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University Governance, Ethics, Integrity, and Legal Compliance

Policy on Business Transactions Between the University and its Affiliated Organizations

Scope

Business transactions between Syracuse University and its affiliated organizations. For purposes of this policy, "affiliated organizations" include (a) corporations, partnerships, limited liability companies or other organizations in which Syracuse University owns, directly or indirectly, more than 50% of the ownership interests in the entity, (b) non-profit organizations in which Syracuse University has the power to appoint or elect a majority of the organization's directors or trustees or where a majority of the organization's directors or trustees are trustees, directors, officers, employees or agents of Syracuse University, and (c) organizations that conduct joint programs or share facilities or employees with Syracuse University.

Policy Statement

All business transactions with affiliated organizations that are not tax-exempt under Internal Revenue Code Section 501(c)(3) ("Non-Exempt Affiliates") will be at arm's length. Further, all transactions with affiliated organizations that are tax-exempt under Internal Revenue Code Section 501(c)(3) ("Exempt Affiliates") will be at arm's length unless (1) the transaction is not in connection with an unrelated trade or business (as defined in the Internal Revenue Code) of the Exempt Affiliate and (2) the transaction is in furtherance of the University's educational mission. For purposes of this policy, "arm's length" means the terms of the transaction are consistent with the terms that would apply if unrelated organizations had engaged in the same or similar transaction under the same or similar circumstances.

The University and any Non-Exempt Affiliate shall not enter into an intercompany business transaction (including but not limited to provision of goods or services, lending of money, rental of property, transfers of assets, cost sharing and expense reimbursement arrangements, licensing arrangements, shared employees, and other transfers of assets, liabilities or funds) unless (a) it is a transaction or type of routine transaction that has been approved by the University's Executive Vice President and Chief Financial Officer, or (b) the terms of the transaction are consistent with the terms that would apply if unrelated organizations had engaged in the same or similar transaction under the same or similar circumstances as confirmed by the Executive Vice President and Chief Financial Officer.

The University and any Exempt Affiliate shall not enter into any intercompany business transaction that either (1) arises in connection with an unrelated trade or business of the Exempt Affiliate or (2) is not in furtherance of the University's educational mission, unless (a) it is a transaction or type of routine transaction that has been approved by the University's Executive Vice President and Chief Financial Officer, or (b) the terms of the transaction are consistent with the terms that would apply if unrelated organizations had engaged in the same or similar transaction under the same or similar circumstances as confirmed by the Executive Vice President and Chief Financial Officer.

This policy requires that, at the beginning of each fiscal year, the University's Executive Vice President and Chief Financial Officer shall review the terms and material facts of the types of routine intercompany business transactions expected to be entered into with affiliated organizations and shall confirm that (1) all transactions with Non-Exempt Affiliates meet the arm's length standard described above, and (2) all transactions with Exempt Affiliates either (a) are entered into in connection with an activity that is not an unrelated trade or business of the Exempt Affiliate and are in furtherance of the University's educational mission, or (b) meet the arm's length standard described above.

In addition, this policy requires that throughout the fiscal year, the University's Executive Vice President and Chief Financial Officer shall review the terms and material facts of individual intercompany business transactions proposed to be entered into with affiliated organizations, other than those previously approved on a categorical basis pursuant to the preceding paragraph, and shall confirm that the terms of the transactions meet the requirements described in the preceding paragraph.

In determining whether a transaction meets the arm's length standard, the University's Executive Vice President and Chief Financial Officer's review shall include an evaluation of all relevant factors, including but not limited to (a) the form of consideration charged or paid, (b) sales or purchase volume, (c) the scope and terms of any warranties provided, (d) the duration of the contract or other agreement, (e) collateral transactions or ongoing relationships between the parties, (f) extension of credit in payment terms, (g) market risks (including fluctuations in cost, demand, pricing and inventory levels), (h) credit and collection risks, (i) product liability risks, (j) similarity of geographic markets, (k) market level (i.e., wholesale, retail, etc.), (l) location-specific costs associated with production and distribution, (m) the extent of competition in the local market, and (n) alternatives realistically available to the parties.

Policy Administration

Date: January 2009


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