissory notes (as amended, restated, supplemented or otherwise modified from time to time, the “ Shelf Notes ”, such term to include any such notes issued in substitution therefor pursuant to paragraph 12D of this Agreement), to be dated the date of issue thereof, to mature, in the case of each Shelf Note so issued, no more than sixteen years from the date of original issuance, to have an average life, in the case of each Shelf Note so issued, of no more than sixteen years, to bear interest on the unpaid balance thereof from the date thereof at the rate per annum, and to have such other particular terms, as shall be set forth, in the case of each Shelf Note so issued, in the Confirmation of Acceptance with respect to such Shelf Note delivered pursuant to paragraph 2B(5), and to be substantially in the form of Exhibit A . The terms “ Note ” and “ Notes ” as used herein shall include each Series AX Note, each Series BX Note, each Series CX Note, each Series D Note, each Series E Note, each Series F Note and each Shelf Note. Notes which have (i) the same final maturity, (ii) the same principal prepayment dates, (iii) the same principal prepayment amounts (as a percentage of the original principal amount of each Note), (iv) the same interest rate, (v) the same interest payment periods and (vi) the same date of issuance (which, in the case of a Note issued in exchange for another Note, shall be deemed for these purposes the date on which such Note’s ultimate predecessor Note was issued), are herein called a “ Series ” of Notes.

2. PURCHASE AND SALE OF NOTES .

2A. [Intentionally Omitted] .

2B. Purchase and Sale of Shelf Notes .

2B(1). Facility . Prudential is willing to consider, in its sole discretion and within limits which may be authorized for purchase by Prudential and Prudential Affiliates from time to time, the purchase of Shelf Notes pursuant to this Agreement. The willingness of Prudential to consider such purchase of Shelf Notes is herein called the “ Facility ”. At any time, (i) $450,000,000, minus (ii) the aggregate principal amount of the Notes then outstanding and all other notes issued and sold under any other agreement by Holdings, the Company or any



	2

Subsidiary and held by Prudential or any Prudential Affiliate which are then outstanding, minus (iii) the aggregate principal amount of Accepted Notes (as hereinafter defined) which have not yet been purchased and sold hereunder prior to such time, is herein called the “ Available Facility Amount ” at such time. NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF SHELF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE. Notwithstanding anything to the contrary appearing herein, in no event shall any Note be purchased under the Facility by a Prudential Affiliate described in clause (i) of the definition thereof if, upon giving effect to such purchase and the use of proceeds thereof, the aggregate principal amount of all Notes and any other notes of the Company then outstanding and held by all Prudential Affiliates described in such clause, would exceed $325,000,000.

2B(2). Issuance Period . Shelf Notes may be issued and sold pursuant to this Agreement until the earlier of (i) the third anniversary of the date of this Agreement (or if such anniversary is not a Business Day, the Business Day next preceding such anniversary) and (ii) the thirtieth day after Prudential shall have given to the Company, or the Company shall have given to Prudential, a written notice stating that it elects to terminate the issuance and sale of Shelf Notes pursuant to this Agreement (or if such thirtieth day is not a Business Day, the Business Day next preceding such thirtieth day). The period during which Shelf Notes may be issued and sold pursuant to this Agreement is herein called the “ Issuance Period ”.

2B(3). Request for Purchase . The Company may from time to time during the Issuance Period make requests for purchases of Shelf Notes (each such request being herein called a “ Request for Purchase ”). Each Request for Purchase shall be made to Prudential by telefacsimile or overnight delivery service, and shall (i) specify the aggregate principal amount of Shelf Notes covered thereby, which shall not be less than $5,000,000 and not be greater than the Available Facility Amount at the time such Request for Purchase is made, (ii) specify the principal amounts, final maturities, principal prepayment dates and amounts and interest payment periods (quarterly or semiannual in arrears) of the Shelf Notes covered thereby, (iii) specify the use of proceeds of such Shelf Notes, (iv) specify the proposed day for the closing of the purchase and sale of such Shelf Notes, which shall be a Business Day during the Issuance Period not less than 5 Business Days after the making of such Request for Purchase, (v) specify the number of the account and the name and address of the depository institution to which the purchase price of such Shelf Notes is to be transferred on the Closing Day for such purchase and sale, (vi) certify that the representations and warranties contained in paragraph 8 are true on and as of the date of such Request for Purchase and that there exists on the date of such Request for Purchase no Event of Default or Default, and (vii) be substantially in the form of Exhibit B . Each Request for Purchase shall be in writing and shall be deemed made when received by Prudential.

2B(4). Rate Quotes . Not later than five Business Days after the Company shall have given Prudential a Request for Purchase pursuant to paragraph 2B(3), Prudential may, but shall



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be under no obligation to, provide to the Company by telephone or telefacsimile, in each case between 9:30 a.m. and 2:00 p.m. New York City local time (or such later time as Prudential may elect) interest rate quotes for the several principal amounts, maturities, principal prepayment schedules, and interest payment periods of Shelf Notes specified in such Request for Purchase. Each quote shall represent the interest rate per annum payable on the outstanding principal balance of such Shelf Notes at which Prudential or a Prudential Affiliate would be willing to purchase such Shelf Notes at 100% of the principal amount thereof.

2B(5). Acceptance . Within two minutes after Prudential shall have provided any interest rate quotes pursuant to paragraph 2B(4), or such shorter period as Prudential may specify to the Company (such period herein called the “ Acceptance Window ”), the Company may, subject to paragraph 2B(6), elect to accept such interest rate quotes as to not less than $5,000,000 aggregate principal amount of the Shelf Notes specified in the related Request for Purchase. Such election shall be made by an Authorized Officer of the Company notifying Prudential by telephone or telefacsimile within the Acceptance Window that the Company elects to accept such interest rate quotes, specifying the financial terms referred to in clause (ii) of paragraph 2B(3) with respect to such Shelf Notes (each such Note being herein called an “ Accepted Note ”) as to which such acceptance (herein called an “ Acceptance ”) relates. The day the Company notifies an Acceptance with respect to any Accepted Notes is herein called the “ Acceptance Day ” for such Accepted Notes. Any interest rate quotes as to which Prudential does not receive an Acceptance within the Acceptance Window shall expire, and no purchase or sale of Shelf Notes hereunder shall be made based on such expired interest rate quotes. Subject to paragraph 2B(6) and the other terms and conditions hereof, the Company agrees to sell to Prudential or a Prudential Affiliate, and Prudential agrees to purchase, or to cause the purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the principal amount of such Shelf Notes. As soon as practicable following the Acceptance Day, the Company and each Prudential Affiliate which is to purchase any such Accepted Notes will execute a confirmation of such Acceptance substantially in the form of Exhibit C (herein called a “ Confirmation of Acceptance ”). If the Company should fail to execute and return to Prudential within three Business Days following receipt thereof from Prudential of a Confirmation of Acceptance with respect to any Accepted Notes, Prudential may at its election at any time prior to its receipt thereof cancel the closing with respect to such Accepted Notes by so notifying the Company in writing.

2B(6). Market Disruption . Notwithstanding the provisions of paragraph 2B(5), if Prudential shall have provided interest rate quotes pursuant to paragraph 2B(4) and thereafter prior to the time an Acceptance with respect to such quotes shall have been notified to Prudential in accordance with paragraph 2B(5) the domestic market for U.S. Treasury securities or derivatives shall have closed or there shall have occurred a general suspension, material limitation, or significant disruption of trading in securities generally on the New York Stock Exchange or in the domestic market for U.S. Treasury securities or derivatives, then such interest rate quotes shall expire, and no purchase or sale of Notes hereunder shall be made based on such expired interest rate quotes. If the Company thereafter notifies Prudential of the Acceptance of any such interest rate quotes, such Acceptance shall be ineffective for all purposes of this Agreement, and Prudential shall promptly notify the Company that the provisions of this paragraph 2B(6) are applicable with respect to such Acceptance.



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2C. Closings . Not later than 1:30 p.m. (New York City local time) on the Closing Day for any Accepted Notes, the Company will deliver to each Purchaser listed on the Purchaser Schedule relating thereto at the offices of Prudential Capital Group the Accepted Notes to be purchased by such Purchaser on such Closing Day in the form of one or more Notes in authorized denominations as such Purchaser may request, dated the applicable Closing Day and registered in such Purchaser’s name (or in the name of its nominee), against payment of the purchase price thereof by transfer of immediately available funds for credit to the account specified by the Company in the Request for Purchase relating to such Notes. If the Company fails to tender to any Purchaser the Accepted Notes to be purchased by such Purchaser on the scheduled Closing Day for such Notes as provided above, or any of the conditions specified in paragraph 3B shall not have been fulfilled by the time required on such scheduled Closing Day, the Company shall, prior to 2:30 p.m., New York City local time, on such scheduled Closing Day notify Prudential (which notification shall be deemed received by each Purchaser) in writing whether (i) such closing is to be rescheduled (such rescheduled date to be a Business Day during the Issuance Period not less than one Business Day and not more than thirty days after such scheduled Closing Day (the “ Rescheduled Closing Day ”) and certify to Prudential (which certification shall be for the benefit of each Purchaser) that the Company reasonably believes that it will be able to comply with the conditions set forth in paragraph 3B on such Rescheduled Closing Day and that the Company will pay the Delayed Delivery Fee in accordance with paragraph 2D(iii) or (ii) such closing is to be canceled. In the event that the Company shall fail to give such notice referred to in the preceding sentence, Prudential (on behalf of each Purchaser) may at its election, at any time after 2:30 p.m., New York City local time, on such scheduled Closing Day, notify the Company in writing that such closing is to be canceled. Notwithstanding anything to the contrary appearing in this Agreement, the Company may not elect to reschedule a closing with respect to any Notes on more than one occasion, unless Prudential shall have otherwise consented in writing.

2D. Fees .

2D(i). Structuring Fee . In consideration for the time, effort and expense involved in the preparation, negotiation and execution of this Agreement, the Company will pay to or as directed by Prudential a fully earned and non-refundable fee in the aggregate amount of $50,000 (herein called the “ Structuring Fee ”).

2D(ii). Shelf Notes Issuance Fee . The Company agrees to pay to or as directed by Prudential in immediately available funds a fee (herein called the “ Issuance Fee ”) on or before each Closing Day (other than the initial Closing Day, if any, occurring within the first six months after the date of this Agreement on which a minimum aggregate principal amount of $20,000,000 of Shelf Notes is purchased and sold) for the purchase and sale of Shelf Notes in an amount equal to 0.10% of the aggregate principal amount of Shelf Notes sold on such Closing Day.

2D(iii). Delayed Delivery Fee . If the closing of the purchase and sale of any Accepted Notes is delayed for any reason beyond the original Closing Day therefor, the Company agrees to pay to (or as directed by) Prudential on the Cancellation Date or actual closing date of such purchase and sale, a fee (herein called the “ Delayed Delivery Fee ”) calculated as follows:



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(BEY - MMY) X DTS/360 X PA

where “ BEY ” means Bond Equivalent Yield, i.e. , the bond equivalent yield per annum of such Note, “ MMY ” means Money Market Yield, i.e. , the yield per annum on a commercial paper investment of the highest quality selected by Prudential on the date Prudential receives notice of the delay in the closing for such Note having a maturity date or dates the same as, or closest to, the Rescheduled Closing Day (a new alternative investment being selected by Prudential each time such closing is delayed); “ DTS ” means Days to Settlement, i.e. , the number of actual days elapsed from and including the original Closing Day with respect to such Note to but excluding the date of such payment; and “ PA ” means Principal Amount, i.e. , the principal amount of the Accepted Note for which such calculation is being made. In no case shall the Delayed Delivery Fee be less than zero. Nothing contained herein shall obligate any Purchaser to purchase any Accepted Note on any day other than the original Closing Day for such Note, as the same may be rescheduled from time to time in compliance with paragraph 2C. Notwithstanding the foregoing, no Delayed Delivery Fee shall be payable in connection with the closing of the purchase and sale of any Series of Notes if all of the conditions precedent set forth in paragraph 3 (other than the condition precedent in paragraph 3B(3)) have been timely satisfied on or prior to the original Closing Day therefor and any relevant Purchaser fails to purchase any such Notes on such Closing Day.

2D(iv). Cancellation Fee . If the Company at any time notifies Prudential in writing that the Company is canceling the closing of the purchase and sale of any Accepted Notes, or if Prudential notifies the Company in writing under the circumstances set forth in the penultimate sentence of paragraph 2C that the closing of the purchase and sale of any Accepted Notes is to be canceled (or under the circumstances set forth in the last sentence of paragraph 2B(5) that the purchase and sale of any Accepted Notes is to be cancelled), or if the closing of the purchase and sale of any Series of Notes is not consummated on or prior to the last day of the Issuance Period (the date of any such notification, or the last day of the Issuance Period, as the case may be, being herein called the “ Cancellation Date ”), the Company agrees to pay to Prudential in immediately available funds an amount (the “ Cancellation Fee ”) calculated as follows:

PI X PA

where “ PI ” means Price Increase, i.e. , the quotient (expressed in decimals) obtained by dividing (a) the excess of the ask price (as determined by Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid price (as determined by Prudential) of the Hedge Treasury Notes(s) on the date the interest rate was locked on the Acceptance Day for such Accepted Notes (as applicable) by (b) such applicable bid price; and “ PA ” has the meaning ascribed to it in paragraph 2D(iii). The foregoing bid and ask prices shall be as reported by such publicly available source of such market data as is then customarily utilized by Prudential. Each price shall be based on a U.S. Treasury security having a par value of $100.00 and shall be rounded to the second decimal place. In no case shall the Cancellation Fee be less than zero. Notwithstanding the foregoing, no Cancellation Fee shall be due in connection with any proposed purchase and sale of any Shelf Notes if all of the conditions precedent set forth in paragraph 3 (other than the condition precedent in paragraph 3B(3)) have been timely satisfied on or prior to the applicable Closing Day therefor and any relevant Purchaser fails to purchase any such Notes on such Closing Day.



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3. CONDITIONS OF CLOSING .

3A. Conditions to Effectiveness of Agreement . The effectiveness of this Agreement and the amendment and restatement of the Prior Agreement effected hereby is subject to the satisfaction of the following conditions:

3A(7). Bank Credit Agreement . The Purchasers shall have received an executed copy of an amendment to the Bank Credit Agreement in form and substance reasonably satisfactory to the Purchasers.

3A(8). Representations and Warranties; No Default. The representations and warranties contained in paragraph 8 and in each other Transaction Document shall be true in all material respects (except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect which such representation and warranty shall be true and correct in all respects) on and as of the date of this Agreement; there shall exist on the date of this Agreement no Event of Default or Default; and the Company shall have delivered to Prudential and the Purchasers an Officer’s Certificate, dated the date of this Agreement, executed by a Responsible Officer of each of Holdings and the Company, to both such effects.

3A(9). Fees and Expenses . Without limiting the provisions of paragraph 12B hereof, the Company shall have paid (i) the Structuring Fee required by paragraph 2D(i), and (ii) the reasonable fees, charges and disbursements of special counsel to the Purchasers to the extent invoiced by no later than one (1) day prior to the date of this Agreement.

3B. Conditions - Each Closing Day . The obligation of any Purchaser to purchase and pay for any Shelf Notes is subject to the satisfaction, on or before such Closing Day, of the following conditions:

3B(1). Certain Documents . Such Purchaser shall have received the following, each dated the date of the applicable Closing Day:

(i) the Note(s) to be purchased by such Purchaser.

(ii) certified copies of the resolutions of the board of directors (or similar authorizing body) of each of the Credit Parties authorizing the execution and delivery of this Agreement, the Multiparty Guaranty and (in the case of the Company) the issuance of such Notes, and of all documents evidencing other necessary corporate or other action and governmental approvals, if any, with respect to this Agreement, the Multiparty Guaranty and such Notes.

(iii) a certificate of the Secretary or an Assistant Secretary and one other officer of each Credit Party certifying the names and true signatures of the officers of such Person authorized to sign this Agreement, the Multiparty Guaranty and such Notes and the other documents to be delivered hereunder.

(iv) certified copies of the articles of incorporation and bylaws (or similar constitutive documents) of each Credit Party.



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(v) a favorable opinion of (a) Stradling Yocca Carlson & Rauth, P.C., dated the applicable Closing Day, satisfactory to such Purchaser, and (b) the Chief Legal Officer of the Credit Parties or such other counsel of the Credit Parties designated by the Company and acceptable to such Purchaser, dated the applicable Closing Day, satisfactory to such Purchaser.

(vi) a good standing certificate for each Credit Party from such Person’s jurisdiction of organization, in each case dated as of a recent date and such other evidence of the status of such Credit Party as such Purchaser may reasonably request.

(vii) additional documents or certificates with respect to legal matters or corporate or other proceedings related to the transactions contemplated hereby as may be reasonably requested by such Purchaser.

3B(2). Representations and Warranties; No Default . The representations and warranties contained in paragraph 8 and in each other Transaction Document shall be true in all material respects (except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect which such representation and warranty shall be true and correct in all respects) on and as of such Closing Day; there shall exist on such Closing Day no Event of Default or Default; and the Company shall have delivered to such Purchaser an Officer’s Certificate, dated such Closing Day, executed by a Responsible Officer of each of Holdings and the Company, to both such effects.

3B(3). Purchase Permitted by Applicable Laws . The purchase of and payment for the Notes to be purchased by such Purchaser on the terms and conditions herein provided (including the use of the proceeds of such Notes by the Company) shall not violate any applicable law or governmental regulation (including, without limitation, Section 5 of the Securities Act or Regulation T, U or X of the Board of Governors of the Federal Reserve System) and shall not subject such Purchaser to any tax, penalty, liability or other onerous condition under or pursuant to any applicable law or governmental regulation, and such Purchaser shall have received such certificates or other evidence as it may request to establish compliance with this condition. This paragraph 3B(3) is a closing condition and shall not be construed as a tax indemnity.

3B(4). Payment of Expenses . Without limiting the provisions of paragraph 12B hereof, the Company shall have paid the reasonable fees, charges and disbursements of special counsel to the Purchasers to the extent invoiced by no later than one (1) day prior to the applicable Closing Day.

3B(5). Payment of Fees . The Company shall have paid to Prudential and each Purchaser any fees due it pursuant to or in connection with this Agreement, including any Issuance Fee due pursuant to paragraph 2D(ii) and any Delayed Delivery Fee due pursuant to paragraph 2D(iii).

4. PREPAYMENTS . The Notes shall be subject to scheduled required prepayment as and to the extent provided in paragraph 4A. The Notes shall also be subject to prepayment under the circumstances set forth in paragraph 4B.



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4A(1). Required Prepayment of Series AX Notes . Until the Series AX Notes have been paid in full, the Company shall prepay the Series AX Notes, without Yield Maintenance Amount, in the amount of $6,000,000 on July 25, 2015, $3,000,000 on July 25, 2016, $7,125,000 on July 25, 2021, $7,125,000 on July 25, 2022, and $7,125,000 on July 25, 2023, and such principal amount of the Series AX Notes, together with interest thereon to the payment dates, shall become due on such payment dates. The remaining principal amount of the Series AX Notes, together with interest accrued thereon, shall become due on the maturity date of the Series AX Notes.

4A(2). Required Prepayment of Series BX Notes . Until the Series BX Notes have been paid in full, the Company shall prepay the Series BX Notes, without Yield Maintenance Amount, in the amount of $3,000,000 on January 25, 2015, $1,000,000 on January 25, 2016, $1,000,000 on January 25, 2021, $9,000,000 on January 25, 2022, $9,000,000 on January 25, 2023, $9,000,000 on January 25, 2024, and $16,000,000 on January 25, 2025, and such principal amount of the Series BX Notes, together with interest thereon to the payment dates, shall become due on such payment dates. The remaining principal amount of the Series BX Notes, together with interest accrued thereon, shall become due on the maturity date of the Series BX Notes.

4A(3). Required Prepayment of Series CX Notes . Until the Series CX Notes have been paid in full, the Company shall prepay the Series CX Notes, without Yield Maintenance Amount, in the amount of $1,000,000 on July 25, 2018, $1,000,000 on July 25, 2019, $1,000,000 on July 25, 2020, $9,000,000 on July 25, 2021, $2,000,000 on July 25, 2022, $2,000,000 on July 25, 2023, $2,000,000 on July 25, 2024, and $3,000,000 on July 25, 2025, and such principal amount of the Series CX Notes, together with interest thereon to the payment dates, shall become due on such payment dates. The remaining principal amount of the Series CX Notes, together with interest accrued thereon, shall become due on the maturity date of the Series CX Notes.

4A(4). Required Prepayments of Other Notes . The Series D Notes, the Series E Notes, the Series F Notes and each Series of Shelf Notes shall be subject to required prepayments, if any, set forth in the Notes of such Series.

4B. Optional Prepayment With Yield-Maintenance Amount . The Notes of each Series shall be subject to prepayment, in whole at any time or from time to time in part (in integral multiples of $100,000 and in a minimum amount of $1,000,000), at the option of the Company, at 100% of the principal amount so prepaid plus interest thereon to the prepayment date and the Yield-Maintenance Amount, if any, with respect to each such Note. Any partial prepayment of a Series of the Notes pursuant to this paragraph 4B shall be applied in satisfaction of required payments of principal in inverse order of their scheduled due dates.

4C. Notice of Optional Prepayment . The Company shall give the holder of each Note of a Series to be prepaid pursuant to paragraph 4B irrevocable written notice of such prepayment not less than 3 Business Days prior to the prepayment date, specifying such prepayment date, the aggregate principal amount of the Notes of such Series to be prepaid on such date, the principal amount of the Notes of such Series held by such holder to be prepaid on that date and that such prepayment is to be made pursuant to paragraph 4B. Notice of prepayment having been given as aforesaid, the principal amount of the Notes specified in such notice, together with interest thereon to the prepayment date and together with the Yield-



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Maintenance Amount, if any, herein provided, shall become due and payable on such prepayment date. The Company shall, on or before the day on which it gives written notice of any prepayment pursuant to paragraph 4B, give telephonic notice of the principal amount of the Notes to be prepaid and the prepayment date to each Significant Holder which shall have designated a recipient for such notices in the applicable purchaser schedule for such Series of Notes or by notice in writing to the Company.

4D. Application of Prepayments . In the case of each prepayment of less than the entire unpaid principal amount of all outstanding Notes of any Series pursuant to paragraph 4A(1), 4A(2), 4A(3) or 4B, the amount to be prepaid shall be applied pro rata to all outstanding Notes of such Series (including, in the case of any prepayment pursuant to paragraph 4A(1), 4A(2) or 4A(3), all Notes prepaid or otherwise retired or purchased or otherwise acquired by the Company or any of its Subsidiaries or Affiliates other than by prepayment pursuant to paragraph 4A or 4B) according to the respective unpaid principal amounts thereof.

4E. Retirement of Notes . The Company shall not, and shall not permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in part prior to their stated final maturity (other than by prepayment pursuant to paragraphs 4A or 4B, or upon acceleration of such final maturity pursuant to paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes of any Series held by any holder unless the Company or such Subsidiary or Affiliate shall have offered to prepay or otherwise retire or purchase or otherwise acquire, as the case may be, the same proportion of the aggregate principal amount of Notes of such Series held by each other holder of Notes of such Series at the time outstanding upon the same terms and conditions. Any Notes so prepaid or otherwise retired or purchased or otherwise acquired by the Company or any of its Subsidiaries or Affiliates shall not be deemed to be outstanding for any purpose under this Agreement, except as provided in paragraph 4D.

5. AFFIRMATIVE COVENANTS . During the Issuance Period and so long thereafter as any Note is outstanding and unpaid, each of Holdings and the Company covenants as follows:

5A. Financial Statements . Holdings and the Company covenant that they will deliver to each holder of the Notes:

(i) as soon as practicable and in any event within the earlier to occur of 60 days after the end of each quarterly period (other than the last quarterly period) in each fiscal year or the date on which another creditor of Holdings or the Company first receives such information, consolidated statements of income and cash flows of Holdings and its Subsidiaries (and together with consolidating schedules breaking out (1) A&B II, LLC and its Subsidiaries on a consolidated basis, and (2) for so long as any Debt of GLP Asphalt LLC is secured by a consensual Lien, GLP Asphalt LLC and its Subsidiaries on a consolidated basis) for the period from the beginning of the current fiscal year to the end of such quarterly period, and a consolidated balance sheet of Holdings and its Subsidiaries (and together with consolidating schedules breaking out (1) A&B II, LLC and its Subsidiaries on a consolidated basis, and (2) for so long as any Debt of GLP Asphalt LLC is secured by a consensual Lien, GLP Asphalt LLC and its Subsidiaries on a



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consolidated basis) as at the end of such quarterly period, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and certified by an authorized financial officer of Holdings, subject only to changes resulting from year-end adjustments; provided that such quarterly financial statements may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date on which Holdings posts such documents, or provides a link thereto, on Holdings’ website;

(ii) as soon as practicable and in any event within the earlier to occur of 120 days after the end of each fiscal year or the date on which another creditor of Holdings or the Company first receives such information, consolidated statements of income and cash flows of Holdings and its Subsidiaries (and together with unaudited consolidating schedules breaking out (1) A&B II, LLC and its Subsidiaries on a consolidated basis, and (2) for any fiscal year during which any Debt of GLP Asphalt LLC is secured by a consensual Lien, GLP Asphalt LLC and its Subsidiaries on a consolidated basis) for such year and a consolidated balance sheet of Holdings and its Subsidiaries (and together with unaudited consolidating schedules breaking out A&B II, LLC and its Subsidiaries on a consolidated basis, and (2) for so long as any Debt of GLP Asphalt LLC is secured by a consensual Lien, GLP Asphalt LLC and its Subsidiaries on a consolidated basis) as at the end of such year, setting forth in each case in comparative form corresponding figures from the preceding annual audit, all in reasonable detail and reasonably satisfactory in scope to the Required Holders and, in the case of such consolidated financial statements of Holdings and its Subsidiaries, certified by independent public accountants of recognized standing whose opinion shall be unqualified and otherwise satisfactory in scope and substance to the Required Holders, provided that such opinion shall be deemed otherwise satisfactory if prepared and rendered in accordance with GAAP and generally accepted auditing standards; provided that such annual financial statements may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date on which Holdings posts such documents, or provides a link thereto, on Holdings’ website;

(iii) promptly upon transmission thereof, copies of all such financial, proxy and information statements, notices and other reports as are sent to Holdings’ stockholders and copies of all registration statements (with such exhibits as any holder reasonably requests) and all reports which are filed with the Securities and Exchange Commission (or any governmental body or agency succeeding to the functions of the Securities and Exchange Commission);

(iv) promptly upon receipt thereof, a copy of each other material report submitted to Holdings or any of its Subsidiaries by independent accountants in connection with any material annual, interim or special audit made by them of the books of Holdings or such Subsidiary pursuant to a request by Holdings’ Board of Directors;

(v) promptly after the furnishing thereof, copies of any certificate, statement or report furnished to any other holder of the debt securities of Holdings or the Company pursuant to the terms of any indenture, loan, credit or similar agreement or instrument



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and not otherwise required to be furnished to the holders of the Notes pursuant to any other clause of this paragraph 5; and

(vi) with reasonable promptness, such other financial data (including without limitation the information specified in paragraph 5E(ii)) as any holder of Notes may reasonably request.

Together with each delivery of financial statements required by clauses (i) and (ii) above, Holdings and the Company will deliver to each holder of Notes an Officer’s Certificate (a) setting forth computations showing (non)compliance with (I) the covenants in paragraphs 6A(1), 6A(2), 6A(3), 6A(4), 6A(5), 6B(2)(iii), 6B(2)(iv), 6B(3)(iv) and 6B(3)(v), (II) the covenant in paragraph 6A(6), but only if compliance with such covenant is required at the end of the applicable fiscal quarter in accordance with the provisions of paragraph 6A(6), and (III) any Incorporated Term requiring a calculation in order to determine compliance with such term (including with respect to each such covenant described in this clause (a), where applicable, a reconciliation from GAAP, as reflected in the financial statements then being furnished, to the calculation of such financial covenants, after giving effect to any change in accounting for Capitalized Lease Obligations which has occurred after June 29, 2012), and (b) stating that to the best of his or her knowledge, after due inquiry, there exists no Default or Event of Default, or if any such Default or Event of Default exists, specifying the nature and period of existence thereof and what action Holdings and the Company propose to take with respect thereto.

Holdings and the Company also covenant that forthwith upon a Responsible Officer obtaining actual knowledge of an Event of Default or Default, they will deliver to each holder of Notes an Officer’s Certificate specifying the nature and period of existence thereof and what action Holdings and the Company propose to take with respect thereto.

5B. Inspection of Property . Holdings and the Company covenant that they will permit any employees or designated representatives of Prudential, any Prudential Affiliate or any other holder of Notes in an original principal amount in excess of $5,000,000, at such Person’s expense, to visit and inspect any of the properties of Holdings and its Subsidiaries, to examine their books and financial records and to make copies thereof or extracts therefrom and to discuss their affairs, finances and accounts with the Responsible Officers and Holdings’ and the Company’s independent certified public accountants, all at such times as the Company and such Person reasonably agree and as often as such Person may reasonably request; provided that a Responsible Officer of the Company shall have reasonable prior notice of, and may elect to be present during, discussions with the Company’s independent public accountants.

5C. Covenant to Secure Notes Equally . Each of Holdings and the Company covenants that, if it or any of its Subsidiaries shall create, assume or otherwise incur any Lien upon any of its property or assets, whether now owned or hereafter acquired, other than Liens permitted by the provisions of paragraph 6B(1) (unless prior written consent to the creation or assumption thereof shall have been obtained pursuant to paragraph 12C), Holdings will make, or will cause its Subsidiaries to make, effective provision whereby the Notes will be secured by such Lien equally and ratably with any and all other Debt thereby secured so long as any such other Debt shall be so secured.



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5D. Information Required by Rule 144A . Each of Holdings and the Company covenants that it will, upon the request of the holder of any Note, provide such holder, and any qualified institutional buyer designated by such holder, such financial and other information as such holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of Notes, except at such times as Holdings or the Company, as applicable, is subject to and in compliance with the reporting requirements of section 13 or 15(d) of the Exchange Act. For the purpose of this paragraph 5D, the term “ qualified institutional buyer ” shall have the meaning specified in Rule 144A under the Securities Act.

5E. Maintenance of Properties; Insurance . Each of Holdings and the Company covenants that it and each Subsidiary will (i) maintain or cause to be maintained in good repair, working order and condition all material properties used or useful at that time in its business and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof and (ii) maintain insurance with reputable and financially sound insurers in such amounts and against such liabilities and hazards as is customarily maintained by other companies operating similar businesses.

5F. Environmental and Safety Laws . (i) Each of Holdings and the Company covenants that it will deliver promptly to each Significant Holder notice of (a) any material enforcement, cleanup, removal or other material governmental or regulatory action instituted or, to Holdings’ or the Company’s best knowledge, threatened against Holdings or the Company or any Significant Subsidiary pursuant to any Environmental and Safety Laws, (b) all material Environmental Liabilities and Costs against or in respect of the Property, Holdings, the Company or any Significant Subsidiary and (c) Holdings’ or the Company’s or any Significant Subsidiary’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that Holdings, the Company or such Significant Subsidiary has reason to believe could cause such Property or any material part thereof to be subject to any material restrictions on its ownership, occupancy, transferability or use under any Environmental and Safety Laws.

(ii) Each of Holdings and the Company covenants that it will, and will cause each of its Significant Subsidiaries to, keep and maintain the Property and conduct its and their operations in compliance with all applicable Environmental and Safety Laws except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

5G. Guarantors . Each of Holdings and the Company covenants that concurrently with any such time as any Person becomes a guarantor or other obligor under any Principal Credit Facility (other than a Principal Credit Facility under which one or more Foreign Subsidiaries are the primary obligors), the Company shall cause such Person to (i) become a party to the Multiparty Guaranty by executing and delivering to the holders of the Notes a Joinder Agreement, and (ii) deliver to the holders of the Notes such organization documents, resolutions and favorable opinions of counsel, all in form, content and scope similar to those delivered on June 29, 2012 (which was the Initial Closing Day (as defined in the Prior



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Agreement)) with respect to Holdings or otherwise reasonably satisfactory to the Required Holders.

5H. Certain Other Provisions . Each of Holdings and the Company covenants that if at any time a Principal Credit Facility of Holdings, the Company or any of their respective Subsidiaries includes (a) any one or more covenants or events of default that are not provided in this Agreement or (b) any one or more covenants or events of default that are more restrictive than the same or similar covenants or events of default provided in this Agreement, then such additional or more restrictive covenants or events of default (each, an “ Incorporated Term ”) will automatically be incorporated into this Agreement (but, for the avoidance of doubt, in the course of the incorporation into this Agreement of any Incorporated Term the scope and meaning of such Incorporated Term will not change) and, once incorporated, may not thereafter be modified except pursuant to the requirements of paragraph 12C, provided that the immediately preceding clauses (a) and (b) shall exclude any covenants or events of default primarily relating to collateral, provided further that: (i) if any Principal Credit Facility is either (x) terminated or (y) reduced to an aggregate principal or commitment amount of less than $40,000,000, in each case, at a time when no event of default exists and no waiver is in effect under any Incorporated Term of such Principal Credit Facility, then any and all Incorporated Terms previously incorporated by reference from such Principal Credit Facility shall, upon such termination or reduction, as the case may be, automatically no longer be incorporated into this Agreement; (ii) if Prudential and Prudential Affiliates at any time hold less than 50% of the total outstanding principal amount of all Notes, then (I) any and all Incorporated Terms previously incorporated by reference from any Principal Credit Facility other than the Bank Credit Agreement and (II) any and all Incorporated Terms previously incorporated by reference from the Bank Credit Agreement other than financial covenants shall, in the case of each of clause (I) and clause (II), on and after such time, automatically no longer be incorporated into this Agreement; and (iii) if the aggregate principal amount of all Notes held by Prudential and Prudential Affiliates at any time is equal to or less than $75,000,000 and if such amount then represents 35% or less of the aggregate principal or commitment amount of all unsecured credit facilities of the Company at such time, then any and all Incorporated Terms previously incorporated by reference from any Principal Credit Facility other than the Bank Credit Agreement shall, on and after such time, automatically no longer be incorporated into this Agreement.

6. NEGATIVE COVENANTS . During the Issuance Period and so long thereafter as any Note or amount due hereunder is outstanding and unpaid, each of Holdings and the Company covenants as follows:

6A. Financial Covenants . Holdings will not permit:

6A(1). Minimum Consolidated Shareholders’ Equity . Consolidated Shareholders’ Equity at any time to be less than (x) prior to the Triggering Event, the sum of (a) $869,540,000, plus (b) to the extent positive, 25% of Consolidated Net Income for each fiscal quarter ended after September 30, 2015 (such required minimum consolidated shareholders’ equity amount not to be reduced by any consolidated net loss during any such fiscal quarter), and (y) on and after the Triggering Event, the sum of (a) $869,540,000, plus (b) to the extent positive, 25% of Consolidated Net Income for each fiscal quarter ended after September 30, 2015 (such required minimum consolidated shareholders’ equity amount not to be reduced by any consolidated net



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loss during any such fiscal quarter), minus (c) non-recurring one-time expenses (whether cash or non-cash) incurred in accordance with GAAP in connection with or as a result of the Triggering Event and determined on an after tax basis; provided that the aggregate amount deducted under this clause (c) for all periods shall not exceed $70,000,000 and shall only be permitted to be deducted for so long as incurred no later than the date that is 18 months after the Triggering Event.

6A(2). Fixed Charge Coverage Ratio . The ratio of (x) prior to the Triggering Event, Adjusted EBITDA to Fixed Charges to be less than 1.50 to 1.00 at the end of any fiscal quarter, and (y) on and after the Triggering Event, the Triggering Event Adjusted EBITDA to Fixed Charges to be less than 1.50 to 1.00 at the end of any fiscal quarter.

6A(3). Debt to Total Adjusted Asset Value . The ratio of the consolidated Debt of Holdings and its Subsidiaries to Total Adjusted Asset Value at any time to exceed 0.50 to 1.00.

6A(4). Unsecured Debt to Unencumbered Income Producing Assets Value . The ratio of Unsecured Debt to Unencumbered Income Producing Assets Value at any time to exceed 0.60 to 1.00.

6A(5). Priority Debt . The aggregate principal amount of Priority Debt at any time to exceed 20% of the Total Adjusted Asset Value at such time.

6A(6). Minimum Unencumbered Fixed Charge Coverage Ratio . In the event the Company elects, for purpose of (and as provided in) clause (b) of the definition of Total Adjusted Asset Value, to have an appraisal performed to determine the Appraised Value of Agricultural Land which is not leased to third parties, then thereafter, if (but only for so long as) such Appraised Value is permitted (by virtue of the requirements for an Appraised Value as set forth in the definition of such term) to be utilized for purpose of determining the value of clause (b) of the definition of Total Adjusted Asset Value at the end of any fiscal quarter, Holdings and its Subsidiaries shall maintain, at the end of such fiscal quarter, a minimum Unencumbered Fixed Charge Coverage Ratio of at least 1.50 to 1.00.

For purpose of each of paragraph 6A(3) and paragraph 6A(5), at Holdings’ option, (a) nonrecourse debt of Holdings or its Subsidiaries with respect to Development Real Properties owned by Holdings or such Subsidiary may be excluded from the calculation of Debt (solely for purpose of paragraph 6A(3)) and Priority Debt (solely for purpose of paragraph 6A(5)) and (b) in each case the Applicable Value (as defined below) of the associated Development Real Properties of Holdings or such Subsidiary shall be excluded from the calculation of Total Adjusted Asset Value; provided that: (i) if the amount of such excluded nonrecourse debt exceeds 70% of the book value of the associated Development Real Properties, then Holdings may not elect to exclude the amount of such nonrecourse debt from the calculation of Debt and Priority Debt unless the amount of such excluded nonrecourse debt is equal to or less than 70% of the Appraised Value of the associated Development Real Properties (the book value of the associated Development Real Properties (if the amount of such excluded nonrecourse debt is equal to or less than 70% of the book value of the associated Development Real Properties) or the Appraised Value of the associated Development Real Properties (if the amount of such excluded nonrecourse debt exceeds 70% of the book value of the associated Development Real Properties but is equal to or less than 70% of the Appraised Value of the associated Development Real



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Properties), as applicable, being referred to as the “ Applicable Value ”); (ii) the aggregate amount of nonrecourse debt excluded shall not at any time exceed 15% of the consolidated total assets of Holdings and its Subsidiaries (less cash, cash equivalents, marketable securities, goodwill, non-controlling interest and pension assets) in accordance with GAAP for the most recent fiscal quarter with respect to which financial statements are required to be delivered pursuant to paragraph 5A(i) or (ii); and (iii) the exclusion of the Applicable Value of the associated Development Real Properties from Total Adjusted Asset Value referred to in clause (b) of this sentence shall be calculated only after giving effect to the reduction, if any, in Total Adjusted Asset Value required by the proviso in clause (c) of the definition of “Total Adjusted Asset Value.” For purposes of this paragraph, “nonrecourse debt” shall include fully recourse mortgage and similar financings obtained by a Subsidiary of the Company if the mortgaged real property constitutes substantially all of the assets of such Subsidiary.

Subject to the provisions of the last paragraph of each of the definitions of “Total Adjusted Asset Value” and “Unencumbered Income Producing Assets Value” herein, for purposes of all calculations made under the financial covenants set forth in paragraph 6A(2) through and including paragraph 6A(6) for an applicable period, (i) if during such period Holdings, the Company or any other Subsidiary shall have consummated an acquisition of a Significant Subsidiary or a Significant Line of Business, (x) Adjusted EBITDA for such period shall be calculated after giving pro-forma effect thereto as if such transaction occurred on the first day of such period; provided , that if the aggregate purchase price for any such acquisition is greater than or equal to $25,000,000, Adjusted EBITDA shall only be calculated on a pro-forma basis to the extent such pro-forma calculations are based on audited financial statements or other financial statements reasonably satisfactory to the Required Holders and (y) any Debt incurred or assumed by any Credit Party or Subsidiary (including the Person or property acquired) in connection with such transaction and any Debt of the Person or property acquired which is not retired in connection with such transaction (1) shall be deemed to have been incurred as of the last day of the previous period and (2) if such Debt has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this paragraph determined by utilizing the rate which is or would be in effect with respect to such Debt as at the relevant date of determination, and (ii) if during such period Holdings, the Company or any other Subsidiary shall have consummated a disposition of all or substantially all of the assets of Holdings, the Company or any other Subsidiary or of a majority of the equity interests of a Subsidiary or of a Significant Line of Business, (x) Adjusted EBITDA for such period shall be calculated after giving pro-forma effect thereto as if such transaction occurred on the last day of the previous period and (y) any Debt which is retired in connection with such transaction shall be excluded and deemed to have been retired as of the last day of the previous period.

6B. Lien and Other Restrictions . Neither Holdings nor the Company will, or will permit its Subsidiaries to:

6B(1). Liens . Create, assume or suffer to exist at any time any Lien on or with respect to any of its property or assets, whether now owned or hereafter acquired (whether or not provision is made for the equal and ratable securing of the Notes in accordance with the provisions of paragraph 5C hereof), except:



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(i) Liens for taxes not yet delinquent or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP;

(ii) Liens (other than Liens pursuant to ERISA) incidental to the conduct of its business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of its property or assets, taken as a whole, or materially impair the use thereof in the operation of its business;

(iii) Liens securing Debt between Subsidiaries or owing to the Company by a Subsidiary;

(iv) Liens (other than as specified in clauses (i) - (iii) above) of the Company and Subsidiaries in existence on the date of this Agreement as set forth in Schedule 6B(1) ;

(v) subject to compliance with paragraph 6A(5), Liens securing Debt other than as set forth in the foregoing clauses (i) - (iv), provided that: (a) there shall not exist any Lien of any kind on the shares of the Voting Stock of any Subsidiary unless Holdings and Subsidiaries continue to own shares of Voting Stock of such Subsidiary which are not subject to any Lien and which represent a majority of the Voting Stock of such Subsidiary; and (b) neither Holdings nor the Company shall secure or permit to be secured any Principal Credit Facility unless the Notes and this Agreement are simultaneously secured pursuant to terms and provisions, including an intercreditor agreement, reasonably satisfactory to the Required Holders; provided , however , that (1) if such Principal Credit Facility is either (x) terminated, or (y) reduced to an aggregate principal or commitment amount of less than $40,000,000, in each case, at a time when no Event of Default exists and no waiver is in effect under this Agreement, then the Notes and this Agreement shall no longer be secured by the collateral securing such Principal Credit Facility and the Purchasers agree to take any and all actions reasonably requested by the Company (at the Company’s sole expense) in order to release the security interest, and (2) if any Liens on assets securing such Principal Credit Facility are released at a time when no Event of Default exists and no waiver is in effect under this Agreement, then such assets shall no longer secure the Notes and this Agreement and the Purchasers agree to take any and all action reasonably requested by the Company (at the Company’s sole expense) in order to release such Liens. Notwithstanding anything to the contrary herein, for purposes of clause (b) of the first proviso of this paragraph 6B(1)(v), clause (b) of the definition of Principal Credit Facility shall exclude all mortgage financings not in excess of the amount permitted to be outstanding pursuant to paragraph 6A(5);

(vi) materialmen’s, mechanic’s, carrier’s, repairmen’s, warehousemen’s and judgment Liens (but, in the case of judgment Liens, only to the extent not constituting an Event of Default under paragraph 7A(xiii)), Liens arising by operation of law and other similar Liens;



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(vii) utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of Holdings or the Subsidiaries;

(viii) Liens (other than any Lien imposed by ERISA) arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation,

(ix) deposits to secure the performance of bids, trade contracts and leases (other than Debt), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(x) subject to compliance with paragraph 6A(5), Liens arising in connection with any capital lease transactions; provided that no such Lien shall extend to or cover any assets other than the assets subject to the applicable capital lease transaction; and

(xi) Liens securing commercial letters of credit (other than any such letters of credit issued pursuant to the Bank Credit Agreement); provided that no such Lien shall extend to or cover any assets of Holdings or any of its Subsidiaries other than the inventory (and bills of lading and other documents related thereto) being financed by any such commercial letters of credit.

6B(2). Loans and Advances . Make or permit to remain outstanding at any time any loan or advance to any Person, except that (a) Holdings may make loans or advances to the Company and (b) the Company and its Subsidiaries may:

(i) subject to paragraph 6A(5), make or permit to remain outstanding loans and advances to the Company and Subsidiaries;

(ii) make or permit to remain outstanding travel and other like advances and customary employee benefits in reasonable amounts to employees in the ordinary course of business;

(iii) make or permit to remain outstanding purchase money loans to Third Parties to whom it sells real property in the ordinary course of its Property Development Activities and its Property Management Business, provided that the aggregate amount of all such purchase money loans may not exceed at any one time an amount equal to 15% of the Consolidated Total Assets of Holdings at the end of the fiscal quarter most recently ended as of any date of determination;

(iv) make or permit to remain outstanding other Third Party loans and advances on standard arm’s-length terms, provided that the aggregate amount of all such loans may not exceed at any one time an amount equal to 5% of the Total Adjusted Asset Value at such time; and



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(v) make advances of payroll payments to employees in the ordinary course of business.

6B(3). Merger and Sale of Assets . Merge with or into or consolidate with any other Person or sell, lease, transfer or otherwise dispose of its assets, except that:

(i) any Subsidiary may merge with the Company, so long as the Company is the surviving Person;

(ii) any Subsidiary may merge with another Subsidiary, or sell, lease, transfer or otherwise dispose of its assets to another Subsidiary or to the Company;

(iii) the Company or any Subsidiary may sell, exchange, lease, transfer or otherwise dispose of assets (other than Undeveloped Land) in the ordinary course of business;

(iv) the Company or any Subsidiary may sell, lease, transfer or otherwise dispose of assets (other than Undeveloped Land) to Third Parties so long as (A) the fair market value thereof on the date sold, leased, transferred or otherwise disposed of, together with the fair market value of all other assets sold, leased, transferred or otherwise disposed of to Third Parties pursuant to this clause (iv) within the prior 12 months, does not represent more than 20% of the Consolidated Total Assets of Holdings at the end of the fiscal quarter most recently ended as of any date of determination and (B) such assets, together with all other assets sold or otherwise disposed of to Third Parties pursuant to this clause (iv) since the beginning of the most recently ended fiscal year, did not contribute more than 10% of Adjusted EBITDA determined as of the most recent fiscal quarter with respect to which financial statements are required to be delivered pursuant to paragraph 5A(i) or (ii); provided that, notwithstanding the applicable limitations appearing in clauses (A) and (B), above, sales or dispositions in excess thereof in a twelve month period may be made for cash if the proceeds of each such excess sale or disposition (net of taxes thereon) are fully utilized in the acquisition of Permitted Assets and/or applied to the repayment of Permitted Debt, in each case within 365 days from the date of such sale or disposition;

(v) the Company or any of its Subsidiaries may (A) engage in Code § 1031 like-kind exchanges with respect to Undeveloped Land, and (B) sell, lease, transfer or otherwise dispose of Undeveloped Land to (1) the Company or any of its Subsidiaries, (2) a Person which is not (and after giving effect thereto will not be) a Subsidiary, solely in exchange for an equity interest in such Person (unless at the time thereof the intention was that such Person would sell such land in its undeveloped state or that any proceeds would be received on or with respect to such equity interest prior to the time such land is developed for commercial or residential purposes), or (3) Third Parties; provided that if in any twelve month period the aggregate fair market value of Undeveloped Land which is sold, leased, transferred or otherwise disposed of pursuant to this clause (3), is greater than $100,000,000, then, within 365 days from the date of each sale, lease, transfer or other disposition which resulted in the $100,000,000 threshold being exceeded, an



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amount equal to such excess, net of taxes thereon, shall be fully utilized in the acquisition of Permitted Assets and/or applied to the repayment of Permitted Debt; and

(vi) the Company may merge or consolidate with another corporation or other Person if (A) the Company will be the continuing or surviving entity and (B) no Default or Event of Default would exist immediately after giving effect to such merger or consolidation.

6B(4). Transactions with Holders of Partnership or Other Equity Interests . Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise deal with, in the ordinary course of business or otherwise (i) any Affiliate (other than in the capacity of an employee, director or officer), or (ii) any Person owning, beneficially or of record, directly or indirectly, 5% or more of the outstanding voting stock of Holdings or the Company or any executive officer (as such term is defined under the Exchange Act) of Holdings or the Company (other than in such Person’s capacity as an employee); provided , however , that such acts and transactions may be performed or engaged in if (a) they are entered into upon terms no less favorable to Holdings, the Company or such other Subsidiary than if no such relationship described in clauses (i) or (ii) above existed and such acts or transactions are otherwise permitted by this Agreement, (b) they are acts and transactions in which the only consideration given by Holdings or any of its Subsidiaries is the issuance by Holdings of its capital stock, (c) they are between Holdings and/or any of its wholly-owned Subsidiaries or (d) they are otherwise permitted under paragraph 6C hereof.

6C. Restricted Payments . Holdings covenants that it will not declare or pay any dividend or other distribution on any class of its capital stock or other equity interests, redeem or repurchase any such interests or make any other distribution on account of any such interests (all of the foregoing being “ Restricted Payments ”) except that Holdings may make a Restricted Payment in any amount so long as (i) no Default or Event of Default shall then exist or would exist after giving effect to any such Restricted Payment and (ii) any such Restricted Payment will not violate any applicable law or regulation.

6D. Terrorism Sanctions Regulations . Each of Holdings and the Company covenants that it will not and will not permit any Controlled Entity (a) to become (including by virtue of being owned or controlled by a Blocked Person), own or control a Blocked Person or any Person that is the target of sanctions imposed by the United Nations or by the European Union, or (b) directly or indirectly to have any investment in or engage in any dealing or transaction (including, without limitation, any investment, dealing or transaction involving the proceeds of the Notes) with any Person if such investment, dealing or transaction (i) would cause any holder to be in violation of any law or regulation applicable to such holder, or (ii) is prohibited by or subject to sanctions under any U.S. Economic Sanctions, or (c) to engage in any activity that could subject such Person or any holder to sanctions under CISADA or any similar law or regulation with respect to Iran or any other country that is subject to U.S. Economic Sanctions.



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7. EVENTS OF DEFAULT .

7A. Acceleration . If any of the following events shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise):

(i) the Company defaults in the payment of (a) any principal of, or Yield-Maintenance Amount on, any Note, or (b) any interest on or any other amount payable hereunder or under any other Transaction Document for more than five days after the same shall become due, either by the terms thereof or otherwise as herein provided; or

(ii) Holdings, the Company or any other Subsidiary defaults in any payment of principal of, or premium or interest on, any obligation for money borrowed (or of any obligation under a conditional sale or other title retention agreement or of any obligation issued or assumed as full or partial payment for property whether or not secured by a purchase money mortgage or of any obligation under notes payable or drafts accepted representing extensions of credit) other than the Notes beyond any period of grace provided with respect thereto, or Holdings, the Company or any other Subsidiary fails to perform or observe any other agreement, term or condition contained in any agreement (or any other event thereunder or under any such agreement occurs and is continuing) and the effect of such payment default or other failure or event is to cause or to permit the holder or holders of such obligation to cause, such obligation to become due (or to become subject to required repurchase by Holdings, the Company or any other Subsidiary) prior to any stated maturity; provided that the aggregate amount of all bligations as to which such a payment default shall occur or such a failure or other event causing or permitting acceleration (or required repurchase by Holdings, the Company or any other Subsidiary) shall occur exceeds $30,000,000; or

(iii) any representation or warranty made by any Credit Party herein or in any other Transaction Document by such Credit Party or any of its officers in any writing furnished in connection with or pursuant to this Agreement or any other Transaction Document shall be false or misleading in any material respect on the date as of which made; or

(iv) Holdings or the Company fails to perform or observe any Incorporated Term (if such term has no grace period associated therewith) or fails to perform any agreement contained in paragraphs 5A(i), 5A(ii), 5C, 5G, 5H or 6 hereof; or

(v) any Credit Party fails to perform or observe any Incorporated Term which has a grace period associated therewith and such failure shall not be remedied within the applicable grace period, or fails to perform or observe any agreement, term or condition contained herein (other than those set forth in paragraphs 5A(i), 5A(ii), 5C, 5G, 5H or 6 hereof) or in any other Transaction Document and such failure shall not be remedied within 30 days after any Responsible Officer obtains actual knowledge thereof; or



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(vi) Holdings, the Company or any Significant Subsidiary makes an assignment for the benefit of creditors or is generally not paying its debts as such debts become due; or

(vii) any decree or order for relief in respect of Holdings, the Company or any Significant Subsidiary is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution, liquidation or similar law, whether now or hereafter in effect (herein called the “ Bankruptcy Law ”), of any jurisdiction; or

(viii) Holdings, the Company or any Significant Subsidiary petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official of Holdings, the Company or any such Significant Subsidiary, or of any substantial part of the assets of Holdings, the Company or any such Significant Subsidiary, or commences a voluntary case under the Bankruptcy Law of the United States or any proceedings (other than proceedings for the voluntary liquidation and dissolution of a Significant Subsidiary) relating to Holdings, the Company or any Significant Subsidiary under the Bankruptcy Law of any other jurisdiction; or

(ix) any petition or application of the type described in clause (viii) of this paragraph 7A is filed, or any such proceedings are commenced, against Holdings, the Company or any Significant Subsidiary and Holdings, the Company or such Significant Subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order, judgment or decree remains unstayed and in effect for more than 45 days; or

(x) any order, judgment or decree is entered in any proceedings against Holdings, the Company or any Significant Subsidiary decreeing the dissolution of Holdings, the Company or such Significant Subsidiary and such order, judgment or decree remains unstayed and in effect for more than 45 days; or

(xi) any order, judgment or decree is entered in any proceedings against Holdings, the Company or any Significant Subsidiary decreeing a split-up of Holdings, the Company or such Significant Subsidiary which requires the divestiture of (A) assets representing a substantial part, or the stock of, or other ownership interest in, a Significant Subsidiary whose assets represent a substantial part of the Consolidated Total Assets of Holdings or (B) assets or the stock of or other ownership interest in a Significant Subsidiary that has contributed a substantial part of Consolidated Net Income for any of the three fiscal years then most recently ended, and such order, judgment or decree remains unstayed and in effect for more than 45 days; or

(xii) (a) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (b) a notice



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of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified Holdings, the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (c) the aggregate amount under all Plans of the fair market value of the assets (within the meaning of Section 303 of ERISA) is less than 70% of the “Funding Target” (within the meaning of Section 303 of ERISA), (d) Holdings, the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (e) Holdings, the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (f) Holdings, the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of Holdings, the Company or any Subsidiary thereunder; and any such event or events described in clauses (a) through (f) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect of the type described in clause (a) or (b) of the definition thereof; or

(xiii) any judgment or decree in the amount of $25,000,000 or more shall be entered against Holdings, the Company or any of the other Subsidiaries that is not paid or fully covered (beyond any applicable deductibles) by insurance and such judgment or decree shall not have been vacated, discharged or stayed or bonded pending appeal within 60 days from the entry thereof; or

(xiv) any Transaction Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all obligations evidenced by the Notes and under the other Transaction Documents, ceases to be in full force and effect; or any Credit Party or any other Person contests in any manner the validity or enforceability of any Transaction Document; or any Credit Party denies that it has any or further liability or obligation under any Transaction Document, or purports to revoke, terminate or rescind any Transaction Document; or

(xv) any Change of Control shall occur;

then (a) if such event is an Event of Default specified in clause (vii), (viii) or (ix) of this paragraph 7A with respect to Holdings or the Company, all of the Notes at the time outstanding shall automatically become immediately due and payable together with interest accrued thereon and the Yield-Maintenance Amount with respect thereto, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Company, and (b) with respect to any event constituting an Event of Default, the Required Holders may at its or their option, by notice in writing to the Company, declare all of the Notes to be, and all of the Notes shall thereupon be and become, immediately due and payable together with interest accrued thereon and together with the Yield-Maintenance Amount, if any, with respect to each Note, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company.



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7B. Rescission of Acceleration . At any time after all of the Notes shall have been declared immediately due and payable pursuant to paragraph 7A, the Required Holders may, by notice in writing to the Company, rescind and annul such declaration and its consequences if (i) the Company shall have paid all overdue interest on the Notes, the principal of and Yield-Maintenance Amount, if any, payable with respect to any Notes which have become due otherwise than by reason of such declaration, and interest on such overdue interest and overdue principal and Yield-Maintenance Amount at the rate specified in the Notes, (ii) the Company shall not have paid any amounts which have become due solely by reason of such declaration, (iii) all Events of Default and Defaults, other than non-payment of amounts which have become due solely by reason of such declaration, shall have been cured or waived pursuant to paragraph 12C, and (iv) no judgment or decree shall have been entered for the payment of any amounts due pursuant to the Notes or this Agreement (as this Agreement pertains to the Notes). No such rescission or annulment shall extend to or affect any subsequent Event of Default or Default or impair any right arising therefrom.

7C. Notice of Acceleration or Rescission . Whenever any Note or Notes shall be declared immediately due and payable pursuant to paragraph 7A or any such declaration shall be rescinded and annulled pursuant to paragraph 7B, the Company shall forthwith give written notice thereof to the holder of each Note at the time outstanding.

7D. Other Remedies . If any Event of Default or Default shall occur and be continuing, the holder of any Note may proceed to protect and enforce its rights under this Agreement, such Note and the other Transaction Documents by exercising such remedies as are available to such holder in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained in this Agreement or any other Transaction Document or in aid of the exercise of any power granted in this Agreement or any other Transaction Document. No remedy conferred in this Agreement or any other Transaction Document upon the holder of any Note is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise.

8. REPRESENTATIONS, COVENANTS AND WARRANTIES . Each of Holdings and the Company represents, covenants and warrants as follows, on the date of this Agreement and at each other time the following representations, covenants and warranties are required to be made pursuant to the other provisions of this Agreement:

8A. Organization . Each Credit Party and each Significant Subsidiary is duly organized, validly existing and in good standing under the laws of the state of its organization. Each Credit Party and each Significant Subsidiary has the full power and authority to own its properties and to carry on its business as now being conducted, and is duly qualified in every state where the nature of its business requires that it do so, and is in good standing under the laws of every jurisdiction outside the state of its organization in which it owns or leases property or conducts business and in which the failure to so qualify would have a Material Adverse Effect. Each Credit Party and each Significant Subsidiary has complied in all material respects with (or is exempt from the application of) all material federal, state and local laws, regulations and orders that are, or in the absence of any exemption could be, applicable to the operations of its



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business, including public utility, bank holding company, state agricultural and Environmental and Safety Laws, in each case except to the extent that the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Credit Party has full power, authority and right to execute and deliver, and to perform and observe, the provisions of the Transaction Documents to which it is a party and to carry out the transactions contemplated by such Transaction Documents. The execution, delivery and performance of this Agreement and the Notes to be issued hereunder by the Company has been authorized by all necessary corporate, limited liability company and other action, and, when duly executed and delivered, will be the legal, valid and binding obligations of the Company, enforceable against it in accordance with their respective terms. The execution, delivery and performance of this Agreement by each Credit Party (other than the Company) has been authorized by all necessary corporate and other action, and, when duly executed and delivered, will be the legal, valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its terms. Each of the Company and Holdings represents and warrants that Schedule 8A contains complete and correct lists, as of the date of this Agreement, of the Subsidiaries of Holdings, showing, as to each Subsidiary, the name thereof, the jurisdiction of its organization, and the percentage of equity outstanding owned by Holdings and each other Subsidiary.

8B. Financial Statements . Holdings and the Company have furnished each Purchaser of any Notes with the following financial statements, identified by a Responsible Officer of Holdings: (i) consolidated balance sheets of Holdings and its Subsidiaries as of the last day in each of the two fiscal years of Holdings most recently completed prior to the date as of which this representation is made or repeated (other than fiscal years completed within 120 days prior to such date for which audited financial statements have not been released) and consolidated statements of income, shareholders’ equity and cash flows of Holdings and its Subsidiaries for each such year, certified by Deloitte & Touche (or such other accounting firm of recognized national standing); and (ii) consolidated balance sheets of Holdings and its Subsidiaries as at the end of the quarterly period (if any) most recently completed prior to such date and after the end of such fiscal year (other than quarterly periods completed within 60 days prior to such date for which financial statements have not been released) and the comparable quarterly period in the preceding fiscal year and consolidated statements of income, stockholders’ equity and cash flows of Holdings and its Subsidiaries for the periods from the beginning of the fiscal years in which such quarterly periods are included to the end of such quarterly periods, in each case prepared by Holdings. Such financial statements (including any related schedules and/or notes) are true and correct in all material respects (subject, as to interim statements, to changes resulting from audits and year-end adjustments), have been prepared in accordance with GAAP consistently followed throughout the periods involved and show all liabilities, direct and contingent, of Holdings and its Subsidiaries required to be shown in accordance with such principles. The balance sheets fairly present the condition of Holdings and its Subsidiaries as at the dates thereof, and the statements of income, shareholders’ equity and cash flows fairly present the results of the operations and cash flows of Holdings and its Subsidiaries for the periods indicated. In the case of any Closing Day, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect since the end of the most recent fiscal year for which such audited financial statements had been furnished at the time of the Acceptance with respect to the Notes to be issued on such Closing Day.



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8C. Actions Pending . There is no action, suit, investigation or proceeding pending or, to the knowledge of Holdings or the Company, threatened against Holdings, the Company or any other Subsidiary or any properties or rights of Holdings, the Company or any other Subsidiary, by or before any court, arbitrator or administrative or governmental body which could reasonably be expected to result in any Material Adverse Effect.

8D. Outstanding Debt . None of Holdings, the Company or any Subsidiary has any Debt outstanding that would cause Holdings or the Company not to be in compliance with paragraphs 6A(3), 6A(4) or 6A(5). There exists no event of default under the provisions of any instrument evidencing any such Debt or of any agreement relating thereto.

8E. Title to Properties . Each Credit Party and each Significant Subsidiary has such title to its properties and assets as is appropriate and sufficient for the conduct of the business which such Credit Party or such Significant Subsidiary presently undertakes or contemplates undertaking, except where the lack thereof could not reasonably be expected to result in a Material Adverse Effect. There are no Liens on such properties and assets that (i) materially restrict such Credit Party’s or such Significant Subsidiary’s intended use and enjoyment thereof in the ordinary course of business or (ii) are not permitted by paragraph 6B(1). There is no default, nor any event that, with notice or lapse of time or both, would constitute such a default under any lease to which any Credit Party or any such Significant Subsidiary is a lessee, lessor, sublessee or sublessor, except to the extent any of the foregoing defaults could not reasonably be expected to result in a Material Adverse Effect.

8F. Taxes . Holdings, the Company and each other Significant Subsidiary has filed all material tax and informational returns which are required to be filed by it. Holdings, the Company and each other such Subsidiary has paid all material taxes as shown on its returns and on all assessments received to the extent that such taxes have become due, except such assessments as are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP. Holdings, the Company and the other Subsidiaries do not have any unpaid tax obligations which collectively could reasonably be expected to have a Material Adverse Effect.

8G. Conflicting Agreements and Other Matters . None of the execution and delivery of this Agreement, the Notes or any other Transaction Document, the offering, issuance and sale of the Notes, the fulfillment of and compliance with the terms and provisions of this Agreement, the Notes and the other Transaction Documents will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien upon any of the properties or assets of Holdings, the Company or any other Subsidiary pursuant to, their respective articles or incorporation or bylaws (or other comparable governing documents, as applicable), any award of any arbitrator or any agreement, instrument, order, judgment, decree, and, after due investigation and to Holdings’ and the Company’s best knowledge, any statute, law, rule or regulation to which Holdings, the Company or any other Subsidiary is subject.

8H. Offering of the Notes . Neither the Company nor any agent acting on its behalf has, directly or indirectly, offered the Notes or any similar security of the Company for sale to, or solicited any offers to buy the Notes or any similar security of the Company from, or otherwise



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approached or negotiated with respect thereto with, any Person or Persons other than Prudential and the Purchasers, and neither the Company nor any agent acting on its behalf has taken or will take any action which would subject the issuance or sale of the Notes to the provisions of Section 5 of the Securities Act or to the provisions of any securities or blue sky law of any applicable jurisdiction.

8I. Regulation U, Etc. The amount of all securities that Holdings and its Subsidiaries together own that constitute “margin stock” (as defined in Regulation G (12 CFR Part 221) of the Board of Governors of the Federal Reserve System (herein called “ margin stock ”)) does not exceed 25% of Consolidated Total Assets of Holdings. None of the proceeds of the Notes will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any margin stock or for the purpose of maintaining, reducing or retiring any indebtedness which was originally incurred to purchase or carry any stock that is currently a margin stock or for any other purpose which might constitute this transaction a “ purpose credit ” within the meaning of such Regulation U. Neither Holdings or the Company nor any agent acting on their behalf has taken or will take any action which might cause this Agreement, the Notes or any other Transaction Document to violate Regulation U, Regulation T or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Exchange Act, in each case as in effect now or as the same may hereafter be in effect.

8J. ERISA .

(a) Holdings, the Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. None of Holdings, the Company or any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by Holdings, the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of Holdings, the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section 430 or 436 of the Code or section 4068 of ERISA, other than such liabilities or Liens as would not be individually or in the aggregate material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of Holdings and its Subsidiaries, taken as a whole.

(b) the aggregate amount under all Plans of the fair market value of the assets (within the meaning of Section 303 of ERISA) is not less than 70% of the “Funding Target” (within the meaning of Section 303 of ERISA).

(c) Holdings, the Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of Holdings and its Subsidiaries, taken as a whole.



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(d) The expected postretirement benefit obligation (determined as of the last day of Holdings’ most recently ended fiscal year in accordance with Financial Accounting Standards Board Accounting Standards Codification 715-60, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of Holdings and its Subsidiaries is not material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of Holdings and its Subsidiaries, taken as a whole.

(e) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by Holdings and the Company to each Purchaser in the first sentence of this paragraph 8J(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in paragraph 9B as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.

8K. Governmental Consent . None of Holdings, the Company or any other Subsidiary, nor any of their respective businesses or properties, nor any relationship between Holdings, the Company or any other Subsidiary and any other Person, nor any circumstance in connection with the offering, issuance, sale or delivery of the Notes is such as to require any authorization, consent, approval, exemption or other action by, notice to or filing with any court, administrative or governmental body (other than routine filings after the date of closing with the Securities and Exchange Commission and/or state blue sky authorities) in connection with (i) the execution and delivery of this Agreement and any other Transaction Documents, (ii) the offering, issuance, sale or delivery of the Notes or (iii) fulfillment of or compliance with the terms and provisions of this Agreement, any other Transaction Document and the Notes.

8L. Utility Company Status . (i) Neither Holdings or the Company nor any entity which is directly or indirectly owned, held, or controlled to the degree of ten percent or more (with the power to vote) by Holdings or the Company is any of: (a) a “ public utility ,” as that term is defined under the Federal Power Act, as amended, and the regulations thereunder (together, the “ FPA ”); or (b) a “ natural gas company ,” as that term is defined under the Natural Gas Act, as amended, and the regulations thereunder; or (c) subject to regulation either as a “ public utility ,” or as an “ affiliated interest ” with or of a “ public utility ,” under the law of the state of Hawaii.

(ii) The issuance by the Company of the Notes does not violate the FPA or any Hawaii state law or regulation with respect to “ public utilities. ” Neither Holdings nor the Company (taken together with any entity which is directly or indirectly owned, held, or controlled to the degree of ten percent or more (with the power to vote)) is in violation of the FPA or any Hawaii state law or regulation with respect to “ public utilities, ” except any violations which, individually or in aggregate, would not result in a Material Adverse Effect, or would not impair the ability or right of any Credit Party to perform its obligations with respect to the Transaction Documents. Holdings, the Company and the other Subsidiaries are not in receipt of any notice, assertion or claim that any of them (or any other entity referenced in the immediately preceding sentence) is in violation of the FPA or any Hawaii state or regulation with respect to “ public utilities .”



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8M. Investment Company Status . Neither Holdings nor the Company is an “ investment company ” or a company “ controlled ” by an “ investment company ” within the meaning of the Investment Company Act of 1940, as amended, or an “ investment adviser ” within the meaning of the Investment Advisers Act of 1940, as amended.

8N. Real Property Matters . Except as could not reasonably be expected to have a Material Adverse Effect: (a) each Credit Party and each Significant Subsidiary has, or is in the process of procuring, for the real property which it owns or uses, such authorizations, consents, approvals, licenses and permissions (collectively, “ Consents ”) that such Credit Party or such Significant Subsidiary believes or has been advised by counsel to be now necessary for it to own, hold, develop, use or operate such real property in its current or intended manner, all in material compliance with applicable laws and regulations; and (b) no Credit Party nor any Significant Subsidiary has received any notice that any such Consent is necessary which has not been obtained, or is in the process of being obtained, other than applications for the same that have been or will be timely filed and are being or will be diligently pursued with the appropriate Governmental Authorities and agencies.

8O. Possession of Franchises, Licenses, Etc. Except as could not reasonably be expected to have a Material Adverse Effect: (i) Holdings, the Company and the other Subsidiaries possess all franchises, certificates, licenses, development and other permits and other authorizations from governmental political subdivisions or regulatory authorities and all patents, trademarks, service marks, trade names, copyrights, licenses, easements, rights of way and other rights, free from burdensome restriction, that are necessary in the judgment of Holdings and the Company in any respect for the ownership, maintenance and operation of their business, properties and assets; (ii) none of Holdings, the Company nor any of the other Subsidiaries is in violation of any such rights; and (iii) no event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, or which adversely affect the rights of Holdings, the Company or the other Subsidiaries thereunder.

8P. Environmental and Safety Matters . Holdings, the Company and the other Subsidiaries and all of their respective properties and facilities have complied at all times and in all respects with all Environmental and Safety Laws except where failure to comply would not result in a Material Adverse Effect.

8Q. Hostile Tender Offers . None of the proceeds of the sale of any Notes will be used to finance a Hostile Tender Offer.

8R. Employee Relations . None of Holdings, the Company or any other Subsidiary is the subject of (i) any strike, work slowdown or stoppage, union organizing drive or other similar activity or (ii) any action, suit, investigation or other proceeding involving alleged employment discrimination, unfair termination, employee safety or similar matters that in either case could reasonably be expected to have a Material Adverse Effect or, to the best knowledge of Holdings and the Company, is any such event imminent or likely to occur.



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8S. Regulations and Legislation . To the best knowledge of Holdings and the Company, no law, regulation, interpretation or legislation has been enacted or issued or is likely to be enacted or issued, that would reasonably be expected to have a Material Adverse Effect.

8T. Foreign Assets Control Regulations, Etc.

(a) Neither Holdings nor any Controlled Entity is (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of the Treasury (“ OFAC ”) (an “ OFAC Listed Person ”) (ii) an agent, department, or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program, or (iii) otherwise blocked, subject to sanctions under or engaged in any activity in violation of other United States economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and Divestment Act (“ CISADA ”) or any similar law or regulation with respect to Iran or any other country, the Sudan Accountability and Divestment Act, any OFAC Sanctions Program, or any economic sanctions regulations administered and enforced by the United States or any enabling legislation or executive order relating to any of the foregoing (collectively, “ U.S. Economic Sanctions ”) (each OFAC Listed Person and each other Person, entity, organization and government of a country described in clause (i), clause (ii) or clause (iii), a “ Blocked Person ”). Neither Holdings nor any Controlled Entity has been notified in writing that its name appears or may in the future appear on a state list of Persons that engage in investment or other commercial activities in Iran or any other country that is subject to U.S. Economic Sanctions.

(b) No part of the proceeds from the sale of the Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by Holdings or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or dealings with, any Blocked Person, or (ii) otherwise in violation of U.S. Economic Sanctions.

(c) Neither Holdings nor any Controlled Entity (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act or any other United States law or regulation governing such activities (collectively, “ Anti-Money Laundering Laws ”) or any U.S. Economic Sanctions violations, (ii) to Holdings’ actual knowledge, is under investigation by any Governmental Authority for possible violation of Anti-Money Laundering Laws or any U.S. Economic Sanctions violations, (iii) has been assessed civil penalties under any Anti-Money Laundering Laws or any U.S. Economic Sanctions, or (iv) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws. Holdings has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that Holdings and each Controlled Entity is and will continue to be in material compliance with all applicable current and future Anti-Money Laundering Laws and U.S. Economic Sanctions.



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(d) (i) Neither Holdings nor any Controlled Entity (1) has been charged with, or convicted of bribery or any other anti-corruption related activity under any applicable law or regulation in a United States of America or any non-United States of America country or jurisdiction, including but not limited to, the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010 (collectively, “ Anti-Corruption Laws ”), (2) to Holdings’ best knowledge, is under investigation by any United States of America or non-United States of America Governmental Authority for possible violation of Anti-Corruption Laws, (3) has been assessed civil or criminal penalties under any Anti-Corruption Laws, or (4) has been or is the target of sanctions imposed by the United Nations or the European Union.

(ii) To Holdings’ knowledge, neither Holdings nor any Controlled Entity has, within the last five years, directly or indirectly offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental Official or a commercial counterparty for the purposes of: (1) influencing any act, decision or failure to act by such Government Official in his or her official capacity or such commercial counterparty; (2) inducing a Governmental Official to do or omit to do any act in violation of the Governmental Official’s lawful duty; or (3) inducing a Governmental Official or a commercial counterparty to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity; in each case which is contrary to applicable law; and

(iii) No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage, in each case which would cause any holder of a Note to be in violation of applicable Anti-Corruption Laws. Holdings has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that Holdings and each Controlled Entity is and will continue to be in material compliance with all applicable Anti-Corruption Laws.

8U. Disclosure . Neither this Agreement nor any other document, certificate or statement furnished to Prudential or any Purchaser by or on behalf of Holdings or the Company in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact peculiar to Holdings or the Company or any other Subsidiary which materially adversely affects, or in the future may (so far as Holdings or the Company can now foresee) materially adversely affect, the consolidated business, property, assets, prospects or financial condition of Holdings and the Subsidiaries and which has not been set forth in this Agreement or in the other documents, certificates and statements furnished to each Purchaser by or on behalf of Holdings or the Company prior to the date this representation is made or confirmed in connection with the transactions contemplated hereby; provided , that with respect to projections and other pro forma financial information included in such information, Holdings and the Company only represent that such information was based upon good faith estimates and assumptions believed by the preparer thereof to be reasonable at the time made, it being recognized by the Purchasers that such financial information as it relates to future events is not to be viewed as a fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount.



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9. REPRESENTATIONS OF THE PURCHASERS . Each Purchaser of any Series of Notes purchased after the date hereof represents as follows:

9A. Nature of Purchase . Such Purchaser is acquiring such Notes for the purpose of investment and not with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act, provided that the disposition of such Purchaser’s property shall at all times be and remain within its control. Such Purchaser has no present intention of selling, granting a participation in, or otherwise distributing any of such Notes in any transaction which would be in violation of the securities laws of the United States of America or any state or other jurisdiction thereof, without prejudice, however, to such Purchaser’s rights at all times to sell or otherwise dispose of all or any part of such securities under a registration under the Securities Act or under an exemption from such registration available under the Securities Act and subject, nevertheless, to the disposition of such Purchaser’s property being at all times within its control. Such Purchaser understands that such Notes have not been registered under the Securities Act and may be exchanged, offered, transferred or resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, and that the Company is not required to register the Notes.

9B. Source of Funds . At least one of the following statements is an accurate representation as to each source of funds (a “ Source ”) to be used by such Purchaser to pay the purchase price of such Notes:

(i) the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“ PTE ”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “ NAIC Annual Statement ”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

(ii) the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amount payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(iii) the Source is either (a) an insurance company pooled separate account, within the meaning of PTE 90-1 or (b) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (iii), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than



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10% of all assets allocated to such pooled separate account or collective investment fund; or

(iv) the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “ QPAM Exemption ”)) managed by a “qualified professional asset manager” or “ QPAM ” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan’s assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM, and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (iv); or

(v) the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “ INHAM Exemption ”)) managed by an “in-house asset manager” or “ INHAM ” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company and (a) the identity of such INHAM and (b) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (v); or

(vi) the Source is a governmental plan; or

(vii) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (vii); or

(viii) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this paragraph 9B, the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

10. DEFINITIONS; ACCOUNTING MATTERS . For the purpose of this Agreement, the terms defined in paragraphs 10A and 10B (or within the text of any other



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paragraph) shall have the respective meanings specified therein and all accounting matters shall be subject to determination as provided in paragraph 10C.

10A. Yield-Maintenance Terms .

“ Business Day ” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City or Honolulu, Hawaii are required or authorized to be closed.

“ Called Principal ” means, with respect to any Note, the principal of such Note that (i) is to be prepaid pursuant to paragraph 4B or (ii) is declared to be immediately due and payable pursuant to paragraph 7A, as the context requires.

“ Discounted Value ” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (converted to reflect the periodic basis on which interest on such Note is payable, if payable other than on a semiannual basis) equal to the Reinvestment Yield with respect to such Called Principal.

“ Reinvestment Yield ” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by (i) the ask-side yields reported, as of 10:00 a.m. (New York City local time) on the Business Day next preceding the Settlement Date with respect to such Called Principal, for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date on the display designated “ Page PX1 ” on Bloomberg Financial Markets (“ Bloomberg ”) (or, if Bloomberg shall cease to report such yields on Page PX1 or shall cease to be Prudential’s customary source of information for calculating yield-maintenance amounts on privately placed notes, then such source as is then Prudential’s customary source of such information), or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been reported as of the Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield shall be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between yields reported for various maturities. The Reinvestment Yield shall be rounded to that number of decimal places as appears in the coupon for the applicable Note.

“ Remaining Average Life ” means, with respect to the Called Principal of any Note, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) each Remaining Scheduled Payment of such Called Principal (but not of interest thereon) by (b) the number of years (calculated to the nearest one-twelfth year) which will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.



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“ Remaining Scheduled Payments ” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due on or after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date.

“ Settlement Date ” means, with respect to the Called Principal of any Note, the date on which such Called Principal (i) is to be prepaid pursuant to paragraph 4B or (ii) is declared to be immediately due and payable pursuant to paragraph 7A, as the context requires.

“ Yield-Maintenance Amount ” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Called Principal of such Note over the sum of (i) such Called Principal plus (ii) interest accrued thereon as of (including interest due on) the Settlement Date with respect to such Called Principal. The Yield-Maintenance Amount shall in no event be less than zero.

10B. Other Terms .

“ Acceptance ” is defined in paragraph 2B(5).

“ Acceptance Day ” is defined in paragraph 2B(5).

“ Acceptance Window ” is defined in paragraph 2B(5).

“ Accepted Note ” is defined in paragraph 2B(5).

“ Accumulated Funding Deficiency ” means a funding deficiency described in section 302 of ERISA and section 412 of the Code.

“ Additional Guarantor ” is defined in paragraph 11N.

“ Adjusted EBITDA ” means Consolidated Net Income Before Taxes for the period of four consecutive fiscal quarters ended on any date of determination plus, to the extent deducted in the calculation thereof, Consolidated Interest Expense, depreciation and amortization expenses, non-cash stock-based compensation expense, non-cash pension, non-cash postretirement and non-cash nonqualified expenses; provided that Adjusted EBITDA shall exclude non-cash gains or losses resulting from the write-up or write-down of assets.

“ Affiliate ” means, without duplication, any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, Holdings. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” is defined in paragraph 12C.



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“ Anti-Corruption Laws ” is defined in paragraph 8T.

“ Anti-Money Laundering Laws ” is defined in paragraph 8T.

“ Appraised Value ” means, at any time of determination, the value determined by an appraisal, performed by an accredited appraiser no earlier than one year prior to such time, which assumes no greater than a twelve-month marketing time frame.

“ Authorized Officer ” means (i) in the case of the Company, any officer of the Company designated as an “ Authorized Officer ” in the Information Schedule or any officer of the Company designated as an “ Authorized Officer ” for the purpose of this Agreement in a certificate executed by one of the Company’s then existing Authorized Officers and (ii) in the case of Prudential, any officer of Prudential designated as its “ Authorized Officer ” in the Information Schedule or any officer of Prudential designated as its “ Authorized Officer ” for the purpose of this Agreement in a certificate executed by one of its then existing Authorized Officers. Any action taken under this Agreement on behalf of the Company by any individual who on or after the date of this Agreement shall have been an Authorized Officer of the Company and whom Prudential in good faith believes to be an Authorized Officer of the Company at the time of such action shall be binding on the Company even though such individual shall have ceased to be an Authorized Officer of the Company, and any action taken under this Agreement on behalf of Prudential by any individual who on or after the date of this Agreement shall have been an Authorized Officer of Prudential, and whom the Company in good faith believe to be an Authorized Officer of Prudential at the time of such action shall be binding on Prudential even though such individual shall have ceased to be an Authorized Officer of Prudential.

“ Available Facility Amount ” is defined in paragraph 2B(1).

“ Bank Credit Agreement ” means that certain Credit Agreement, dated as of June 4, 2012, by and among the Company, Bank of America, N.A., First Hawaiian Bank and the other lenders and financial institutions party thereto, as the same may be amended, amended and restated, supplemented, refinanced, replaced or otherwise modified from time to time.

“ Bankruptcy Law ” is defined in clause (vii) of paragraph 7A.

“ Beneficiaries ” is defined in paragraph 11.

“ Blocked Person ” is defined in paragraph 8T.

“ Business Day ” is defined in paragraph 10A.

“ Cancellation Date ” is defined in paragraph 2D(iv).



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“ Cancellation Fee ” is defined in paragraph 2D(iv).

“ Capitalized Lease Obligations ” means, with respect to any Person, any rental obligation of such Person which, under GAAP in effect as of June 29, 2012, is or will be required to be capitalized on the books of such Person, taken at the amount thereof accounted for as indebtedness (net of interest expense) in accordance with such principles; provided , that the adoption or issuance of any accounting standards after June 29, 2012 will not cause any rental obligation that was not or would not have been a Capitalized Lease Obligation prior to such adoption or issuance to be deemed a Capital Lease Obligation.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et. seq.), as amended, and the regulations promulgated thereunder.

“ Change of Control ” means: (a) the acquisition, after the date hereof, by any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934) (but excluding any employee benefit plan of such person or persons or their respective subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) of outstanding shares of voting stock of Holdings representing more than 50% of voting control of Holdings; or (b) the failure of Holdings to own 100% of the equity interests of the Company at any time; or (c) the failure of Holdings to directly or indirectly own 100% of the Equity Interests of Grace Pacific LLC, a Hawaii limited liability company, at any time.

“ CISADA ” is defined in paragraph 8T.

“ Closing Day ” means, with respect to any Accepted Note, the Business Day specified for the closing of the purchase and sale of such Accepted Note in the Confirmation of Acceptance for such Accepted Note, provided that (i) if the Company and the Purchasers which are obligated to purchase any Accepted Notes agree on an earlier Business Day for such closing, the “ Closing Day ” for such Notes shall be such earlier Business Day, and (ii) if the closing of the purchase and sale of any Accepted Notes is rescheduled pursuant to paragraph 2C, the Closing Day for such Notes, for all purposes of this Agreement except references to “ original Closing Day ” in paragraph 2D(iii), means the Rescheduled Closing Day with respect to such Notes.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Company ” is defined in the introductory paragraph hereto.

“ Confirmation of Acceptance ” is defined in paragraph 2B(5).

“ Consolidated Interest Expense ” means, for any period of determination thereof, the sum of all amounts that would, in accordance with GAAP, be deducted in computing Consolidated Net Income for such period on account of interest, including without limitation, imputed interest in respect of Capitalized Lease Obligations, fees in respect of letters of credit and bankers’ acceptance financing and amortization of debt discount and expense.



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“ Consolidated Net Income ” means, for any period of determination thereof, the consolidated net income from continuing operations of Holdings and its Subsidiaries as determined in accordance with GAAP, provided that the proceeds of any sale or condemnation of real estate that is treated as a discontinued operation pursuant to GAAP shall be treated as income from continuing operations to the extent the net proceeds of such sale or condemnation have been reinvested in real estate within twelve months from the date of sale or condemnation.

“ Consolidated Net Income Before Taxes ” means, for any period of determination thereof, Consolidated Net Income for such period plus the sum of all deferred and current federal, state, local and foreign income taxes that are deducted in accordance with GAAP in computing Consolidated Net Income for such period.

“ Consolidated Shareholders’ Equity ” means, at any time of determination thereof for Holdings and its Subsidiaries determined on a consolidated basis in accordance with GAAP, the sum of (i) consolidated shareholders’ equity, and (ii) any consolidated mezzanine equity (or other temporary or non-permanent equity) resulting from the application of the Financial Accounting Standards Board Accounting Standards Codification Topic 718, and related stock-based compensation awards issued to management which are puttable upon a change of control; provided , that any determination of Consolidated Shareholders’ Equity shall exclude all non-cash adjustments to Consolidated Shareholders’ Equity resulting from the application of the Financial Accounting Standards Board Accounting Standards Codification Topic 960.

“ Consolidated Total Assets ” means, at any time of determination thereof and for any Person, the consolidated total assets of such Person and Subsidiaries determined in accordance with GAAP.

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

“ Controlled Entity ” means (i) any of the Subsidiaries of Holdings and any of their or Holdings’ respective Controlled Affiliates and (ii) if Holdings has a parent company, such parent company and its Controlled Affiliates.

“ Credit Parties ” means the Company and the Guarantors.

“ Debt ” means, as to any Person at the time of determination thereof without duplication, (i) any indebtedness of such Person (A) for borrowed money, including commercial paper and revolving credit lines, (B) evidenced by bonds, debentures or notes or otherwise representing extensions of credit, whether or not representing obligations for borrowed money or (C) for the payment of the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, regardless of when such liability or other obligation is due and payable, (ii) Capitalized Lease Obligations of such Person, (iii) Guarantees, assumptions and endorsements by such Person (other than endorsements of negotiable instruments for collection in the ordinary course of business) of Debt of another Person, and (iv) Debt, whether or not assumed, that is secured by Liens on the property or other assets of such Person. “ Debt ”



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shall not include a reimbursement obligation incurred in connection with a standby letter of credit issued (i) in support of trade payables or (ii) as condition to receiving (A) a governmental entitlement, (B) a performance bond or (C) a performance guaranty, in each case under the immediately preceding clauses (i) and (ii) to the extent such reimbursement obligation is contingent and to the extent the aggregate amount of such standby letters of credit does not exceed $10,000,000.

“ Delayed Delivery Fee ” is defined in paragraph 2D(iii).

“ Development Real Properties ” means, at any time of determination, any real property asset under development, construction, renovation or rehabilitation that (i) is then treated as an asset under development under GAAP, (ii) is located in the State of Hawaii, the Territory of Guam or the continental United States, and (iii) has been designated by the Company in a written notice to the holders of Notes as a “Development Real Property.”

“ Environmental and Safety Laws ” means all federal, state and local laws, regulations and ordinances, relating to the discharge, handling, disposition or treatment of Hazardous Materials and other substances or the protection of the environment or of employee health and safety, including, without limitation, CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et. seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et. seq.), the Clean Air Act (42 U.S.C. Section 7401 et. seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et. seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et. seq.) and the Emergency Planning and Community Right-To-Know Act (42 U.S.C. Section 11001 et. seq.), each as the same may be amended and supplemented.

“ Environmental Liabilities and Costs ” means, as to any Person, all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, contribution, cost recovery, costs and expenses (including all fees, disbursements and expenses of counsel, expert and consulting fees, and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand, by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, permit, order or agreement with any federal, state or local Governmental Authority or other Person, arising from environmental, health or safety conditions, or the release or threatened release of a contaminant, pollutant or Hazardous Material into the environment, resulting from the operations of such Person or its subsidiaries, or breach of any Environmental and Safety Law or for which such Person or its subsidiaries is otherwise liable or responsible.



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“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any corporation which is a member of the same controlled group of corporations as the Company within the meaning of section 414(b) of the Code, or any trade or business which is under common control with the Company within the meaning of section 414(c) of the Code.

“ Event of Default ” means any of the events specified in paragraph 7A, provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and “ Default ” means any of such events, whether or not any such requirement has been satisfied.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“ Facility ” is defined in paragraph 2B(1).

“ FASB ” means the Financial Accounting Standards Board of the American Institute of Certified Public Accountants, or any successor body.

“ Fixed Charges ” means Consolidated Interest Expense for the period of four consecutive fiscal quarters ended on any date of determination, plus preferred dividends of Holdings accrued during such period, plus scheduled principal payments (excluding balloon payments and amounts borrowed under the revolving credit agreement that are classified as current liabilities under GAAP provided no Default or Event of Default then exists under this Agreement or the Bank Credit Agreement) of Holdings and its Subsidiaries for the period of four consecutive fiscal quarters next succeeding such date of determination.

“ Foreign Subsidiary ” means any Subsidiary that is incorporated or organized under the laws of a country other than the United States of America or any state thereof or the District of Columbia, provided that any Subsidiary that is not described in the preceding clause, but which owns voting stock in one or more Foreign Subsidiaries but owns no other material assets and does not engage in any trade or business (other than acting as a holding company for such voting stock in Foreign Subsidiaries) shall be deemed to be a Foreign Subsidiary hereunder; provided further that any Subsidiary which is disregarded as separate from its owner for United States federal income tax purposes and which owns voting stock in one or more Foreign Subsidiaries shall be deemed to be a Foreign Subsidiary.

“ GAAP ” has the meaning provided in paragraph 10C.

“ Governmental Authority ” means (a) the government of (i) the United States of America or any state or other political subdivision thereof, or (ii) any other jurisdiction in which Holdings or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of Holdings or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.



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“ Governmental Official ” shall mean any governmental official or employee, employee of any government-owned or government-controlled entity, political party, any official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity.

“ Guarantee ” means, without duplication, any obligation, contingent or otherwise, of any Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation of any other Person (the primary obligor) in any manner, directly or indirectly, and including any obligation: (a) to make any loan, advance or capital contribution, or for the purchase of any property from, any Person, in each case for the purpose of enabling such Person to maintain working capital, net worth or any other balance sheet condition or to pay debts, dividends or expenses except for advances, deposits and initial payments made in the usual and ordinary course of business for the purchase or acquisition of property or services; (b) to purchase materials, supplies or other property or services if such obligation requires that payment for such materials, supplies or other property or services be made regardless of whether or not delivery of such materials, supplies or other property or services is ever made or tendered; (c) to rent or lease (as lessee) any real or personal property (except for leases in effect on December 31, 2011) if such obligation is absolute and unconditional under conditions not customarily found in commercial leases then in general use; or (d) of any partnership or joint venture in which such Person is a general partner or joint venturer if such obligation is not expressly non-recourse to such Person; but excluding contingent obligations under (i) a completion guaranty issued in connection with a real estate development project to the extent contingent and not constituting a direct or indirect obligation to repay Debt, and (ii) environmental indemnification agreements.

“ Guaranteed Obligations ” is defined in paragraph 11A.

“ Guarantors ” means (i) each of Holdings, A&B II, LLC, a Hawaii limited liability company, Grace Pacific LLC, a Hawaii limited liability company, and (ii) each Person that hereafter becomes a party to the Multiparty Guaranty pursuant to the requirements of paragraph 5G.

“ Hazardous Materials ” means (a) any material or substance defined as or included in the definition of “ hazardous substances, ” “ hazardous wastes, ” “ hazardous materials, ” “ toxic substances ” or any other formulations intended to define, list or classify substances by reason of their deleterious properties, (b) any oil, petroleum or petroleum derived substance, (c) any flammable substances or explosives, (d) any radioactive materials, (e) asbestos in any form, (f) electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million, (g) pesticides or (h) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental agency or authority or which may or could pose a hazard to the health and safety of persons in the vicinity thereof.

“ Hedge Treasury Note(s) ” means, with respect to any Accepted Notes, the United States Treasury Note or Notes whose duration (as determined by Prudential) most closely matches the duration of such Accepted Notes.

“ Holdings ” is defined in the introductory paragraph hereto.



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“ Hostile Tender Offer ” means, with respect to the use of proceeds of any Note, any offer to purchase, or any purchase of, shares of capital stock of any corporation or equity interests in any other entity, or securities convertible into or representing the beneficial ownership of, or rights to acquire, any such shares or equity interests, if such shares, equity interests, securities or rights are of a class which is publicly traded on any securities exchange or in any over-the-counter market, other than purchases for portfolio investment purposes of such shares, equity interests, securities or rights which, together with any shares, equity interests, securities or rights then owned, represent less than 5% of the equity interests or beneficial ownership of such corporation or other entity, and such offer or purchase has not been duly approved by the board of directors of such corporation or the equivalent governing body of such other entity prior to the date on which the Company makes the Request for Purchase of such Note.

“ including ” means, unless the context clearly requires otherwise, “ including without limitation ”.

“ Institutional Investor ” means an insurance company, bank, pension fund, investment company, “ qualified institutional buyer ” (as such term is defined under Rule 144A promulgated under the Securities Act, or any successor law, rule or regulation), “ accredited investor ” (as such term is defined under Regulation D promulgated under the Securities Act, or any successor law, rule or regulation) or other Person with assets in excess of $50,000,000 that invests in securities for its own account or as a dealer.

“ Issuance Period ” is defined in paragraph 2B(2).

“ Joinder Agreement ” means a joinder agreement to the Multiparty Guaranty, substantially in the form of Exhibit D .

“ Leased Non-Agricultural Land ” means land owned in fee by Holdings or its Subsidiaries, other than Agricultural Land, located in the State of Hawaii or the continental United States and leased to third parties on arms’-length terms, which land has improvements situated thereon in which none of Holdings or its Subsidiaries has an ownership interest.

“ margin stock ” is defined in paragraph 8I.



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“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the business, condition (financial or otherwise) or operations of Holdings and its Subsidiaries taken as a whole, (b) a material impairment of the ability of any Credit Party to perform its obligations under any Transaction Document, or (c) a material adverse effect on the material rights and remedies of the Purchasers taken as a whole, which material adverse effect was not caused by any Purchaser.

“ Multiemployer Plan ” means any Plan which is a “ multiemployer plan ” (as such term is defined in section 4001(a)(3) of ERISA).

“ Multiparty Guaranty ” is defined in paragraph 11.

“ NOI from Investment Properties ” means, for any period of determination thereof for Holdings and its Subsidiaries, the consolidated cash revenues attributable to all Investment Properties less operating expenses, real property taxes, taxes on gross revenue, common area maintenance expenses, ground and other rents, other rental expenses, and charges for property management related thereto, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ NOI from Leased Agricultural Land ” means, for any period of determination thereof for Holdings and its Subsidiaries, the consolidated cash revenues attributable to all Agricultural Land which is leased to third parties on arms’-length terms less operating expenses, real property taxes, taxes on gross revenue, and charges for property management related thereto, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ NOI from Leased Non-Agricultural Land ” means, for any period of determination thereof for Holdings and its Subsidiaries, the consolidated cash revenues attributable to all Leased Non-Agricultural Land less operating expenses, real property taxes, taxes on gross revenue, and charges for property management related thereto, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ NOI from Unencumbered Investment Properties ” means, for any period of determination thereof for Holdings and its Subsidiaries, the consolidated cash revenues attributable to Unencumbered Investment Properties less operating expenses, real property taxes, taxes on gross revenue, common area maintenance expenses, ground and other rents, other rental



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expenses, and charges for property management related thereto, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ NOI from Unencumbered Leased Agricultural Land ” means, for any period of determination thereof for Holdings and its Subsidiaries, the consolidated cash revenues attributable to Unencumbered Leased Agricultural Land, less operating expenses, real property taxes, taxes on gross revenue, and charges for property management related thereto, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ NOI from Unencumbered Leased Non-Agricultural Land ” means, for any period of determination thereof for Holdings and its Subsidiaries, the consolidated cash revenues attributable to all Unencumbered Leased Non-Agricultural Land less operating expenses, real property taxes, taxes on gross revenue, and charges for property management related thereto, but in no event shall take into account tenant deposits, refunds of tenant deposits, tenant improvements paid for by Holdings or its Subsidiaries, reimbursement by tenants to Holdings or its Subsidiaries for tenant improvements paid for by Holdings or its Subsidiaries, allowances for bad debts, gains or losses from the sales of leased property, depreciation and amortization, overhead allocations that are not directly associated with the property, or state and federal income taxes.

“ Notes ” is defined in paragraph 1C.

“ OFAC ” is defined in paragraph 8T.

“ OFAC Listed Person ” is defined in paragraph 8T.

“ OFAC Sanctions Program ” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

“ Officer’s Certificate ” means a certificate signed in the name of Holdings and/or the Company, as applicable, by a Responsible Officer of such Person.

“ PBGC ” means the Pension Benefit Guaranty Corporation, or any successor or replacement entity thereto under ERISA.

“ Permitted Assets ” means (i) where any Property Sub or any assets of a Property Sub or of the Company have been sold or otherwise transferred, assets, including real estate, to be used by the Company or any Property Sub in conducting Property Development Activities, the Property Management Business, agribusiness or the aggregate business and (ii) in all other



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instances, assets, including real estate, to be used in conducting Property Development Activities, the Property Management Business, agribusiness or the aggregate business.

“ Permitted Debt ” means: (i) any unsecured Debt of the Company or a Subsidiary (exclusive of Debt owed to the Company or a Subsidiary) selected by the Company, so long as the aggregate amount of all proceeds from sales or other dispositions which are made after December 31, 2011 pursuant to the proviso appearing in clauses (iv) or (v) of paragraph 6B(3) of this Agreement, the Prior Agreement or a predecessor agreement thereto and that are applied to the prepayment of such unsecured Debt pursuant to this clause (i) does not exceed $150,000,000; and (ii) after the $150,000,000 basket in clause (i) has been fully utilized, all unsecured Debt of the Company and Subsidiaries (exclusive of any Debt owed to the Company or a Subsidiary thereof) on a pro rata basis, provided that if the Notes and any Principal Credit Facility have become secured pursuant to paragraph 6B(1)(v)(b) at the applicable time after the $150,000,000 basket in clause (i) has been fully utilized, then “Permitted Debt” at such time shall mean the Notes and any Principal Credit Facility which have become secured pursuant to paragraph 6B(v)(b) on a pro rata basis.

“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Plan ” means any “ employee pension benefit plan ” (as such term is defined in section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by Holdings, the Company or any ERISA Affiliate.

“ Principal Credit Facility ” means (a) the Bank Credit Agreement and (b) with regard to Holdings or any Subsidiary, any other credit agreement, loan agreement, note purchase agreement or similar agreement under which credit facilities in the aggregate principal or commitment amount of at least $40,000,000 are provided for, in each case, as any of the same may be amended, amended and restated, supplemented or otherwise modified from time to time; provided , however , that the immediately preceding clause (b) shall exclude (i) all purchase money debt, (ii) all construction and other project financings, and (iii) all nonrecourse loans and credit facilities, and guaranties in respect thereof. Nonrecourse shall, for purposes of this definition, include (a) limited recourse loans and credit facilities at all times during which the recourse portion of such loans and credit facilities (including commitments in respect thereof) is not in excess of $40,000,000, and (b) fully recourse mortgage and similar financings obtained by a Subsidiary of the Company if the mortgaged real property constitutes substantially all of the assets of such Subsidiary.

“ Prior Agreement ” is defined in paragraph 1A.

“ Priority Debt ” means, at any time of determination thereof, and without duplication, the Company’s, Holdings’ and the other Guarantors’ Debt secured by a Lien, plus all Debt of Holdings’ Subsidiaries (other than the Company and the Subsidiaries of Holdings which are Guarantors), both secured and unsecured.

“ Prohibited Transaction ” means any transaction described in section 406 of ERISA which is not exempt by reason of section 408 of ERISA or the transitional rules set forth in



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section 414(c) of ERISA and any transaction described in section 4975(c) of the Code which is not exempt by reason of section 4975(c) (2) or section 4975(d) of the Code, or the transitional rules of section 2003(c) of ERISA.

“ Property ” means all real property owned or leased by Holdings, the Company or any of the other Subsidiaries, and all personal property owned or leased by Holdings, the Company or any other Subsidiary.

“ Property Development Activities ” means land acquisition and development activities, the principal objective of which is to acquire and develop real property for sale or other disposition.

“ Property Management Business ” means the managing, leasing, selling and purchasing of real property.

“ Prudential ” means Prudential Investment Management, Inc. and any successor thereto.

“ Prudential Affiliate ” means (i) any corporation or other entity controlling, controlled by, or under common control with, Prudential and (ii) any managed account or investment fund which is managed by Prudential or a Prudential Affiliate described in clause (i) of this definition. For purposes of this definition the terms “ control ”, “ controlling ” and “ controlled ” means the ownership, directly or through subsidiaries, of a majority of a corporation’s or other Person’s Voting Stock or equivalent voting securities or interests.

“ Purchasers ” means (i) each holder of Notes which is a signatory to this Agreement, and (ii) with respect to any Shelf Notes, Prudential and/or the Prudential Affiliate(s) which are purchasing such Notes.

“ Request for Purchase ” is defined in paragraph 2B(3).

“ Required Holders ” means the holder or holders of at least a majority of the aggregate principal amount of the Notes or of a Series of Notes, as the context may require, from time to time outstanding and, if no Notes are outstanding, means Prudential.

“ Rescheduled Closing Day ” is defined in paragraph 2C.

“ Responsible Officer ” means any of Holdings’ or the Company’s (as applicable) chief financial officer, principal accounting officer, treasurer, controller or chief legal officer and any other officer of Holdings or the Company with responsibility for the administration of the relevant portion of this Agreement or matters referenced herein. Any document delivered hereunder that is signed by a Responsible Officer of Holdings or the Company shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of Holdings or the Company and such Responsible Officer shall be conclusively presumed to have acted on behalf of Holdings or the Company, as applicable.



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“ Restricted Payments ” is defined in paragraph 6C.

“ Securities Act ” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“ Series ” is defined in paragraph 1C.

“ Series AX Notes ” is defined in paragraph 1B.

“ Series BX Notes ” is defined in paragraph 1B.

“ Series CX Notes ” is defined in paragraph 1B.

“ Series D Notes ” is defined in paragraph 1B.

“ Series E Notes ” is defined in paragraph 1B.

“ Series F Notes ” is defined in paragraph 1B.

“ Shelf Notes ” is defined in paragraph 1C.

“ Significant Holder ” means (i) Prudential or any Prudential Affiliate, so long as Prudential or any Prudential Affiliate shall hold any Note or the Issuance Period has not terminated or (ii) any other holder of at least 10% of the aggregate principal amount of the Notes of any Series from time to time outstanding.

“ Significant Line of Business ” means a line of business or an operating division, the book value of which is, on the date determination, equal to 5% or more of Consolidated Shareholders’ Equity.

“ Significant Subsidiary ” means any direct or indirect Subsidiary of Holdings, the net worth of which is, on the date of determination, 5% or more of Consolidated Shareholders’ Equity.

“ Structuring Fee ” is defined in Section 2D(i).

“ Subsidiary ” means, as to any Person, any other company, whether operating as a corporation, joint venture, partnership, limited liability company or other entity, which is consolidated with such Person in accordance with GAAP. Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of Holdings.

“ Third Party ” means any Person other than Holdings or its Subsidiaries.

“ Total Adjusted Asset Value ” means, at any time of determination thereof, without duplication, (a) the real estate leasing property value (which shall be deemed to be equal to the sum of (i) NOI from Investment Properties for the then or most recently ended two consecutive fiscal quarters multiplied by two divided by the Applicable Cap Rates, plus (ii) NOI from Leased Agricultural Land for the then or most recently ended two consecutive fiscal quarters multiplied by two divided by the Applicable Cap Rates, plus (iii) NOI from Leased Non-Agricultural Land



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for the then or most recently ended two consecutive fiscal quarters multiplied by two divided by the Applicable Cap Rates), plus (b) the greater of (x) EBITDA (as defined below) generated from the agricultural division of Holdings and its Subsidiaries (excluding, as an abundance of caution, NOI from Leased Agricultural Land) for the period of four consecutive fiscal quarters then or most recently ended divided by 20.0%, and (y) the Appraised Value of Agricultural Land which is not leased to third parties ( provided that the determination of whether or not to obtain the appraisal necessary to determine the Appraised Value shall be made at the option of the Company and if the Company does not elect to have an appraisal performed, then clause (x) will be deemed to be greater than clause (y)), plus (c) the book value of Development Real Properties owned by Holdings or any of its Subsidiaries (with such book value, in the case of a less than wholly-owned Subsidiary or any other entity (other than a Subsidiary) in which Holdings or any of its Subsidiaries owns an equity interest (each, a “ Joint Venture Entity ”), to be (i) with respect to a consolidated Joint Venture Entity, equal to the net assets of such Joint Venture Entity less the non-controlling interest in such Joint Venture Entity as reflected on the most recent consolidated balance sheet of Holdings required to be delivered pursuant to paragraph 5A(i) or (ii), or (ii) with respect to an unconsolidated Joint Venture Entity, equal to the book value of Holdings’ direct or indirect investment in such Joint Venture Entity), provided that the aggregate amount under this clause (c) shall not comprise more than 30% of the consolidated total assets of Holdings and its Subsidiaries (less cash, cash equivalents, marketable securities, goodwill, non-controlling interest and pension assets) in accordance with GAAP for the most recent fiscal quarter with respect to which financial statements are required to be delivered pursuant to paragraph 5A(i) or (ii), plus (d) the value of the Grace Pacific business (which shall be deemed to be equal to Adjusted EBITDA (but calculated solely with respect to A&B II, Inc. and its Subsidiaries for the then or most recently ended period of four consecutive fiscal quarters) divided by 16.67%). For purpose of clause (b) of this definition, “ EBITDA ” means the operating profit of the agricultural division of Holdings and its Subsidiaries, but prior to the deduction in the determination thereof of any expenses in respect of depreciation and amortization.

Notwithstanding anything to the contrary in the foregoing portions of this definition or in the final paragraph of paragraph 6A (immediately preceding paragraph 6B), any asset or Person (together with such Person’s Subsidiaries) acquired by Holdings or any of its Subsidiaries, for purpose of determining the “Total Adjusted Asset Value,” shall be valued at net book value during the period from the consummation of such acquisition until the last day of the first four full fiscal quarters occurring after the consummation of such acquisition.

“ Transaction Documents ” means this Agreement (including the Multiparty Guaranty), the Notes and any and all other agreements and instruments from time to time executed and delivered by or on behalf of any Credit Party related thereto.

“ Transferee ” means any Institutional Investor that is the direct or indirect transferee of all or any part of any Note purchased under this Agreement.



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“ Triggering Event Adjusted EBITDA ” means Consolidated Net Income Before Taxes for the period of four consecutive fiscal quarters ended on any date of determination plus , to the extent deducted in the calculation thereof, (i) Consolidated Interest Expense, (ii) depreciation and amortization expenses, (iii) non-cash stock-based compensation expense, (iv) non-cash pension, non-cash postretirement and non-cash nonqualified expenses, and (v) non-recurring one-time expenses (whether cash or non-cash) incurred in accordance with GAAP in connection with or as a result of the Triggering Event; provided that the aggregate amount added back under this clause (v) for all periods shall not exceeed $45,000,000 and shall only be permitted to be added back for so long as incurred no later than the date that is 18 months after the Triggering Event; provided that Triggering Event Adjusted EBITDA shall exclude non-cash gains or losses resulting from the write-up or write-down of assets .

“ Undeveloped Land ” means (i) land owned in fee by the Company or any Subsidiary as of December 31, 2014 which at the time of determination has not been developed for commercial or residential purposes, (ii) land acquired by the Company or any Subsidiary subsequent to December 31, 2014 pursuant to a Code section 1031 like-kind exchange (in exchange for land described in clause (i) or (ii) of this definition) which at the time of determination has not been developed for commercial or residential purposes, or (iii) capital stock or other equity interests of a Subsidiary which owns as its principal asset, directly or indirectly, Undeveloped Land described in clause (i) or (ii) of this definition.

“ Unencumbered Agricultural Division Assets ” means assets of the agricultural division of Holdings and its Subsidiaries which: (i) are not subject to a mortgage or any other Lien, other than (a) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, and (b) Liens incidental to the conduct of the owner of such asset’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of the applicable asset, or materially impair the use thereof; (ii) are not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such asset, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that prohibits or limits the ability of Holdings or any Subsidiary, as the case may be, to create, incur, assume or suffer to exist any Lien upon any assets or equity interest of Holdings or any Subsidiary except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) are not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such asset, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such asset owned by a Subsidiary of Holdings shall be deemed to be an Unencumbered Agricultural Division Asset unless (1) both such asset and all equity interests of the Subsidiary which holds legal title to such asset is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in paragraph 7A(vi)-(xi) of



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this Agreement (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

“ Unencumbered Agricultural Land ” means Agricultural Land which: (i) is not subject to a mortgage or any other Lien, other than (a) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, and (b) Liens incidental to the conduct of the owner of such property’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of the applicable property, or materially impair the use thereof; (ii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that prohibits or limits the ability of Holdings or any Subsidiary, as the case may be, to create, incur, assume or suffer to exist any Lien upon any assets or equity interest of Holdings, or any Subsidiary except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such land owned by a Subsidiary of Holdings shall be deemed to be Unencumbered Agricultural Land unless (1) both such land and all equity interests of the Subsidiary which holds legal title to such land is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in paragraph 7A(vi)-(xi) of this Agreement (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

“ Unencumbered EBITDA ” means, for any period of determination, with respect to Holdings and its Subsidiaries on a consolidated basis, without duplication, (i) Adjusted EBITDA derived from Unencumbered Investment Properties and Unencumbered Leased Agricultural Land, (ii) Adjusted EBITDA generated from the agricultural division of Holdings and its Subsidiaries but only to the extent the assets in the agricultural division are Unencumbered Agricultural Division Assets, and (iii) Adjusted EBITDA calculated solely with respect to A&B II, LLC and its Subsidiaries, provided that amounts under this clause (iii) shall be excluded from the calculation of Unencumbered EBITDA if, at any time during such period of determination, any Debt of A&B II, LLC or its Subsidiaries is secured by a consensual Lien except that only Adjusted EBITDA of GLP Asphalt LLC shall be excluded from the calculation of Unencumbered EBITDA if the only Debt of A&B II, LLC or its Subsidiaries which is secured by a consensual Lien consists of (1) the bank facility from Wells Fargo Bank, N.A. in favor of GLP Asphalt LLC in an aggregate commitment or outstanding principal amount not to exceed $30 million, or any extensions (including by amendments or amendments and restatements), refinancings or replacements of such bank facility in an aggregate commitment or outstanding principal amount not to exceed $30 million, and/or (2) the term loan from Bank of Hawaii in



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favor of GLP Asphalt LLC in an aggregate outstanding principal amount not to exceed the original aggregate principal amount of $14 million, as reduced from time to time in accordance with its originally scheduled principal amortization (and only until its final maturity date of March 1, 2021).

“ Unencumbered Fixed Charge Coverage Ratio ” means, as of any date of determination, the ratio of (a) Unencumbered EBITDA for the period of four (4) consecutive fiscal quarters ending on such date to (b) Unencumbered Fixed Charges determined as of such date.

“ Unencumbered Fixed Charges ” means, for any date of determination, with respect to Holdings and its Subsidiaries on a consolidated basis, the portion of Consolidated Interest Expense attributable to Unsecured Debt for the period of four (4) consecutive fiscal quarters ending on such date, plus preferred dividends of Holdings accrued during such period, plus scheduled principal payments with respect to Unsecured Debt (excluding balloon payments and amounts outstanding under the Bank Credit Agreement that are classified as current liabilities under GAAP but only to the extent that no Default or Event of Default then exists under this Agreement or the Bank Credit Agreement) of Holdings and its Subsidiaries for the period of twelve months next succeeding such date of determination.

“ Unencumbered Income Producing Assets Value ” means, at any time of determination thereof, without duplication, (i) the NOI from Unencumbered Investment Properties for the then or most recently ended two consecutive fiscal quarters multiplied by two divided by the Applicable Cap Rates, plus (ii) the NOI from Unencumbered Leased Agricultural Land for the then or most recently ended two consecutive fiscal quarters multiplied by two divided by the Applicable Cap Rates, plus (iii) the NOI from Unencumbered Leased Non-Agricultural Land for the then or most recently ended two consecutive fiscal quarters multiplied by two divided by the Applicable Cap Rates, plus (iv) the greater of (x) EBITDA generated from the agricultural division of Holdings and its Subsidiaries but only to the extent the assets in the agricultural division are Unencumbered Agricultural Division Assets (excluding, as an abundance of caution, NOI from Leased Agricultural Land) for the period of four consecutive fiscal quarters then or most recently ended divided by 20.0%, and (y) the Appraised Value of Unencumbered Agricultural Land which is not leased to third parties ( provided that the determination of whether or not to obtain the appraisal necessary to determine the Appraised Value shall be made at the option of the Company and if the Company does not elect to have an appraisal performed, then clause (x) will be deemed to be greater than clause (y)), plus (v) the value of the Grace Pacific business (which shall be deemed to be equal to Adjusted EBITDA (but calculated solely with respect to A&B II, LLC and its Subsidiaries for the then or most recently ended period of four consecutive fiscal quarters) divided by 16.67%), provided that amounts under this clause (v) shall be excluded from the calculation of Unencumbered Income Producing Assets Value if, at such time of determination or at any time during such then or most recently ended period of four consecutive fiscal quarters, any Debt of A&B II, LLC or its Subsidiaries is or was secured by a consensual Lien, except that only the value of GLP Asphalt LLC (which shall be deemed to be equal to Adjusted EBITDA (but calculated solely with respect to GLP Asphalt LLC and its Subsidiaries for the then or most recently ended period of four consecutive fiscal quarters) divided by 16.67%) shall be excluded from the calculation of Unencumbered Income Producing Assets Value if the only Debt of A&B II, LLC or its Subsidiaries which is or was secured by a



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consensual Lien consists or consisted of (1) the bank facility from Wells Fargo Bank, N.A. in favor of GLP Asphalt LLC in an aggregate commitment or outstanding principal amount not to exceed $30 million, or any extensions (including by amendments or amendments and restatements), refinancings or replacements of such bank facility in an aggregate commitment or outstanding principal amount not to exceed $30 million, and/or (2) the term loan from Bank of Hawaii in favor of GLP Asphalt LLC in an aggregate outstanding principal amount not to exceed the original aggregate principal amount of $14 million, as reduced from time to time in accordance with its originally scheduled principal amortization (and only until its final maturity date of March 1, 2021), plus (vi) the net book value (i.e., the book value net of liabilities, whether secured or unsecured) of Development Real Properties owned by Holdings or any of its Subsidiaries (with such net book value, in the case of a less than wholly-owned Subsidiary or any other entity (other than a Subsidiary) in which Holdings or any of its Subsidiaries owns an equity interest (each, a “ Joint Venture Entity ”), to be included in the determination of “Unencumbered Income Producing Assets Value”, but only (I) in the case of a consolidated Joint Venture Entity, to the extent of the applicable ownership percentage held by Holdings and its Subsidiaries multiplied by such net book value, and (II) in the case of an unconsolidated Joint Venture Entity, to the extent of such net book value, provided that (X) such aggregate net book value of Development Real Properties owned by Holdings or any of its wholly-owned Subsidiaries shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent it comprises 10% or less of the Unencumbered Income Producing Assets Value, and (Y) such aggregate net book value of Development Real Properties held by Joint Venture Entities shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent it comprises 5% or less of the Unencumbered Income Producing Assets Value, and (vii) the book value of notes receivable held directly by Holdings or its Subsidiaries (or indirectly through a Person other than Holdings or its Subsidiaries) from Persons other than Holdings or any of its Subsidiaries, and the book value of mezzanine equity investments held directly by Holdings or its Subsidiaries (or indirectly through a Person other than Holdings or its Subsidiaries) in other Persons (but (I) without duplication of the immediately preceding clause (vi), and (II) in the case of any note receivable or mezzanine equity investment held by a Person other than Holdings or a wholly-owned Subsidiary, the book value thereof shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent of the amount of such book value multiplied by the applicable percentage of such Person which is owned by Holdings and its Subsidiaries in the aggregate), provided that the aggregate book value of such notes receivable and mezzanine investments shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent it comprises 5% or less of the Unencumbered Income Producing Assets Value, provided further that the aggregate of the net book value and the book value (as applicable) of the assets described in the immediately preceding clauses (vi) and (vii) shall be included in the determination of Unencumbered Income Producing Assets Value only to the extent it comprises 15% or less of the Unencumbered Income Producing Assets Value. For purpose of clause (iv) of this definition, “ EBITDA ” means the operating profit of the agricultural division of Holdings and its Subsidiaries, but prior to the deduction in the determination thereof of any expenses in respect of depreciation and amortization.



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purpose of determining the “Unencumbered Income Producing Asset Value,” shall be valued at net book value during the period from the consummation of such acquisition until the last day of the first four full fiscal quarters occurring after the consummation of such acquisition.

“ Unencumbered Investment Properties ” means Investment Properties which (i) are not subject to a mortgage or any other Lien, other than (a) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, and (b) Liens incidental to the conduct of the owner of such property’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of the applicable property, or materially impair the use thereof; (ii) are not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such project, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that prohibits or limits the ability of Holdings or any Subsidiary, as the case may be, to create, incur, assume or suffer to exist any Lien upon any assets or equity interest of Holdings, or any Subsidiary except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) are not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such project, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such Investment Property owned by a Subsidiary of Holdings shall be deemed to be an Unencumbered Investment Property unless (1) both such project and all equity interests of the Subsidiary which holds legal title to such project is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in paragraph 7A(vi)-(xi) of this Agreement (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary



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Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such land owned by a Subsidiary of Holdings shall be deemed to be Unencumbered Leased Agricultural Land unless (1) both such land and all equity interests of the Subsidiary which holds legal title to such land is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in paragraph 7A(vi)-(xi) of this Agreement (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

“ Unencumbered Leased Non-Agricultural Land ” means Leased Non-Agricultural Land which: (i) is not subject to a mortgage or any other Lien, other than (a) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, (b) Liens incidental to the conduct of the owner of such property’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances of credit, or the guarantee, maintenance, extension or renewal of the same, and which do not in the aggregate materially detract from the value of the applicable property, or materially impair the use thereof, and (c) arms’-length operating leases with third-party lessees; (ii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that prohibits or limits the ability of Holdings or any Subsidiary, as the case may be, to create, incur, assume or suffer to exist any Lien upon any assets or equity interest of Holdings, or any Subsidiary except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Debt of Holdings and its Subsidiaries not prohibited hereunder; and (iii) is not subject to any agreement (including (x) any agreement governing Debt incurred in order to finance or refinance the acquisition of such land, and (y) if applicable, the organizational documents of Holdings or any Subsidiary) that entitles any Person to the benefit of any Lien on any assets or equity interests of Holdings or any Subsidiary or would entitle any Person to the benefit of any Lien on such assets or equity interests upon the occurrence of any contingency (including pursuant to an “equal and ratable” clause). No such land owned by a Subsidiary of Holdings shall be deemed to be Unencumbered Leased Non-Agricultural Land unless (1) both such land and all equity interests of the Subsidiary which holds legal title to such land is not subject to any Lien, (2) each intervening entity between Holdings and such Subsidiary does not have any Debt for borrowed money, and (3) no event has occurred or condition exists described in paragraph 7A(vi)-(xi) of this Agreement (assuming that such provisions applied to such Subsidiary) with respect to such Subsidiary.

“ Unsecured Debt ” means, at any time of determination thereof, the consolidated Debt of Holdings or its Subsidiaries not secured by any Lien.

“ USA PATRIOT Act ” shall mean United States Public Law 107-56, Uniting and



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Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA) PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

“ U.S. Economic Sanctions ” shall have the meaning specified in paragraph 8T.

“ Voting Stock ” means any shares of stock (or comparable equity securities) whose holders are entitled under ordinary circumstances to vote for the election of directors (or comparable persons), irrespective of whether at the time stock (or comparable equity securities) of any other class or classes has or might have voting power by reason of the happening of any contingency.

10C. Accounting Principles, Terms and Determinations . All references in this Agreement to “ generally accepted accounting principles ” and “ GAAP ” shall be deemed to refer to generally accepted accounting principles in effect in the United States at the time of application thereof, but excluding in each case the effects of Accounting Standards Codification 825-10-25 (previously referred to as SFAS 159) or any other accounting standard that would result in any financial liability being set forth at an amount less than the actual outstanding principal amount thereof. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all unaudited financial statements and certificates and reports as to financial matters required to be furnished hereunder shall be prepared, in accordance with generally accepted accounting principles, applied on a basis consistent with the most recent audited consolidated financial statements of Holdings and its Subsidiaries delivered pursuant to clause (ii) of paragraph 5A or, if no such statements have been so delivered, the most recent audited financial statements referred to in clause (i) of paragraph 8B.

11. MULTIPARTY GUARANTY . The multiparty guaranty under this paragraph 11 (as amended or otherwise modified from time to time, the “ Multiparty Guaranty ”) is made jointly and severally by each of the Guarantors in favor of the Purchasers and their respective successors, assigns and transferees (each of such Persons being referred to herein as a “ Beneficiary ” and collectively, as the “ Beneficiaries ”).

11A. Unconditional Guaranty . Each Guarantor hereby unconditionally, absolutely and irrevocably guarantees to each of the Beneficiaries the prompt and complete payment when due (whether at stated maturity, by acceleration or otherwise) and performance of all Guaranteed Obligations. The term “ Guaranteed Obligations ” shall mean all loans, advances, debts, liabilities and obligations for monetary amounts and otherwise from time to time owing by the Company, in the Company’s capacity as the issuer of Notes, to the Purchasers in connection with this Agreement, the Notes and the other Transaction Documents, whether due or to become due, matured or unmatured, liquidated or unliquidated, contingent or non-contingent, and all covenants and duties regarding such amounts, of any kind or nature, present or future, arising under or in respect of this Agreement, the Notes or the other Transaction Documents (it being understood that this term includes all principal, interest (including interest that accrues after the commencement by or against the Company of any action under applicable bankruptcy or insolvency law under any applicable jurisdiction, whether or not a claim for post-petition interest is allowed as a claim in such bankruptcy or insolvency proceeding), the Yield-Maintenance



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Amount, if any, premium or other prepayment consideration, fees, expenses, costs or other sums (including, without limitation, all fees and disbursements of any law firm or other external counsel) chargeable to the Company, in the Company’s capacity as the issuer of Notes, under this Agreement, the Notes or the other Transaction Documents).

11B. Reimbursement of Expenses . Each Guarantor also agrees to pay upon demand all costs and expenses (including, without limitation, all fees and disbursements of any law firm or other external counsel) incurred by any Beneficiary in enforcing any rights under this Multiparty Guaranty.

11C. Guaranteed Obligations Unaffected . No payment or payments made by any other Guarantor or other Credit Party, or by any other guarantor or other Person, or received or collected by any of the Beneficiaries from any other Guarantor or other Credit Party or from any other guarantor or other Person by virtue of any action or proceeding or any setoff or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, release or otherwise affect the liability of each of the Guarantors hereunder which shall, notwithstanding any such payments, remain liable for the Guaranteed Obligations, subject to paragraph 11K below, until the Guaranteed Obligations are paid in full in cash.

11D. Joint and Several Liability . All Guarantors and their respective successors and assigns shall be jointly and severally liable for the payment of the Guaranteed Obligations and the expenses required to be reimbursed to the holders of the Notes pursuant to paragraph 11B, above, notwithstanding any relationship or contract of co-obligation by or among the Guarantors or their successors and assigns.

11E. Enforcement of Guaranteed Obligations . Each Guarantor hereby jointly and severally agrees, in furtherance of the foregoing and not in limitation of any other right that any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of the Company to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. § 362(a)), each Guarantor will upon demand pay, or cause to be paid, in cash, the unpaid amount of all Guaranteed Obligations owing to the Beneficiary or Beneficiaries making such demand an amount equal to all of the Guaranteed Obligations then due to such Beneficiary or Beneficiaries.

11F. Tolling of Statute of Limitations . Each Guarantor agrees that any payment, performance or other act that tolls any statute of limitations applicable to the obligations, liabilities and indebtedness of the Company owing to the Beneficiaries under this Agreement, the Notes or any of the other Transaction Documents shall also toll the statute of limitations applicable to such Guarantor’s liability under this Multiparty Guaranty to the extent permitted by law.

11G. Rights of Contribution . The Company and each Guarantor hereby agree that, to the extent that a Guarantor shall have paid an amount hereunder to any Beneficiary that is greater than the net value of the benefits received, directly or indirectly, by such paying Guarantor as a



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result of the issuance and sale of the Notes, such paying Guarantor shall be entitled to contribution from the Company or any Guarantor that has not paid its proportionate share, based on benefits received as a result of the issuance and sale of the Notes, of the Guaranteed Obligations. Any amount payable as a contribution under this paragraph 11G shall be determined as of the date on which the related payment or distribution is made by the Guarantor seeking contribution, and each of the Company and the Guarantors acknowledges that the right to contribution hereunder shall constitute an asset of such Guarantor to which such contribution is owed. Notwithstanding the foregoing, the provisions of this paragraph 11G shall in no respect limit the obligations and liabilities of any Guarantor to the Beneficiaries hereunder or under any other Transaction Document, and each Guarantor shall remain liable for the full payment and performance guaranteed hereunder. Any indebtedness or other obligations of the Company or a Guarantor now or hereafter held by or owing to any Guarantor is hereby subordinated in time and right of payment to all indebtedness or other obligations of the Company and the Guarantors to any or all of the Beneficiaries under the Notes, this Agreement or any other Transaction Document.

11H. Subrogation . Notwithstanding any payment or payments made by any Guarantor hereunder, each Guarantor hereby irrevocably waives, solely with respect to such payment or payments, any and all rights of subrogation to the rights of the Beneficiaries against the Company and, except to the extent otherwise provided in paragraph 11G, any and all rights of contribution, reimbursement, assignment, indemnification or implied contract or any similar rights against the Company, any endorser or other guarantor of all or any part of the Guaranteed Obligations, in each case until such time (subject to paragraph 11K below) as the Guaranteed Obligations have been paid in full in cash. In furtherance of the foregoing, for so long as any Guaranteed Obligations shall remain outstanding, no Guarantor shall take any action or commence any proceeding against the Company or any other guarantor of the Guaranteed Obligations (or any of their respective successor, transferees or assigns, whether in connection with a bankruptcy or insolvency proceeding or otherwise), to recover any amounts in respect of payments made under this Multiparty Guaranty to the Beneficiaries. If, notwithstanding the foregoing, any amount shall be paid to any Guarantor on account of such subrogation or other rights at any time when all of the Guaranteed Obligations shall not (subject to paragraph 11K below) have been paid in full in cash, such amount shall be held by such Guarantor in trust for the Beneficiaries entitled thereto, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to such Beneficiaries (to be shared ratably based on the respective principal amounts outstanding of Notes held by such Beneficiaries) in the exact form received by such Guarantor (duly endorsed by such Guarantor to such Beneficiary if required), to be applied against the Guaranteed Obligations of each of such Beneficiaries, whether matured or unmatured, in such order as such Beneficiary may determine.

11I. Amendments, Etc., With Respect to Guaranteed Obligations . Each Guarantor shall remain obligated under this Multiparty Guaranty notwithstanding: (a) that any demand for payment of any of the Guaranteed Obligations made by any Beneficiary may be rescinded by such Beneficiary, and any of the Guaranteed Obligations continued; (b) that any of the Agreement (including this Multiparty Guaranty), the Notes or any other Transaction Document may be renewed, extended, amended, modified, supplemented or terminated, in whole or in part (and each Guarantor expressly waives any and all of its rights to consent to any of the foregoing actions described in this clause (b) and agrees that no such action, absent such Guarantor’s



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consent, will result in the exoneration of such Guarantor under applicable law); (c) that any guaranty, collateral or right of setoff at any time held by any Person for the payment of the Guaranteed Obligations may be obtained, sold, exchanged, waived, surrendered or released; (d) any loss or impairment of any rights of subrogation, reimbursement, repayment, contribution, indemnification or other similar rights of any Guarantor against the Company, any other Guarantor or any other Person with respect to all or any part of the Guaranteed Obligations; (e) any assignment or other transfer by any holder of the Notes of any part of the Guaranteed Obligations or the Notes; (f) any impossibility of performance, impracticability, frustration of purpose or illegality under the Agreement (including this Multiparty Guaranty), the Notes or any other Transaction Document or any force majeure or act of any Governmental Authority; or (g) any reorganization, merger, amalgamation or consolidation of the Company or any Guarantor with or into any other Person. Each Guarantor hereby waives any and all defenses, counterclaims or offsets which such Guarantor might or could have by reason of any of the foregoing and any other defense or objection which such Guarantor might or could have to the absolute, primary and continuing nature, or the validity, enforceability or amount of this Multiparty Guaranty (other than any defense based upon the final payment in full in cash and performance in full of the Guaranteed Obligations).

11J. Guaranty Absolute and Unconditional; Termination . Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Beneficiary upon this Multiparty Guaranty or acceptance of this Multiparty Guaranty. This Agreement, the Notes, the other Transaction Documents and the Guaranteed Obligations in respect of any of them, shall conclusively be deemed to have been created, contracted for or incurred in reliance upon this Multiparty Guaranty; and all dealings between any of the Company or the Guarantors, on the one hand, and any of the Beneficiaries, on the other, shall likewise conclusively be presumed to have been had or consummated in reliance upon this Multiparty Guaranty. Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any Credit Party or any other guarantor with respect to the Guaranteed Obligations. This Multiparty Guaranty shall be construed as a continuing, irrevocable, absolute and unconditional guaranty of payment, performance and compliance when due (and not of collection) and is a primary obligation of each Guarantor without regard to (a) the validity or enforceability of the provisions of this Agreement (other than the Multiparty Guaranty), the Notes, the other Transaction Documents, any of the Guaranteed Obligations or any other guaranty or right of setoff with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense, setoff or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any of the Credit Parties against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of any Credit Party or guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of any Credit Party or any other guarantor of the Guaranteed Obligations, in bankruptcy or in any other instance (other than payment or performance in full of the Guaranteed Obligations). Each of the Guarantors hereby agrees that it has complete and absolute responsibility for keeping itself informed of the business, operations, properties, assets, condition (financial or otherwise) of the Company, the other Guarantors, any and all endorsers and any and all guarantors of the Guaranteed Obligations and of all other circumstances bearing upon the risk of nonpayment of the obligations evidenced by the Notes or the Guaranteed Obligations, and each of the Guarantors further agrees that the Beneficiaries shall have no duty, obligation or responsibility to



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advise it of any such facts or other information, whether now known or hereafter ascertained, and each Guarantor hereby waives any such duty, obligation or responsibility on the part of the Beneficiaries to disclose such facts or other information to such Guarantor.

When pursuing its rights and remedies hereunder against any of the Guarantors, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against any other Credit Party or any other Person under a guaranty of the Guaranteed Obligations or any right of setoff with respect thereto, and any failure by such Beneficiary to pursue such other rights or remedies or to collect any payments from any such other Credit Party or Person or to realize upon any such guaranty or to exercise any such right of setoff, or any release of any such other Credit Party or Person or any such guaranty or right of setoff, shall not relieve the Guarantors of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of each of the Beneficiaries against the Guarantors. This Multiparty Guaranty shall remain in full force and effect until all Guaranteed Obligations shall have been satisfied by payment in cash or performance in full, upon the occurrence of which this Multiparty Guaranty shall, subject to paragraph 11K below, terminate.

11K. Reinstatement . This Multiparty Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time the payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or otherwise must be restored or returned by any Beneficiary in connection with the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Credit Party or in connection with the application of applicable fraudulent conveyance or fraudulent transfer law, all as though such payments had not been made.

11L. Payments . Each Guarantor hereby agrees that the Guaranteed Obligations will be paid to each of the Beneficiaries pursuant to this Agreement without setoff or counterclaim, except for any taxes, assessments or levies required to be withheld by applicable law, in immediately available funds at the location and in the currency or currencies specified by such Beneficiary pursuant to this Agreement. Any amount required to be deducted and withheld shall be treated for all purposes of this Agreement and the Notes as having been paid to the party in respect of which such withholding was made.

11M. Bound by Other Provisions . Holdings agrees that it is bound by each covenant set forth in this Agreement and that it will make each representation and warranty set forth in this Agreement at the applicable times specified therefor, in each case to the extent the applicable provision pertains to “Holdings.” Each other Guarantor agrees that it is bound by each covenant set forth in this Agreement and that it will make each representation and warranty set forth in this Agreement at the applicable times specified therefor, in each case to the extent the applicable provision pertains to a Subsidiary (other than the Company).

11N. Additional Guarantors . The initial Guarantor(s) shall be such Person(s), if any, as are identified as “Guarantors” on the signature pages hereof. From time to time subsequent to the date hereof, Persons that are Subsidiaries or other Affiliates of the Company may become parties hereto as required by paragraph 5G of this Agreement, as Guarantors (each an “ Additional Guarantor ”), by executing a Joinder Agreement. Upon delivery of any such Joinder Agreement to each of the Beneficiaries, notice of which is hereby waived by the



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Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as fully a party hereto in such capacity as if such Additional Guarantor were an original signatory hereof. Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Guarantor hereunder, nor by any election of the Beneficiaries not to cause any Subsidiary or other Affiliate of the Company to become an Additional Guarantor hereunder. This Multiparty Guaranty shall be fully effective as to any Guarantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Guarantor hereunder.

12. MISCELLANEOUS .

12A. Note Payments . The Company agrees that, so long as any Purchaser shall hold any Note, it will make payments of principal of, interest on, and any Yield-Maintenance Amount payable with respect to, such Note, which comply with the terms of this Agreement, by wire transfer of immediately available funds for credit on the date due to the account or accounts of such Purchaser specified in the applicable purchaser schedule for such Series of Notes or such other account or accounts in the United States as such Purchaser may from time to time designate in writing, notwithstanding any contrary provision herein or in any Note with respect to the place of payment. Each Purchaser agrees that, before disposing of any Note, it will make a notation thereon (or on a schedule attached thereto) of all principal payments previously made thereon and of the date to which interest thereon has been paid. The Company agrees to afford the benefits of this paragraph 12A to any Transferee which shall have made the same agreement as the Purchasers have made in this paragraph 12A.

12B. Expenses . Each of Holdings and the Company agrees, whether or not the transactions contemplated hereby shall be consummated, to pay, and save Prudential, each Purchaser and any Transferee harmless against liability for the payment of, all out-of-pocket expenses arising in connection with such transactions, including (i) all document production and duplication charges and the fees and expenses of any special counsel engaged by the Purchasers or any Transferee in connection with this Agreement and the other Transaction Documents, the transactions contemplated hereby and thereby and any subsequent proposed modification of, or proposed consent under, this Agreement or any other Transaction Document, whether or not such proposed modification shall be effected or proposed consent granted, and (ii) the reasonable costs and expenses, including attorneys’ fees, incurred by any Purchaser or any Transferee in enforcing any rights under this Agreement, the Notes or any other Transaction Document or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby or by reason of any Purchaser’s or any Transferee’s having acquired any Note, including without limitation costs and expenses incurred in any bankruptcy case of Holdings, the Company or any other Subsidiary. The obligations of Holdings and the Company under this paragraph 12B shall survive the transfer of any Note or portion thereof or interest therein by any Purchaser or any Transferee and the payment of any Note.

12C. Consent to Amendments . This Agreement may be amended, and Holdings or the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if Holdings and the Company shall obtain the written consent to such amendment, action or omission to act, of the Required Holders except that, (i) with the written



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consent of the holders of all Notes of a particular Series, and if an Event of Default shall have occurred and be continuing, of the holders of all Notes of all Series, at the time outstanding (and not without such written consents), the Notes of such Series may be amended or the provisions thereof waived to change the maturity thereof, to change or affect the principal thereof, or to change or affect the rate or time of payment of interest on or any Yield-Maintenance Amount payable with respect to the Notes of such Series, (ii) without the written consent of the holder or holders of all Notes at the time outstanding, no amendment to or waiver of the provisions of this Agreement shall change or affect the provisions of paragraph 7A or this paragraph 12C insofar as such provisions relate to proportions of the principal amount of the Notes of any Series, or the rights of any individual holder of Notes, required with respect to any declaration of Notes to be due and payable or with respect to any consent, amendment, waiver or declaration, (iii) with the written consent of Prudential (and not without the written consent of Prudential) the provisions of paragraph 2B may be amended or waived (except insofar as any such amendment or waiver would affect any rights or obligations with respect to the purchase and sale of Notes which shall have become Accepted Notes prior to such amendment or waiver), and (iv) with the written consent of all of the Purchasers which shall have become obligated to purchase Notes of any Series (and not without the written consent of all such Purchasers), any of the provisions of paragraphs 2B and 3 may be amended or waived insofar as such amendment or waiver would affect only rights or obligations with respect to the purchase and sale of the Notes of such Series or the terms and provisions of such Notes. Each holder of any Note at the time or thereafter outstanding shall be bound by any consent authorized by this paragraph 12C, whether or not such Note shall have been marked to indicate such consent, but any Notes issued thereafter may bear a notation referring to any such consent. No course of dealing between Holdings and the Company, on the one hand, and Prudential or the holder of any Note, on the other hand, nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of Prudential or any holder of such Note. As used herein and in the Notes, the term “ this Agreement ” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.

12D. Form, Registration, Transfer and Exchange of Notes; Transfer Restriction . The Notes are issuable as registered notes without coupons in denominations of at least $2,500,000, except as may be necessary to reflect any principal amount not evenly divisible by $2,500,000. The Company shall keep at its principal office a register in which the Company shall provide for the registration of Notes and of transfers of Notes. Upon surrender for registration of transfer of any Note at the principal office of the Company, the Company shall, at its expense, execute and deliver one or more new Notes of the same Series and of the same tenor and of the same aggregate principal amount, registered in the name of such transferee or transferees. At the option of the holder of any Note, such Note may be exchanged for other Notes of the same Series and of the same tenor and of any authorized denominations, of the same aggregate principal amount, upon surrender of the Note to be exchanged at the principal office of the Company. Whenever any Notes are so surrendered for exchange, the Company shall, at its expense, execute and deliver the Notes which the holder making the exchange is entitled to receive. Each prepayment of principal payable on each prepayment date upon each new Note issued upon any such transfer or exchange shall be in the same proportion to the unpaid principal amount of such new Note as the prepayment of principal payable on such date on the Note surrendered for registration of transfer or exchange bore to the unpaid principal amount of such Note. No reference need be made in any such new Note to any prepayment or prepayments of



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principal previously due and paid upon the Note surrendered for registration of transfer or exchange. Every Note surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer duly executed, by the holder of such Note or such holder’s attorney duly authorized in writing. Any Note or Notes issued in exchange for any Note or upon transfer thereof shall carry the rights to unpaid interest and interest to accrue which were carried by the Note so exchanged or transferred, so that neither gain nor loss of interest shall result from any such transfer or exchange. Upon receipt of written notice from the holder of any Note of the loss, theft, destruction or mutilation of such Note and, in the case of any such loss, theft or destruction, upon receipt of such holder’s unsecured indemnity agreement, or in the case of any such mutilation upon surrender and cancellation of such Note, the Company will make and deliver a new Note, of the same tenor, in lieu of the lost, stolen, destroyed or mutilated Note. Notwithstanding anything to the contrary herein, each Purchaser agrees, and each subsequent holder of a Note or purchaser of a participation in a Note by its acceptance of an interest in a Note agrees, that no Note shall be transferred to any Person which is not an Institutional Investor without the prior consent of the Company, such consent not to be unreasonably withheld. No transfer or exchange of any Note or Notes shall be effective unless made pursuant to this paragraph 12D. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof.

12E. Persons Deemed Owners; Participations . Prior to due presentment for registration of transfer, the Company may treat the Person in whose name any Note is registered as the owner and holder of such Note for the purpose of receiving payment of principal of and premium, if any, and interest on such Note and for all other purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary. Subject to the preceding sentence, the holder of any Note may from time to time grant participations in all or any part of such Note to any Institutional Investor on such terms and conditions as may be determined by such holder in its sole and absolute discretion.

12F. Survival of Representations and Warranties; Entire Agreement; No Novation . All representations and warranties contained herein, in any other Transaction Document or made in writing by or on behalf of Holdings, the Company or any other Credit Party in connection herewith or therewith shall survive the execution and delivery of this Agreement, the Notes and the other Transaction Documents, the transfer of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any Transferee, regardless of any investigation made at any time by or on behalf of any Purchaser or Transferee. Subject to the preceding sentence, this Agreement, the Notes, the other Transaction Documents and, until the effectiveness of the amendment and restatement thereof by this Agreement, the Prior Agreement, embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof. This Agreement amends, restates and replaces the Prior Agreement and is not intended to constitute a novation thereof (it being acknowledged and agreed that the Company’s covenants in the Prior Agreement shall remain operative for periods prior to the effectiveness of this Agreement, and any unwaived breach of such covenants or any unwaived breach of representations and warranties under the Prior Agreement made prior to the effectiveness of this Agreement, in each case if such unwaived breach constituted a Default or Event of Default under the Prior Agreement immediately prior to



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the effectiveness of this Agreement, shall constitute a Default or Event of Default, as applicable, under this Agreement.

12G. Successors and Assigns . All covenants and other agreements in this Agreement contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including, without limitation, any Transferee) whether so expressed or not.

12H. Independence of Covenants . All covenants hereunder shall be given independent effect so that if a particular action or condition is prohibited by any one of such covenants, the fact that it would be permitted by an exception to, or otherwise be in compliance within the limitations of, another covenant shall not (i) avoid the occurrence of a Default or Event of Default if such action is taken or such condition exists or (ii) in any way prejudice an attempt by the holder of any Note to prohibit, through equitable action or otherwise the taking of any action by Holdings or the Company or any other Subsidiary which would result in a Default or Event of Default. For the avoidance of doubt, if a particular action or condition is expressly permitted by an exception to a covenant and is not expressly prohibited by another provision in the same covenant, the taking of such action or the existence of such condition shall not result in a Default or Event of Default under such covenant.

12I. Notices . All written communications provided for hereunder (other than communications provided for under paragraph 2B) shall be sent by first class mail or nationwide overnight delivery service (with charges prepaid) and (i) if to Prudential, at the address set forth on the first page of this letter or at such other address as Prudential shall have specified to the Company in writing, (ii) if to any Purchaser, addressed as specified for such communications in the applicable purchaser schedule for the applicable Series of Notes or at such other address as any such Purchaser shall have specified to the Company in writing, (iii) if to any other holder of any Note, addressed to it at such address as it shall have specified in writing to the Company or, if any such holder shall not have so specified an address, then addressed to such holder in care of the last holder of such Note which shall have so specified an address to the Company and (iv) if to Holdings, the Company or any Guarantor, addressed to such Person care of the Company at 822 Bishop Street, Honolulu, Hawaii 96801-3440, Attention: Chief Financial Officer (with a copy to Chief Legal Officer) or at such other address as the Company shall have specified to each holder of a Note in writing. Any communication pursuant to paragraph 2B shall be made by the method specified for such communication in paragraph 2B, and shall be effective to create any rights or obligations under this Agreement only if, in the case of a telephone communication, an Authorized Officer of the party conveying the information and of the party receiving the information are parties to the telephone call, and in the case of a telefacsimile communication, the communication is signed by an Authorized Officer of the party conveying the information, addressed to the attention of an Authorized Officer of the party receiving the information, and in fact received at the telefacsimile terminal the number of which is listed for the party receiving the communication in the Information Schedule or at such other telefacsimile terminal as the party receiving the information shall have specified in writing to the party sending such information.

12J. Descriptive Headings . The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.



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12K. Satisfaction Requirement . If any agreement, certificate or other writing, or any action taken or to be taken, is, by the terms of this Agreement, required to be satisfactory to Prudential, any Purchaser or the Required Holders, the determination of such satisfaction shall be made by Prudential, such Purchaser or the Required Holders, as the case may be, in the sole and exclusive judgment (exercised in good faith) of the Person(s) making such determination.

12L. Governing Law . This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding choice of law principles of the law of such state that would permit the application of the laws of a jurisdiction other than such state.

12M. Payments Due on Non-Business Days . (a) For purpose of all Notes other than Shelf Notes, anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or interest, or Yield-Maintenance Amount payable with respect to, any such Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day, without interest for the period of extension.

(b) For purpose of any Series of Shelf Notes, anything in this Agreement or the Notes to the contrary notwithstanding, (x) subject to clause (y), any payment of interest on any Shelf Note that is due on a date that is not a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day, and (y) any payment of principal of or Yield-Maintenance Amount on any Shelf Note (including principal due on the final maturity date of such Shelf Note) that is due on a date that is not a Business Day shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.

12N. Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

12O. Severalty of Obligations . The sales of Notes to the Purchasers are to be several sales, and the obligations of Prudential and the Purchasers under this Agreement are several obligations. No failure by Prudential or any Purchaser to perform its obligations under this Agreement shall relieve any other Purchaser or Holdings or the Company of any of its obligations hereunder, and neither Prudential nor any Purchaser shall be responsible for the obligations of, or any action taken or omitted by, any other such Person hereunder.

12P. Jurisdiction and Process; Waiver of Jury Trial .

(i) Each of the Company, Holdings and each other Guarantor irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement, the Notes or the other Transaction Documents. To the fullest extent permitted by applicable law, each of the Company,



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Holdings and each other Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(ii) Each of the Company, Holdings and each other Guarantor consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in paragraph 12P(i) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in paragraph 12I or at such other address of which such holder shall then have been notified pursuant to paragraph 12I. Each of the Company, Holdings and each other Guarantor agrees that such service upon receipt (a) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (b) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(iii) Nothing in this paragraph 12P shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company, Holdings or any other Guarantor in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(iv) The parties hereto hereby waive trial by jury in any action brought on or with respect to this Agreement, the Notes or any other document executed in connection herewith or therewith.

12Q. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

12R. Binding Agreement . When this Agreement is executed and delivered by Holdings and the other Guarantors, the Company, Prudential, and the holders of the Series D Notes, the Series AX Notes, the Series BX Notes, the Series CX Notes, the Series E Notes and the Series F Notes, it shall become a binding agreement among Holdings and the other Guarantors, the Company, Prudential, and the holders of the Series D Notes, the Series AX Notes, the Series BX Notes, the Series CX Notes, the Series E Notes and the Series F Notes. This Agreement shall also inure to the benefit of each Purchaser which shall have executed and delivered a Confirmation of Acceptance, and each such Purchaser shall be bound by this Agreement to the extent provided in such Confirmation of Acceptance.

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THE COMPANY:	ALEXANDER & BALDWIN, LLC, a Hawaii limited liability company By: /s/ Paul Ito Its: Senior Vice President, Chief Financial Officer and Treasurer
	By: /s/ Nelson Chun Its: Senior Vice President and Chief Legal Officer
HOLDINGS:	ALEXANDER & BALDWIN, INC., a Hawaii corporation By: /s/ Paul Ito Its: Senior Vice President, Chief Financial Officer and Treasurer
	By: /s/ Nelson Chun Its: Senior Vice President and Chief Legal Officer
The foregoing Agreement is hereby accepted as of the date first above written. PRUDENTIAL INVESTMENT MANAGEMENT, INC. By: /s/ Cornelia Cheng Vice President
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA , as a holder of the Series AX Notes, the sole holder of the Series BX Notes, the sole holder of the Series CX Notes, a holder of the Series D Notes and a holder of the Series E Notes By: /s/ Cornelia Cheng Vice President



PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY , as a holder of the Series AX Notes, a holder of the Series D Notes and a holder of the Series E Notes By: Prudential Investment Management, Inc., as investment manager By: /s/ Cornelia Cheng Vice President
THE GIBRALTAR LIFE INSURANCE CO., LTD. , as a holder of the Series AX Notes, a holder of the Series D Notes, a holder of the Series E Notes and a holder of the Series F Notes By: Prudential Investment Management (Japan), Inc., as Investment Manager By: Prudential Investment Management, Inc., as Sub-Advisor By: /s/ Cornelia Cheng Vice President
THE PRUDENTIAL LIFE INSURANCE COMPANY, LTD. , as a holder of the Series AX Notes and a holder of the Series D Notes By: Prudential Investment Management (Japan), Inc., as Investment Manager By: Prudential Investment Management, Inc., As Sub-Advisor By: /s/ Cornelia Cheng Vice President
PRUCO LIFE INSURANCE COMPANY , as a holder of the Series D Notes By: /s/ Cornelia Cheng Assistant Vice President



FARMERS INSURANCE EXCHANGE , as a holder of the Series E Notes By: Prudential Private Placement Investors, L.P. (as Investment Advisor) as Investment Manager By: Prudential Private Placement Investors, Inc. (its General Partner) as Sub-Advisor By: /s/ Cornelia Cheng Vice President
MID CENTURY INSURANCE COMPANY , as a holder of the Series E Notes By: Prudential Private Placement Investors, L.P. (as Investment Advisor) as Investment Manager By: Prudential Private Placement Investors, Inc. (its General Partner) as Sub-Advisor By: /s/ Cornelia Cheng Vice President
PRUDENTIAL LEGACY INSURANCE COMPANY OF NEW JERSEY , as a holder of the Series E Notes By: Prudential Investment Management, Inc., as investment manager By: /s/ Cornelia Cheng Vice President
FARMERS NEW WORLD LIFE INSURANCE COMPANY , as a holder of the Series E Notes By: Prudential Private Placement Investors, L.P. (as Investment Advisor) as Investment Manager By: Prudential Private Placement Investors, Inc. (its General Partner) as Sub-Advisor By: /s/ Cornelia Cheng Vice President



PRUDENTIAL ARIZONA REINSURANCE UNIVERSAL COMPANY , as a holder of the Series F Notes By: Prudential Investment Management, Inc., as investment manager By: /s/ Cornelia Cheng Vice President
UNITED OF OMAHA LIFE INSURANCE COMPANY , as a holder of the Series F Notes By: Prudential Private Placement Investors, L.P. (as Investment Advisor) as Investment Manager By: Prudential Private Placement Investors, Inc. (its General Partner) as Sub-Advisor By: /s/ Cornelia Cheng Vice President
COMPANION LIFE INSURANCE COMPANY , as a holder of the Series F Notes By: Prudential Private Placement Investors, L.P. (as Investment Advisor) as Investment Manager By: Prudential Private Placement Investors, Inc. (its General Partner) as Sub-Advisor By: /s/ Cornelia Cheng Vice President
MTL INSURANCE COMPANY , as a holder of the Series F Notes By: Prudential Private Placement Investors, L.P. (as Investment Advisor) as Investment Manager By: Prudential Private Placement Investors, Inc. (its General Partner) as Sub-Advisor By: /s/ Cornelia Cheng Vice President



PHYSICIANS MUTUAL INSURANCE COMPANY , as a holder of the Series F Notes By: Prudential Private Placement Investors, L.P. (as Investment Advisor) as Investment Manager By: Prudential Private Placement Investors, Inc. (its General Partner) as Sub-Advisor By: /s/ Cornelia Cheng Vice President

GUARANTORS:

ALEXANDER & BALDWIN, INC.,
a Hawaii corporation

By: /s/ Paul Ito
Its: Senior Vice President, Chief Financial Officer and Treasurer

By: /s/ Nelson Chun
Its: Senior Vice President and Chief Legal Officer

GRACE PACIFIC LLC , a Hawaii limited liability company

By: /s/ Paul Ito
Its: Treasurer

A&B II, LLC , a Hawaii limited liability company

By: /s/ Paul Ito
Its: Treasurer

INDEPENDENT CONTRACTOR AGREEMENT

Effective as of January 1, 2016, Grace Pacific LLC (“GP”) and David C. Hulihee (“Contractor”) hereby agree:

1. Background . GP desires to retain Contractor as an independent contractor to perform services for GP and Contractor is willing to perform such services, on terms set forth more fully below.

2. Engagement . GP desires to hire Contractor to provide consulting services (“Services”) in connection with the operation of GP and its affiliated companies, including, but not limited to, assisting in the transition to a new President of GP, enhancing revenues and operating performance, supporting GP’s government and community affairs, and providing advice and assistance at the specific request of GP. Contractor shall spend not less than an average of 10 hours a week providing the Services.

3. Commencement of Services; Term . Contractor shall commence the provision of the Services on January 1, 2016 and shall continue performing the Services until December 31, 2016, unless this Agreement is sooner terminated or extended as provided herein.

4. Compensation . As Contractor’s consideration for providing the Services, GP shall pay Contractor at the annual rate of $200,000.00, plus general excise tax (which may be charged at 4.712% so that Contractor’s fee shall be net of such tax), payable on a twice monthly basis. All costs and expenses incurred by Contractor in performing the Services shall be borne by Contractor, except that GP will reimburse pre-approved expenses within fifteen (15) days of a receipt by GP of an invoice from Consultant accompanied by reasonable supporting documentation, which shall be submitted at the same time as invoices for fees for Services.

5. No Assignment . Contractor shall at all times remain primarily responsible for the performance of all Services and may not transfer or assign such responsibility without the prior written consent of GP.

6. Confidentiality . Except as contemplated by this Agreement or required by law, Consultant shall not use or disclose at any time any confidential or nonpublic information of GP obtained by Consultant in connection with this Agreement; provided, however , such restriction shall not apply to information that is generally known to the public or becomes known to the public, or is approved in writing by GP for use or disclosure.

7. Termination . This Agreement can be terminated prior to the expiration of its term on written notice for cause, such as Contractor’s failure to perform the Services in a timely and responsible manner. In the event of the Contractor’s death or disability preventing performance of the Services, GP’s obligations under this Agreement will terminate as of the end of the day on which Contractor’s death or disability occurs.

-1-

8. Compliance with Law . Contractor shall comply with all requirements of federal, state and county laws with respect to the performance of the Services. Contractor shall be responsible for paying all taxes relating to Contractor’s compensation under this Agreement. Contractor shall indemnify and hold harmless GP from and against any and all claims, obligations, liabilities or demands with respect to and arising out of any breach by Contractor of this Agreement.

9. Independent Contractor . Contractor is an independent contractor, and is not an employee, partner or agent of GP for any purpose including but not limited to, the application of the Federal Insurance Contribution Act, the Social Security Act, the Federal Unemployment Tax Act, the provisions of the Internal Revenue Code, Hawaii’s Income tax laws relating to income tax withholding at the source of income, the Hawaii Workers Compensation Code, the Hawaii Prepaid Healthcare Act, and the Hawaii Temporary Disability Insurance Act.

10. IRS Reporting . GP shall provide Contractor with an IRS Form 1099, which shall report the total compensation paid to Contractor within the appropriate taxable year consistent with the requirements of the Internal Revenue Code of 1986, as amended.

11. Other Activities . This is not an exclusive agreement for services, as Contractor may perform services for others.

12. Notice . Any and all notices, demands or other communications required or desired to be given hereunder by either party shall be in writing and shall be validly given or made to the other party or its authorized representative at the addresses set forth below. Any party may change its address for the purpose of receiving notices as herein provided by a written notice given to the other party.

GP Grace Pacific, LLC

P.O. Box 78

Honolulu, Hawaii 96810

Attention : President

Contractor David C. Hulihee

Honolulu, HI 96816

13. Contract Terms to be Exclusive . This written Agreement contains the sole and entire agreement between the parties with respect to its subject matter, and supersedes any and all other agreements between them with respect to its subject matter.

14. Amendment, Waiver or Modification . No amendment, waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. The term of this Agreement may be extended only upon the written agreement of both parties.

-2-

15. Arbitration . Any dispute or claim arising out of or relating to this Agreement, or breach thereof, between GP and Contractor, shall be submitted to a confidential and binding arbitration in Honolulu, Hawaii before a single neutral arbitrator selected from the Panel of Neutrals of Dispute Prevention & Resolution, Inc. (“DPRI”), in accordance with the Rules, Procedures, and Protocols for Arbitration of Disputes of DPRI, then in effect. The parties further agree that the award of the arbitrator is binding upon the parties and that judgment upon the award rendered may be entered in any court of competent jurisdiction. The arbitrator shall not have the authority to award punitive damages.

16. Governing Law . This Agreement and performance hereunder shall be construed in accordance with the laws of the State of Hawaii.

17. Binding Effect of Agreement . This Agreement shall be binding on and inure to the benefit of the respective parties and their respective heirs, legal representatives, successors, and assigns.

18 . No Third Party Rights . Nothing expressed or referred to in this Agreement will be construed to give any person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.

19. Counterparts; Telecopy/Electronic Delivery . This Agreement may be executed in counterparts and delivered by telecopy or electronically.

-3-

IN WITNESS WHEREOF, GP and Contractor have executed this Agreement effective as of the date first above written.

Grace Pacific, LLC

By /s/ Gordon C.K. Yee

Its President

/s/ Davic C. Hulihee

David C. Hulihee

-4-

EXHIBIT A

DESCRIPTION OF SERVICES


1.	Any and All Operating Matters of:


a.	Grace Pacific LLC


b.	GP Roadway Solutions, Inc.


c.	GLP Asphalt LLC


d.	GP/RM Prestress LLC


e.	Maui Paving LLC

-5-

ALEXANDER & BALDWIN, INC.

Subsidiaries as of February 1, 2016



Name of Subsidiary			State or Other Jurisdiction Under Which Organized

SUBSIDIARIES AND RELATED ENTITIES *
A&B II, LLC			Hawaii
	A&B EKS Holdings LLC		Hawaii
	A&B EKS LH LLC		Hawaii
	Entities in which A&B II, LLC is involved as a member and/or manager:
		Pohaku Pa’a, LLC**	Hawaii
	Grace Pacific LLC		Hawaii
		G P Maintenance Solutions, Inc	Hawaii
		G P Roadway Solutions, Inc.	Hawaii
		Grace Pacific Precast, Inc.	Hawaii
		Niu Construction, Inc.	Hawaii
		Oahu Paving Company, Inc.	Hawaii
	Entities in which Grace Pacific LLC is involved as a member and/or manager:
		GLP Asphalt LLC**	Hawaii
		GP/RM Prestress, LLC**	Hawaii
		Maui Paving, LLC**	Hawaii
Alexander & Baldwin, LLC			Hawaii
	Entities in which Alexander & Baldwin, LLC is involved as a member and/or manager:
		A&B Gateway LLC	Hawaii
		A&B KRS II LLC	Hawaii
		A&B Little Cottonwood LLC	Delaware
		A&B Lot 100 LLC	Hawaii
		A&B Mililani Investment LLC	Hawaii
		A&B Napili LLC	Hawaii
		AB Hawaii Royal MacArthur LLC	Hawaii
		ABI Concorde LLC	Hawaii
		ABI Mililani Gateway South LLC	Hawaii
		ABL Ag. LLC	Hawaii
		ABL Exchange LLC	Hawaii
		ABL Hahani LLC	Hawaii
		ABL Hamakua LLC	Hawaii
		ABL Kakaako Commerce 1 LLC	Hawaii
		ABL Kakaako Commerce 2 LLC	Hawaii
		ABL Kelo LLC	Hawaii
		ABL 233 Lahainaluna Road LLC	Hawaii

-1-




		McBryde Sugar Company, LLC		Hawaii
			McBryde Resources, Inc.	Hawaii
			Entities in which McBryde Sugar Company, LLC is involved as a member and/or manager:
			McBryde Concorde LLC	Hawaii
		WTEI, LLC		Hawaii
A & B Properties, Inc.				Hawaii
	Entities in which A & B Properties, Inc. is involved as a member and/or manager

		A&B Airport Hotel LLC		Hawaii
		A&B Alakea LLC		Hawaii
		A&B Deer Valley LLC		Delaware
		A&B Guam LLC		Hawaii
		A&B Hokua LLC		Hawaii
		A&B Ka Milo LLC		Hawaii
		A&B Kakaako LLC		Hawaii
		A&B Kane LLC		Hawaii
		A&B Kihei LLC		Hawaii
			Kamalani Ventures LLC	Hawaii
		A&B Kukui’ula Fairway Homes LLC		Hawaii
			ABP-EWP Development LLC**	Hawaii
		A&B Lanihau LLC		Hawaii
		A&B Manoa LLC		Hawaii
		A&B MF-11 LLC		Hawaii
			Keala O Wailea LLC**	Hawaii
		A&B MLR LLC		Hawaii
			MLR Golf Partners LLC**	Hawaii
		A&B Ninigret LLC		Hawaii
		A&B P&L LLC		Hawaii
		A&B Riverside LLC		Hawaii
		A&B Santa Barbara LLC		Hawaii
			Santa Barbara Land and Ranching	Delaware
			Company, LLC**
		A&B Visalia 1 LLC		Hawaii
		A&B Visalia 3 LLC		Delaware
		A&B Waianae LLC		Delaware
		A&B Waiawa LLC		Hawaii
		A&B Waikiki LLC		Hawaii
		A&B Wailea LLC		Hawaii
			Wailea MF-7 LLC	Hawaii
			Wailea MF-8 LLC	Hawaii
			Kai Malu Wailea LLC**	Hawaii
		A&B Waipio 100 LLC		Hawaii
		A&B Waipio Shopping Center LLC		Hawaii

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A&B Westridge LLC**		California
AB Properties Concorde LLC		Hawaii
ABP Deer Valley LLC		Delaware
ABP Kailua Road LLC		Hawaii
ABP Kakaako Commerce 1 LLC		Hawaii
ABP Kakaako Commerce 2 LLC		Hawaii
ABP Komohana LLC		Hawaii
ABP Mililani Gateway LLC		Hawaii
ABP Mililani Gateway South LLC		Hawaii
ABP Napili LLC		Hawaii
ABP Pearl Highlands LLC		Hawaii
ABP Residuary LLC		Hawaii
ABP Savannah-A LLC		Hawaii
ABP Savannah-B LLC		Hawaii
ABP Ulupuni LLC		Hawaii
ABP Windward LLC		Hawaii
ABX Napili LLC		Hawaii
Aikahi Park Holdings LLC		Hawaii
Avenue Penn LLC		Hawaii
Blacksand Hawaii Investment LLC		Hawaii
Brydeswood Water Company		Hawaii
Centre Pointe Marketplace, LLC**		California
Crossroads Plaza Development		California
Partners, LLC**
EOK 4607 LLC		Hawaii
Estates of Kahala LLC		Hawaii
4607 Kahala LLC**		Hawaii
Hokua Development Group LLC**		Hawaii
Kahului Town Center LLC		Hawaii
Kamuela Associates LLC**		Hawaii
KDC, LLC		Hawaii
	BKDC Kauai Estates LLC**	Hawaii
	Kukui’ula Development Company	Hawaii
	(Hawaii), LLC**
	KDCH Workforce Housing LLC**	Hawaii
	Koloa Housing I LLC**	Hawaii
	Kukui’ula Makai LLC**	Hawaii
	Kukui’ula South Shore Community	Hawaii
	Services, LLC**
	Makai Cottage Model, LLC**	Hawaii
	Kukui’ula Housing Development LLC**	Hawaii
	Kukui’ula Model Home LLC**	Hawaii
	Lodge Hale Development, LLC**	Hawaii
	Kukui’ula Housing Development II,	Hawaii
	LLC**

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	Kainani Villas, LLC**	Hawaii
	Kukui’ula Residential Development,	Hawaii
	LLC**
	Kukui’ula Village LLC**	Delaware
Keawe Development LLC		Hawaii
Kewalo Development LLC**		Hawaii



		KKV Management LLC	Hawaii
		Kona Development Group LLC**	Hawaii
		Palmdale Trade & Commerce Center, LLC**	California
		Panama and Gosford Retail, LLC**	California
		Port Allen Residential LLC	Hawaii
		Rye Canyon Office Partners, LLC**	California
		Square One Lahaina LLC	Hawaii
		The Collection LLC	Hawaii
		Wailea Estates LLC	Hawaii
		Wailea Water Services LLC	Hawaii
		Waimanu Development LLC	Hawaii
		WDCI Deer Valley LLC	Delaware
		WDCI Heritage LLC	Hawaii
		WDCI Komohana LLC	Hawaii
Agri-Quest Development Company, Inc.			Hawaii
East Maui Irrigation Company, Limited			Hawaii
	Entities in which East Maui Irrigation Company, Limited is involved as a member and/or manager:


		EMI Kakaako Commerce LLC	Hawaii
		EMI Residuary LLC	Hawaii
Hawaiian DuraGreen, Inc.			Hawaii
Kahului Trucking & Storage, Inc.			Hawaii
Kauai Commercial Company, Incorporated			Hawaii
Kukui’ula Development Company, Inc.			Hawaii
	Entities in which Kukui’ula Development Company, Inc. is involved as a member and/or manager:

		South Shore Resources LLC	Hawaii
Ohanui Corporation			Hawaii
Division : Hawaiian Commercial & Sugar Company			Hawaii



OTHER RELATED ENTITIES
Alexander & Baldwin Foundation			Hawaii
Alexander & Baldwin Sugar Museum			Hawaii
Hawaiian Sugar & Transportation Cooperative			Hawaii
(a Hawaii agricultural cooperative association)

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INACTIVE SUBSIDIARIES *					Hawaii
A & B Inc.






* Wholly-owned unless otherwise indicated.
** Partial ownership.
*** Currently managed by third party.

-5-

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-182419 on Form S-8 of our reports relating to the consolidated financial statements of Alexander & Baldwin, Inc. and subsidiaries and the effectiveness of Alexander & Baldwin, Inc. and subsidiaries’ internal control over financial reporting dated February 29, 2016 , appearing in the Annual Report on Form 10-K of Alexander & Baldwin, Inc. and subsidiaries for the year ended December 31, 2015 .

/s/ Deloitte & Touche LLP

Honolulu, Hawaii

February 29, 2016

Consent of Independent Accountants

The Board of Directors Alexander & Baldwin, Inc.:

We consent to the incorporation by reference in Registration Statement No. 333-182419 on Form S-8 of our Independent Auditors’ Report, dated February 26, 2016, with respect to the balance sheet of Kewalo Development LLC as of December 31, 2015, and the related statements of income and changes in members’ equity, and cash flows for the year ended December 31, 2015, which report appears in the Annual Report on Form 10-K of Alexander & Baldwin, Inc. for the year ended December 31, 2015.

/s/ KKDLY LLC

Honolulu, Hawaii

February 29, 2016

EXHIBIT 31.1

CERTIFICATION

I, Christopher J. Benjamin, certify that:

1. I have reviewed this Annual Report on Form 10-K of Alexander & Baldwin, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By /s/ Christopher J. Benjamin

Christopher J. Benjamin,

President and Chief Executive Officer

Date: February 29, 2016

EXHIBIT 31.2

CERTIFICATION

I, Paul K. Ito, certify that:

1. I have reviewed this Annual Report on Form 10-K of Alexander & Baldwin, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

By /s/ Paul K. Ito

Paul K. Ito, Senior Vice President,

Chief Financial Officer and Treasurer

Date: February 29, 2016

EXHIBIT 32

Certification of Chief Executive Officer and

Chief Financial Officer Pursuant to

18 U.S.C. Section 1350, As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10‑K of Alexander & Baldwin, Inc. (the "Company") for the fiscal year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Christopher J. Benjamin , as President and Chief Executive Officer of the Company, and Paul K. Ito, as Senior Vice President, Chief Financial Officer and Treasurer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Christopher J. Benjamin
Name:	Christopher J. Benjamin
Title:	President and Chief Executive Officer
Date:	February 29, 2016



/s/ Paul K. Ito
Name:	Paul K. Ito
Title:	Senior Vice President, Chief Financial Officer and Treasurer
Date:	February 29, 2016

Exhibit 95

MINE SAFETY DISCLOSURE

The operation of Grace Pacific LLC’s Makakilo Quarry (the “Quarry”) is subject to regulation by the federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects the Quarry on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Whenever MSHA issues a citation or order, it also generally proposes a civil penalty, or fine, related to the alleged violation. Citations or orders can be contested and appealed, and as part of that process, are often reduced in severity and amount, and are sometimes dismissed.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Company is required to present information regarding certain mining safety and health citations which MSHA has issued with respect to its mining operation in its periodic reports filed with the Securities and Exchange Commission (the “SEC”). We have provided information below in response to the rules and regulations of the SEC issued under Section 1503(a) of the Dodd-Frank Act.

The Dodd-Frank Act and the subsequent implementing regulation issued by the SEC require disclosure of the following categories of violations, orders and citations: (1) Section 104 S&S Citations, which are citations issued for violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard; (2) Section 104(b) Orders, which are orders issued upon a follow up inspection where the inspector finds the violation previously cited has not been totally abated in the prescribed time period; (3) Section 104(d) Citations and Orders, which are issued upon violations of mandatory health or safety standards caused by an unwarrantable failure of the operator to comply with the standards; (4) Section 110(b)(2) Violations, which result from the reckless and repeated failure to eliminate a known violation; (5) Section 107(a) Orders, which are given when MSHA determines that an imminent danger exists and results in an order of immediate withdrawal from the area of the mine affected by the condition; and (6) written notices from MSHA of a pattern of violations—or the potential to have such pattern—of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of mine health or safety hazards under Section 104(e). In addition, the Dodd-Frank Act requires the disclosure of the total dollar value of proposed assessments from MSHA under the Mine Act and the total number of mining related fatalities. This information for the Quarry for the twelve months ended December 31, 2015 is as follows:



Total Number of S&S Citations	1*
Mine Act § 104(b) Orders	0
Mine Act § 104(d) Citations and Orders	0
Mine Act § 110(b)(2) Violations	0
Mine Act § 107(a) Orders	0
Total Dollar Value of Proposed MSHA Assessments	$4,162
Total Number of Mining Related Fatalities	0
Received Written Notice of Pattern of Violation under Mine Act §104(e) (yes/no)	No
Received Written Notice of Potential to Have Pattern under Mine Act §104(e) (yes/no)	No

* Note that Exhibit 95 to the Company’s Form 10-Q for the quarter ended March 31, 2015 inadvertently reported 4 S&S citations, rather than 1 S&S citation.

As of December 31, 2015, there were no pending legal actions before the Federal Mine Safety and Health Review Commission involving the Quarry. No legal actions were instituted during the twelve months ended December 31, 2015 and no legal actions were resolved during the twelve months ended December 31, 2015.

Kewalo Development LLC

Financial Statements

(With Independent Auditors’ Report Thereon)

December 31, 2015 and 2014

Independent Auditors’ Report

The Members

Kewalo Development LLC:

We have audited the accompanying financial statements of Kewalo Development LLC (the Company), which comprise the balance sheet as of December 31, 2015, and the related statements of income and changes in members’ equity, and cash flows for the year then ended, and the related notes to financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kewalo Development LLC as of December 31, 2015, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Prior Period Financial Statements

The comparative financial statements as of and for the year ended December 31, 2014, have not been audited, reviewed, or compiled and accordingly, we express no opinion on it.

/s/ KKDLY LLC

Honolulu, Hawaii

February 26, 2016

KEWALO DEVELOPMENT LLC

Balance Sheets

December 31, 2015 and 2014



					2014
		Assets	2015		(Unaudited)

Cash			$	2,573,165	$	485,513
Real Estate Development Costs					192,649,651
Deferred Financing Costs					8,901
		Total Assets	$	2,573,165	$	193,144,065

		Liabilities and Members' Equity

Liabilities:
	Contingency Reserve		$	2,457,823	$	96,596
	Accounts Payable and Accrued Expenses				212,881
	Retention Payable				14,743,123
	Loan Payable				76,068,549
	Deposits				36,072,303
		Total Liabilities	2,457,823		127,193,452

Members' Equity			115,342		65,950,613

			$	2,573,165	$	193,144,065

See accompanying notes to financial statements

KEWALO DEVELOPMENT LLC

Statements of Income and Changes in Members' Equity

December 31, 2015 and 2014



						2014
			2015			(Unaudited)

Real Estate Sales, Net			$	242,952,850		$	9,659,590
Cost of Sales			208,911,678			8,268,443
			34,041,172			1,391,147

Operating Expenses			1,413			178,842

	Operating Income		34,039,759			1,212,305

Other Income (Expense):
	Rental and Other Income		36,544			80,992
	Other Expense		(7,841		)	(8,994		)
		Net Income	34,068,462			1,284,303

Members' Equity at Beginning of Year			65,950,613			53,092,321
Member's Contributions			—			11,573,989
Distributions to Members			(99,903,733		)	—

			$	115,342		$	65,950,613

See accompanying notes to financial statements

KEWALO DEVELOPMENT LLC

Statements of Cash Flows

December 31, 2015 and 2014



							2014
				2015			(Unaudited)

Cash Flows from Operating Activities:
	Net Income			$	34,068,462		$	1,284,303
	Adjustments to Reconcile Net Income to Net Cash Provided (Used In) Operating Activities:
		Real Estate Development Costs		192,649,651			(88,449,655		)
		Prepaid Expenses		8,901			134
		Contingency Reserve		2,361,227			96,596
		Accounts Payable and Accrued Expenses		(212,881		)	(8,962,494		)
		Retention Payable		(14,743,123		)	8,072,229
		Deposits		(36,072,303		)	(1,407,864		)
			Net Cash Provided by (Used In) Operating Activities	178,059,934			(89,366,751		)

Cash Flows From Financing Activities:
	Distributions to Members			(99,903,733		)	—
	Principal Payment on Debt			(76,068,549		)	(7,878,179		)
	Proceeds From Issuance of Debt			—			83,946,728
	Contributions from Members			—			11,573,989
		Net Cash Provided by (Used In) Financing Activities		(175,972,282		)	87,642,538
		Net Increase (Decrease) in Cash		2,087,652			(1,724,213		)
Cash at Beginning of Year				485,513			2,209,726
Cash at End of Year				$	2,573,165		$	485,513

Supplemental Cash Flow Information:
	Interest Paid			$	203,663		$	953,825
Supplemental Noncash Operating Information:
	Deferred Financing Cost Amortized to Real Estate Development Costs			$	—		$	882,826

See accompanying notes to financial statements

KEWALO DEVELOPMENT LLC

Notes to Financial Statements

December 31, 2015 and 2014 (Unaudited)


(1)	Organization and Description of Business

Kewalo Development LLC (the Company) is a Hawaii limited liability company formed on June 3, 2010, by Waimanu Development LLC, a Hawaii limited liability company (Waimanu). A&B Properties, Inc., a Hawaii corporation is Waimanu’s parent company and is the Manager of the Company. On September 5, 2012, the Company amended and restated its operating agreement (the Operating Agreement) and admitted N1189 LLC, a Hawaii limited liability company, BSC Waihonua LLC, a Hawaii limited liability company, and Armstrong Homes, Ltd., a Hawaii corporation as members (the Additional Members). The Company was formed primarily for the purpose of developing and selling real property commonly referred to as “Waihonua at Kewalo”, comprised of a condominium high rise project with 341 fee simple units, in Honolulu, Hawaii (the Project) and a senior citizen housing building in Honolulu, Hawaii, consisting of approximately 70 rental units.

In conjunction with a planned development permit (the Permit) issued by the Hawaii Community Development Authority (HCDA), the Company effectively satisfied the reserve housing obligations under the Permit to receive approval for issuance of the certificate of occupancy for the Waihonua at Kewalo condominium project. The Company deposited deeds and other consideration in conjunction with a development agreement by and between the Company and an unrelated third party developer, SCD Piikoi, LLC. The certificate of occupancy for the Project was issued in October 2014.

The Company commenced construction of the Project in November 2012. As of June 2015, all 341 units were sold.

In accordance with the Operating Agreement, the economic interest and voting interest in the Company, as defined, were as follows as of December 31, 2015 and 2014 (unaudited):



	Economic		Voting
	Interest		Interest

Waimanu Development LLC	50.000	%	50	%
N1189 LLC	19.231	%	25	%
BSC Waihonua LLC	29.231	%	23	%
Armstrong Homes, Ltd.	1.538	%	2	%

The Operating Agreement provides for distributions to the Members first to the Additional Members proportionately until their respective unpaid preferred amount, as defined, equals zero. Further distributions are then to be paid to Waimanu until its unpaid preferred amount, as defined equals zero and then allocated 90 percent to Waimanu and 10 percent to the Additional Members in proportion to their respective economic interest.

KEWALO DEVELOPMENT LLC

Notes to Financial Statements

December 31, 2015 and 2014 (Unaudited)

Pursuant to the Operating Agreement, net profits from operations are first allocated to reduce any negative capital accounts, as defined, to zero, then to the Additional Members’ respective adjusted capital account up to their unpaid preferred amount, as defined. Additional net profits are then allocated to Waimanu’s capital account up to its unpaid preferred amount, as defined, and then allocated 90% to Waimanu and 10% to the Additional Members in proportion to their respective economic interest. Losses are first allocated to any member with a capital account greater than its unpaid preferred amount and then to Waimanu’s capital account until it equals zero. Additional losses are proportionately allocated to the Additional Members’ with capital accounts equal to zero and then to all members in proportion to their respective economic interest.


(2)	Summary of Significant Accounting Principles

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash

The Company maintains cash accounts in a Hawaii bank, which as of December 31, 2015 and at various times throughout the year then ended, exceeded federally insured limits.

Revenue Recognition

Profit on sales of real estate is recognized when title has passed, minimum down payment criterion are met, the terms of any note received are such as to satisfy continuing investment requirements and collectability of the note is reasonably assured, the risks and rewards of ownership have been transferred to the buyer, and there is no substantial continuing involvement with the property. If any of the aforementioned criteria are not met, profit is deferred and recognized under the cost recovery, deposit, or percentage of completion method.

KEWALO DEVELOPMENT LLC

Notes to Financial Statements

December 31, 2015 and 2014 (Unaudited)

Income Taxes

As a limited liability company, the Company is not a tax-paying entity for purposes of federal and state income taxes. Income or losses of the Company are reported on the Members’ income tax returns. Therefore, no provision or liability for income taxes has been included in the financial statements.

The Company follows the provisions of Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 740, Income Taxes . ASC Topic 740 clarifies the accounting for uncertain tax positions in an enterprise’s financial statements by prescribing a recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has determined that the Company does not have an uncertain tax position and associated unrecognized benefits that materially impact the financial statements or related disclosures.

As tax matters are subject to some degree of uncertainty, there can be no assurance that the Company’s tax returns will not be challenged by the taxing authorities and that the Company or its members will not be subject to additional tax, penalties, and interest as a result of such challenge. The Company is no longer subject to U.S. federal examinations by tax authorities for the years ended December 31, 2011 and prior.


(3)	Cash Reserve

As of December 31, 2015, the Company has cash in bank amounting to $2,457,823, which is reserved for possible claims against or obligations of the Company arising out of the normal course of business as provided by the Operating Agreement and at the discretion of the Manager. The reserve was established using funds from distributable cash to the Members.


(4)	Debt

On November 30, 2012, the Company entered into a $120 million loan agreement with four unrelated financial institutions to finance the construction of the condominium project. Borrowings under the loan agreement bear interest at a base rate as defined, plus 3 percent (3.1545% at December 31, 2014 (unaudited)). Drawings under the loan agreement were secured by the real property, the assignment of sales contracts and a limited repayment guaranty and a completion guaranty by the Manager.

At December 31, 2014, the outstanding balance of this loan was $76,068,549 (unaudited). The loan agreement contained certain financial and operational covenants including, the timely completion of the Project, and financial ratio and minimum ownership and guarantor tangible net worth requirements.

KEWALO DEVELOPMENT LLC

Notes to Financial Statements

December 31, 2015 and 2014 (Unaudited)

As of December 31, 2015, the Company had repaid in full all outstanding borrowings under the loan agreement and accrued interest thereon.


(5)	Deferred Financing Costs

Loan fees related to the construction debt were capitalized to deferred financing costs and amortized over the term of the loan. During the year ended December 31, 2014, the Company amortized approximately $883,000 (unaudited) of deferred financing costs which were capitalized as real estate development costs.


(6)	Related-Party Transactions

The Company recorded real estate sales at market prices to directors, officers and employees of the Manager and the Manager’s parent company of approximately $3,800,000 and $2,400,000 in 2015 and 2014 (unaudited), respectively. In 2015, the Company also recorded approximately $2,000,000 in real estate sales to an Additional Member.

Developer Fee

In accordance with the Operating Agreement, the Manager has sole responsibility for the day-to-day oversight and administration of the Company’s business activities and internal affairs, including the management of cash and personnel. In consideration for such duties, the Operating Agreement provided for a developer fee to be paid to the Manager equal to 4% of the total cost of constructing the condominium units. The developer fee amounted to approximately $2,025,200 for the year ended December 31, 2015, and $1,640,300 for the year ended December 31, 2014 (unaudited), excluding the consulting fees described below.

Consulting Agreement

The Company has a consulting agreement with an affiliate of BSC Waihonua LLC, to market the Project, assist in meeting the affordable housing requirements and to advise on certain development and construction issues. The consulting fee is calculated as 24% of the developer fee. For the years ended December 31, 2015 and 2014, the Company capitalized approximately $492,700 and $518,000 (unaudited), respectively, to real estate development costs under the Consulting Agreement.

KEWALO DEVELOPMENT LLC

Notes to Financial Statements

December 31, 2015 and 2014 (Unaudited)


(7)	Commitments and Contingencies

In conjunction with provisions of the Company’s Operating Agreement, the Manager has recorded a reserve liability for possible claims against or obligations of the Company arising out of the normal course of business. The liability approximates 1% of total sales proceeds on the Project and was included in cost of sales of the Project for the year ended December 31, 2015 and 2014 (unaudited). The contingency reserve amounted to $2,457,823 and $96,596 (unaudited) at December 31, 2015 and 2014, respectively.


(8)	Subsequent Events

The Company has evaluated subsequent events from the balance sheet date through February 26, 2016, the date at which the financial statements were available to be issued and determined there were no other items to disclose.

Kewalo Development LLC

(A Limited Liability Company)

Financial Statements

December 31, 2013

Kewalo Development LLC

(A Limited Liability Company)

Balance Sheet

December 31, 2013



		Assets

Cash			$	2,209,726
Prepaid Expenses			9,035
Real Estate Under Development			103,317,169
Deferred Financing Costs			882,826
		Total Assets	$	106,418,756

		Liabilities and Members' Equity

Liabilities:
	Accounts Payable		$	9,175,375
	Retentions Payable		6,670,893
	Deposits		37,480,167
		Total Liabilities	53,326,435

Commitments and Contingencies

Members' Equity			53,092,321
			$	106,418,756

See accompanying notes to financial statements

Kewalo Development LLC

(A Limited Liability Company)

Statement of Operations and Changes in Member's Equity

December 31, 2013



Operating Expenses:
	Marketing		$	246,873
	General and Administrative		3,382
		Total Operating Expense	250,255

Other Income			31,665
Other Expenses			(6,315		)

Net Loss			(224,905		)

Members' Equity - Beginning of Year			36,337,301
Member Contributions			16,979,925
Members' Equity - End of Year			$	53,092,321

See accompanying notes to financial statements

Kewalo Development LLC

(A Limited Liability Company)

Statement of Cash Flows

December 31, 2013



Cash Flows from Operating Activities:
	Net Loss				$	(224,905	)
	Adjustments to Reconcile Net Loss to Cash Used in Operating Activities:
		Changes in assets and liabilities:
			Real estate under development		(63,477,581		)
			Prepaid expenses		5,380
			Accounts payable		5,311,282
			Retentions payable		5,721,070
			Deposits		37,480,167

				Net cash used in operating activities	(15,184,587		)

Cash Flows from Financing Activity:
		Contributions from Members			16,979,925

			Net Increase in Cash		1,795,338

Cash - Beginning of Year					414,388

Cash - End of Year					$	2,209,726


Supplemental noncash operating information:
	Deferred financing cost amortized to real estate development costs				$	588,567

See accompanying notes to financial statements

Kewalo Development LLC

(A Limited Liability Company)

Notes to Financial Statements

December 31, 2013


1.	Summary of Operations and Significant Accounting Policies


a.	Company Operations

Kewalo Development LLC (the Company) is a Hawaii limited liability company formed on June 3, 2010 by Waimanu Development, LLC, a Hawaii limited liability company (Waimanu). A&B Properties, Inc., a Hawaii corporation, is Waimanu’s parent company and is the manager of the Company (the Manager). On September 5, 2012, the Company amended and restated its operating agreement (the Operating Agreement) and admitted N1189 LLC, a Hawaii limited liability company, BSC Waihonua LLC, a Hawaii limited liability company, and Armstrong Homes, Ltd., a Hawaii corporation, as additional members (collectively, the Additional Members). The Company was formed for the primary purpose of developing and selling real-estate property commonly referred to as “Waihonua at Kewalo”, comprised of a condominium high rise project with 341 fee simple units, in Honolulu, Hawaii (the “Project”) and a senior citizen housing building in Honolulu, Hawaii, consisting of approximately 70 rental units.

In conjunction with a planned development permit (the “Permit”) issued by the Hawaii Community Development Authority (HCDA), the Company effectively satisfied the reserve housing obligations under the Permit to receive approval for issuance of the certificate of occupancy for the Waihonua at Kewalo condominium project in January 2015, with the Company’s deposit of deeds and other consideration in conjunction with a development agreement by and between the Company and an unrelated third party developer, SCD Piikoi, LLC. The certificate of occupancy for the Project was issued in October 2014.

The Company completed construction of the Project in November 2014, and all units were sold as of June 2015.

In accordance with the Operating Agreement, the members’ Economic Interest and Voting Interest, as defined, in the Company as of December 31, 2013 were as follows:



	Economic Interest	Voting Interest
Waimanu Development LLC	50.000 percent	50.0 percent
N1189 LLC	19.231 percent	25.0 percent
BSC Waihonua LLC	29.231 percent	23.0 percent
Armstrong Homes, Ltd.	1.538 percent	2.0 percent


1.	Summary of Operations and Significant Accounting Policies (continued)


a.	Company Operations (continued)

Pursuant to the Operating Agreement, Waimanu and the Additional Members are each required to contribute $32.5 million. The Manager may authorize and request additional capital contributions in proportion to the Economic Interest of each member. The members have the option, but not the obligation, to make the requested additional capital contributions. As of December 31, 2013, Waimanu’s and the Additional Members’ cumulative capital contributions amounted to approximately $32.5 million and $20.9 million, respectively.

For the year ended December 31, 2013, N1189 and BSC contributed approximately $6.7 million and $10.2 million, respectively.

The Operating Agreement provides for distributions to the members, first to the Additional Members proportionately until their respective unpaid preferred amount, as defined, equals zero. Additional distributions are then paid to Waimanu until its unpaid preferred amount equals zero and then allocated 90 percent to Waimanu and 10 percent to the Additional Members in proportion to their respective Economic Interest.

The Operating Agreement also provides for the allocation of net profits and losses, as defined, to the members. Net profits from operations are first allocated to reduce any negative capital accounts, as defined, to zero, then to the Additional Members’ respective adjusted capital account up to the unpaid preferred amount, as defined. Additional net profits are then allocated to Waimanu’s capital account up to its unpaid preferred amount and then allocated 90 percent to Waimanu and 10 percent to the Additional Members in proportion to their Economic Interest. Losses are first allocated to any member with a capital account greater than its unpaid preferred amount and then to Waimanu’s capital account until it equals zero. Additional losses are proportionately allocated to the Additional Members’ capital accounts are equal to zero and then to all members in proportion to their respective Economic Interest.


b.	Basis of Presentation

The Company’s financial statements are presented on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP).


c.	Management Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.


d.	Revenue Recognition

Sales of real estate generally are accounted for under the full accrual method. Under that method, gain is not recognized until the collectability of the sales price is reasonably assured and the earnings process is virtually completed. When a sale does not meet the requirements for income recognition, the sales transactions are accounted for under the deposit method. Under that method, the sale is not recognized, and the contract receivable from the buyer is not recorded. The property continues to be reported on the balance sheet as real estate under development subject to sales contracts. Payments received from the buyer are reported as deposits in the balance sheet. As of December 31, 2013, unrecorded contracts receivable on sales that are accounted for under the deposit method totaled approximately $214 million.

1. Summary of Operations and Significant Accounting Policies (continued)


e.	Cash

Cash includes demand deposits in banks.


f.	Real Estate Under Development Subject to Sales Contracts

The Company capitalizes all of the direct costs of development and construction of the Projects, including real estate taxes and other carrying costs incurred during the development period.


g.	Marketing and General and Administrative Expenses

The Company generally expenses marketing and certain general and administrative expenses as incurred.


h.	Deferred Financing Costs

Loan fees related to the Company’s construction loan are capitalized to deferred financing costs in the accompanying financial statements and amortized over the term of the related note. During the year ended December 31, 2013, amortization amounted to approximately $589,000, which was capitalized to real estate under development on the accompanying balance sheet.


i.	Income Taxes

As a limited liability company, the Company’s taxable income or loss is allocated to members in accordance with the Operating Agreement. No provision has been made in the financial statements for federal or state income taxes, as these taxes are the responsibility of the individual members.

j. Subsequent Events

Subsequent events were evaluated through February 26, 2016, the date that these financial statements were available for issuance.


2.	Concentrations of Credit Risk

The Company maintains cash accounts in a Hawaii bank, which as of December 31, 2013 and at various times throughout the year then ended, exceeded federally insured limits. The Company has not experienced losses in these accounts and management believes there is no significant credit risk related to cash.


3.	Construction Loan

On November 30, 2012, the Company entered into a $120 million loan agreement (the Loan Agreement) with four unrelated financial institutions to finance the construction of the Projects. As of December 31, 2013 there were no draws on the Loan Agreement.

Borrowings under the Loan Agreement bear interest at a base rate, as defined, plus 3 percent. Outstanding principal and accrued interest related to the Loan Agreement are due at maturity on June 4, 2015, unless a 6-month extension option is exercised, subject to the lenders’ conditions for granting the extension. The notes are secured by the Projects, the assignment of sales contracts and proceeds, a limited repayment guaranty, as defined, by the Manager for the lesser of $20 million or the outstanding loan balance, a completion guaranty, as defined, by the Manager, and other specified security.

The Loan Agreement contains certain financial and operational covenants including, but not limited to, the timely completion of the Projects, maintenance of a loan to value ratio, maintenance of a loan to cost ratio, guarantor minimum ownership requirements and guarantor minimum tangible net worth requirements. The Company and guarantor were in compliance with all debt covenants for the year ended December 31, 2013.


4.	Commitments and Contingencies


a.	Construction Contract

On October 15, 2012, the Company entered into a construction contract with an unrelated contractor to construct the condominium units for cost plus the contractor’s fee, as defined. The contract provides for a guaranteed maximum price, as defined, of approximately $145 million.


b.	Leases

The Company leases its sales office pursuant to a lease agreement that expires on May 31, 2015. At December 31, 2013, the future minimum rental commitments under these leases were approximately as follows:



For the years ending December 31,
2014	$	42,000
2015	18,000
	$	60,000


5.	Transactions with Affiliates


a.	Development Fee

The Operating Agreement provides for payments to the Manager for the oversight and administration of the Company’s business activities and internal affairs, as defined (the Developer Fee). The Developer Fee is equal to 4 percent of the total cost of constructing the condominium units and is payable monthly commencing on the groundbreaking of the Projects, as defined. For the year ended December 31, 2013 the Developer Fee amounted to approximately $1,777,000, excluding the consulting fees discussed in Note 5b, and is capitalized to real estate under development in the accompanying balance sheet. As of December 31, 2013, approximately $137,000 was due to the Manager, recorded in accounts payable on the accompanying balance sheet.


b.	Consulting Fee

On September 5, 2012, the Company entered into a consulting agreement (the Consulting Agreement) with an affiliate of BSC, to market the Projects, assist in meeting affordable housing requirements and to advise on certain development and construction issues, as needed. Compensation is 24 percent of the Developer Fee and, in the aggregate, will range between $1,520,000 and $1,615,000. For the year ended December 31, 2013 the Company paid approximately $561,000 in fees under the Consulting Agreement, which are capitalized to real estate under development in the accompanying balance sheet. As of December 31, 2013, approximately $43,000 was due to the affiliate of BSC, recorded in accounts payable on the accompanying balance sheet.


6.	Deposits

As of January 1, 2013, approximately $27.9 million was held in escrow related to binding sales contracts for the condominium units. The Company had no legal right to these funds until certain conditions were met. In 2013, the Company met the conditions required to use the escrow deposits to pay for project costs. As of December 31, 2013, the Company received approximately $37.5 million of escrow deposit funds, recorded in deposits on the accompanying balance sheet.