ITEM 115-1601-R0502���������������������������������������������������������������                             May 23-24, 2002




THIS OPERATING AGREEMENT is made and entered into effective as of this 1st day of July, 2002 (the �Effective Date�) by and between THE UNIVERSITY OF MONTANA - WESTERN� (the �University�) and THE UNIVERSITY OF MONTANA - WESTERN FOUNDATION, a Montana non-profit corporation (the �Foundation�).




A.����� The University is a public institution of higher learning and is a campus of the Montana University System.

B.����� The Foundation is a private and independent Montana non-profit corporation organized to support the mission of the University through private support.

C.����� The Montana Board of Regents is responsible for ensuring the integrity and reputation of the University and its programs and must be assured that the independent University affiliated Foundation will adhere to ethical standards appropriate to such organizations.

D.����� To accomplish this objective, the Board of Regents has approved a policy which requires the University and the Foundation to enter into an operating agreement that outlines their relationship and defines appropriate Foundation activities.


NOW, THEREFORE, based upon the foregoing recitals and the mutual promises contained herein, the parties agree as follows:


1. ������� The Foundation�s responsibilities are to:

A.����� Solicit, receive, hold invest, re-invest, administer and manage funds (including both�� restricted and unrestricted gifts) consistent with the needs of its donors, and to make expenditures to or for the benefit of the University, and with University consent, manage University funds and other University resources to the extent permissible by law, provided that such University funds and other resources remain identified in Foundation and University records as University assets;

B.����� Conduct its fund raising operations in a manner that is consistent with the mission and priorities of the University;

C.����� Comply with all applicable state and federal laws;

D.����� Accept, account for and receipt all gifts, grants and endowments by preparing and maintaining financial and accounting records in accordance with generally accepted principles or other comprehensive Basis of Accounting;

E.����� Biennially submit audited financial statements and a list of the Foundation�s officers and Board members to the Chancellor of the University for submission to the Commissioner of Higher Education and the Board of Regents;

F. ���� Maintain and enforce at all times an appropriate conflict of interest policy;

G.����� Seek and obtain input from the University (through the Chancellor of the University) before defining the priorities for the Foundation fund raising efforts.

H.����� Fund approximately 25% of the Executive Director�s salary.


2.�������� The University�s responsibilities are to:

A.����� Provide adequate space and utilities for the Foundation staff and its operations;


B.����� Keep the Foundation appraised (through the Chancellor of the University) of the University�s needs and priorities.


3.�������� As consideration for the services provided by the Foundation to the University under this Agreement, the University agrees to pay the Foundation the sum of $10,000 for its services. As additional consideration for the services provided hereunder the University will provide the space and utilities for the Foundation as set forth in Paragraph 2A bove.

4.�������� All gifts made to the University shall be accounted for and ownership maintained by the University; all gifts made to the Foundation on behalf of the University shall be accounted for and the ownership maintained by the Foundation.

5.�������� No employee of the Montana University System will hold a voting position within the Foundation.

6.�������� To the extent permitted by applicable law, the records of the Foundation will be kept confidential to protect the privacy interests of its donors.

7.�������� In the performance of this Agreement, the parties shall not discriminate on the basis of gender, race, color, religion, marital status, creed, age, political belief, physical or mental handicap, national or ethnic origin.

8.�������� All services performed by the Foundation hereunder shall be on an independent contractor basis.� The Foundation, as an independent entity, will have the sole right to control and determine the method and manner of performing its duties hereunder.� Nothing herein shall be deemed to create any partnership, joint venture or other relationship between the parties other than independent parties contracting on an arm�s length basis.

9.�������� This Agreement shall be in effect for the University�s 2002-2003 and 2003-2004� fiscal years unless terminated by an agreement in writing signed by both parties.


Signed as of the Effective Date


The University of Montana - Western������������������� The University of Montana - Western Foundation



By____________________________������������������ By____________________________

��� Stephen T. Hulbert���������������������������������������� Pam Merrell

��� Chancellor���������������������������������������������������� President, Western Foundation Board