Write a Contract

- SW's company and KF will form a JV - SW has significant property background (both in development and buyer advocacy) - SWe has found a splitter block in Brisbane and we signed a contract to buy it, the block is already in two lots - we plan to knock down the existing old house straddling the big block and build two separate houses on their own smaller blocks, then sell these two land & house packages separately - KF will be funding the entire project (purchase of land, build of houses, incidental expenses along the way) SW will be providing project management - the properties will be in KF's name - upon sale of both houses, Nett Profits are calculated with all expenses incurred along the way (including interest costs) taken into account - Nett Profits are then shared between the JV parties (SW's company bills KF for SW services) - if Nett Profits are negative, SW's company shares the losses (what would be the right mechanism - KF bills SW's company?) - KF's risk is SW failing to perform his duties Dispute Resolution: We’ve been advised [however we are not hung up on this] that there should be a separate SERVICE CONTRACT between the parties additional to the JV (or perhaps the JV reworded as such) outlining duties as well as non-performance remedies. SW's Duties: Site location & acquisition Site preparation Design and specifications Construction Sales Penalties: Scenario 1 - If SW temporarily can’t perform his duties due to sickness etc - his company continues to fulfill his role until he can preform, or if permanent sickness etc, then a project manager may also be called upon and paid for by his company. Scenario 2 - If SW won’t perform his duties for what ever other reason, then SW’s company shall forfeit its share of positive Nett Profits, but is still liable for its share of any negative Nett Profits. Arbitration: Our strong preference is to incorporate a binding independent arbitration clause in case of any disputes and stay away from courts. Arbitration needs to be in Queensland, Australia. We are just starting out on this path and are conscious of all expenses (including legals) plus do not want to overly complicate matters. If there are any "off-the-shelf" service contracts available, we are happy to consider these. The almost finalised draft JV document is attached. It can probably be "tightened up" as well - please provide your comments.