Guidelines to Address Trustee, CEO and Executive Conflicts of Interest

Policy 1200, Procedure Number 3
Guidelines to Address Conflicts of Interest

Trustees, Chief Executive Officer, and Executives should clearly avoid any potential or actual Conflict of Interest. The following guidelines and procedures should be applied in the event a potential or actual Conflict of Interest arises.

Disclosure of Material Facts at a Board Meeting

The Trustee, Chief Executive Officer, or Executive who may have an actual or potential Conflict of Interest (the "Conflicted Trustee, Conflicted Chief Executive Officer, or Conflicted Executive"), should inform the non-conflicted Trustees, non-conflicted Chief Executive Officer, and non-conflicted Executives (the "Non-Conflicted Trustees, Non-Conflicted Chief Executive Officer, and Non-Conflicted Executives") of all relevant facts and circumstances.

The Conflicted Trustee, Conflicted Chief Executive Officer, or Conflicted Executive is responsible to disclose all material facts concerning an actual or potential Conflict of Interest involving the Conflicted Trustee, Conflicted Chief Executive Officer, or Conflicted Executive, or the Conflicted Trustee's, Conflicted Chief Executive Officer's, or Conflicted Executive's Immediate Family member of which the Conflicted Trustee, Conflicted Chief Executive Officer, or Conflicted Executive has actual knowledge, at a Trustees' meeting as soon as such potential or actual Conflict of Interest is discovered, and before any action is taken on the contract or transaction.

After disclosure of the interest and all material facts, the Conflicted Trustee, Conflicted Chief Executive Officer, or Conflicted Executive should leave the Board meeting. No contract or transaction between KS and a Conflicted Trustee, Conflicted Chief Executive Officer, or Conflicted Executive, or a Conflicted Trustee's, Conflicted Chief Executive Officer's, or Conflicted Executive's Immediate Family member shall be permitted unless the Non-Conflicted Trustees, Non-Conflicted Chief Executive Officer, and Non-Conflicted Executives, having full knowledge of the disclosure, approve the contract or transaction by a requisite vote.

Minutes of the Board meeting should accurately reflect the disclosure made by, and the non-participation of, the Conflicted Trustee, Conflicted Chief Executive Officer, or Conflicted Executive (see Article V, Records of Proceedings).

Review of the Fairness of the Transaction

To be valid, contracts or transactions which involve one or more Trustees, Chief Executive Officer, one or more Executives, or one or more of a Trustee's, Chief Executive Officer's, or Executive's Immediate Family, must be considered "fair and reasonable" to KS in the judgment of the Non-Conflicted Trustees, Non-Conflicted Chief Executive Officer, and Non-Conflicted Executives by a requisite vote after a complete and objective review of all of the material terms of the contract or transaction. To be "fair and reasonable" the consideration and terms of the contract or transaction must be at least as favorable to KS as it would have been in an arms-length transaction with an unrelated third party.

A Conflicts of Interest review is required when there are contracts or transactions between:

KS and one or more of its Trustees, Chief Executive Officer, Executives, or their Immediate Family members;

KS and any other organization in which one or more Trustees, Chief Executive Officer, Executives, or their Immediate Family members have a financial interest; or

KS and any organization for which one or more Trustees, Chief Executive Officer, Executives, or their Immediate Family members simultaneously serves as a member of the organization's board of directors or as an officer.

Obtain Court Approval

Any provision of this Conflicts Of Interest policy notwithstanding, if the duty of a Trustee, Chief Executive Officer, or Executive and the Trustee's, Chief Executive Officer's, or Executive's individual interest or the Trustee's, Chief Executive Officer's, or Executive's interest as trustee of another trust, conflict in the exercise of a trust power, the power may be exercised only by court authorization (except as provided in Section 554A-3(c)(1), (5), (17, and (23), Hawaii Revised Statutes, upon petition pursuant to Section 554A-5(b), Hawaii Revised Statutes.