. Good Samaritan Education

Finance Committee 17th Meeting

Saturday 01 November 2014

7.30am-8.30am Breakfast Meeting Dining Room, Mount St Benedict Centre, Pennant Hills

MEETING AGENDA Welcome

Prayer We will be attending morning prayer after the meeting at 9am.

Attendance

FC16 Minutes FC16 Minutes

Business arising from the minutes

ITEMS

1. September Monthly Report FC17.1

2. Review of FC Report for 2014 Incl in Assembly papers

3. Review of GC property minute – action required FC17.3(i),(ii),(iii) (Attachments to GC12 papers of preliminary modelling of possible Mater Christi/Mater Dei scenarios are included for your information as background reading).

Agenda - FC16 v1.0 FINAL - 20140918

Good Samaritan Education

Finance Committee 16th Meeting

18th September 2014 4.00pm-5.30pm

Boardroom, Lourdes Hill College, Hawthorne

MINUTES Welcome and prayer Gerry welcomed participants to the meeting and began with a reflection on the opening of the Bernadette Centre, Stella Centre and Our Lady of Lourdes Chapel at Lourdes Hill College on Friday 12th September.

Attendance Gerry Dalton (Chair), Vic Lorenz, , Kay Herse (Executive Officer) - LHC Steve Zuckerman (Director Finance and Resources), Graham West – GoToMeeting

Apologies Ann-Maree Nicholls sgs

FC15 Minutes The minutes were accepted as an accurate record.

Business arising from the minutes There was no business arising other than matters already included in the agenda.

Discussion Points Action

1. August Monthly Report Gerry presented a summary report and the following points were noted: a) Expenditure is below budget and year to date position remains

very positive b) Invoice for valuation cost still to be presented c) $10,000 in professional development costs for the Benedictine

course which will take place in October is still to be met. It was agreed that the summary report was very useful to the Committee’s considerations.

Gerry will continue to produce the summary report for each meeting

2. 2015 Draft budget It was noted that the following are included in the draft budget: a) Payment of recompense to the Sisters b) Lease payments from the Colleges c) Increases in auditing and legal costs have been allowed in the

2015 budget but it is assumed that major increases would occur in 2016 in line with the projections in the 10 year projected budget

It was noted that the draft budget will be further refined in February 2015 once the EPI for 2014 and enrolment figures from the February census are known.

Gerry will prepare a letter for the GC meeting on 10 October recommending adoption of the draft budget

3. Recommendation re auditor appointment The proposal from Moore Stephens for the estimated cost of the 2014 audit being $5,500 for the auditing of the financial statements and $1000 for a meeting with the FC was discussed.

Gerry will prepare a letter for the GC meeting on 10 October proposing that the GC recommend to the

GSE Finance Committee Minutes v1.0 FINAL 20140918 Page 1

a) It was decided to recommend the appointment of Moore Stephens for the 2014 audit for the following reasons:

b) the work on the past two audits has been satisfactory c) the cost is reasonable d) the fact that Moore Stephens also audits the SGS accounts is

an advantage during this period of transfer of the property. It was noted that there should be a meeting between Moore Stephens and the FC midway through 2015 to discuss the requirements for the 2015 audit.

Annual Assembly the appointment of Moore Stephens as auditors for the 2014 audit

4. Consideration of Note 4 on the 2013 audited accounts This note referred to Expenses summarised by Main Activities. It was decided that the activities other than “Education Governance Services’ are minor. It was decided that Note 4 should be deleted and Note 3 restyled to ‘Expenses: Education, Governance and Services’

Kay to advise the Congregational Office to delete Note 4 for the 2014 audit.

5. Consider of the status of contractors It was reported that the use of the ATO Employee/Contractor Decision Tool http://www.ato.gov.au/Calculators -and-tools/Employee-or-contractor/ had produced Contractor as an outcome when applied to the EO contract.

FC members to access the ATO tool prior to the next FC meeting to confirm that outcome.

6. Stella Maris BAA Steve reported that he had discussed the application with the Stella Maris business manager and noted that there is a strong strategic rationale for the college to purchase the neighbouring property.

• It will reduce Development Application objections • The college has a very small footprint • Properties in this area do not come on the market often.

The timing is difficult as it coincides with the College building plans.

The cash position for 2016, if a property was purchased, showed extremely tight liquidity. The College should reassess its projections to have an adequate cash buffer of some $400k. This might include the consideration of the unused overdraft facility, which would then involve additional interest expense.

It was decided to recommend approval of the application to purchase the neighbouring property under certain conditions as set out in Actions.

FC recommends that the GC approve the BAA under the following conditions: a) That the downstairs

property is purchased for no more than $1.4m as indicated in the BAA

b) That the College makes whatever adjustments are necessary to improve the cash at bank in 2016 to provide a buffer of approximately $400k.

c) That the upstairs property is purchased for no more than $800,000 as indicated in the BAA

d) That prior to entering into any contract for Stage 1B updated financial projections are provided to the FC to provide assurance to the FC that cash flow is adequate.

7. Review of financial policies It was decided to defer this item with FC members sending any comments to Kay prior to the next meeting

FC Members to send comments on the review of financial policies to Kay prior to the next meeting.

GSE Finance Committee Minutes v1.0 FINAL 20140918 Page 2

Re Policy 7.1: After ‘The Chair of the Finance Committee reports on the progress of the budget at each meeting of the Governing Council’.

Add, ‘The minutes of each meeting of the Finance Committee are presented to the Governing Council’.

8.Next meeting

The next scheduled meeting is on Saturday 1 November 2014 at the Annual Assembly.

GSE Finance Committee Minutes v1.0 FINAL 20140918 Page 3

FC17.1

Extract from GC12 Minutes 4. Planning

e. Property Progress Update GC12.4e Lengthy and detailed discussion took place on the matters set out in the Property Progress Update (GC12.4e) and attachments. It was noted that significant progress had been made since the August GC meeting but that much still needed to be resolved. The main discussion points were: i. the release of the valuation reports to each college and the explanation that should

accompany them ii. the implications for St Scholastica’s property arrangements in 2015 between GSE,

SGS and the College as Sr Clare has advised that the St Scholastica’s property will not be transferred at the same time as the other nine colleges due the complexities of that property

iii. the desirability for all colleges to be placed on an equitable footing with regard to land purchased pre-incorporation for each college being funded by the canonical authority.

iv. the desirability for GSE to continue the practice of the congregation of discounting the lease payment required of Mater Dei. In 2013 and 2014the Mater Dei lease payment has been limited by the Sisters to $20,000 less the amount paid to GSE for services. In other words Mater Dei has paid a total of $20,000 for both services and lease payments.

The Council decided:

a) the valuation reports should be distributed by GSE to the each college including the explanation that • the valuations have been undertaken to establish a value of all College

property as at the date of transfer of property from SGS to GSE • the valuations are not the basis for determining any future agreement between

SGS and GSE for the transfer of the leased property • the purpose of the distribution of the valuation reports is to ensure that all

property has been included not to enter discussion of the amount of the valuation

b) that, as the St Scholastica’s property is not being transferred with the property of the other nine colleges, it is GSE’s preferred option that the SGS property currently under lease to the College become the subject of a lease from SGS to GSE with GSE then sub-leasing the property to the College. This will simplify financial arrangements as all property relationships will be between SGS and GSE at the first level (9 colleges through ownership transfer and payment of recompense and one college through a leasing arrangement). At the second level property relationships between GSE and the colleges will be the same for all colleges ie a leasing arrangement.

c) that GSE should enter into discussions with relevant parties, ie SGS and Mater Christi College, to arrive at an arrangement whereby the property that was purchased pre-incorporation for each college was funded by the canonical authority so that all colleges are on an equitable footing in this regard.

d) that GSE should discount Mater Dei lease payments as has been the practice by SGS. It was decided that the $20,000 total that is in place for 2014 would continue for 2015. It was acknowledge that this will result in a $30,000 approx reduction in income the GSE 2015 budget. The Council will ask the FC to develop a formula to apply from 2016 onwards that will provide for a total payment for services and lease to GSE by Mater Dei of approximately 50% of the total that would be due under the per capita formula.

FC17.3

Modelling of possible Mater Dei scenarios Steve Zuckerman 9 October 2014 I modelled the impact of reducing Mater Dei’s payments to GSE under the following 2 scenarios as requested:

1. Capping annual payments (service + lease) at $20,000 – no annual escalation 2. Capping the 2015 payment at $25,000 (half of the amount payable under the per capita formula)

and then annual increases of CPI + 1.0% In both cases, there is a meaningful impact on GSE’s cash flows (but by no means catastrophic) which would necessitate some adjustment to the proposed CPI + 1.0% annual increase mechanism from 2016. To correct the impact, under the 2 scenarios above, the adjustment would be as follows:

1. Annual increase of CPI + 1.5% throughout forecast 2016-2023 period 2. Also an increase of CPI + 1.5% in 2016 & maintaining that CPI + 1.5% increase for 2017 & 2018, but

then back to CPI + 1.0% from 2019 onwards ie. CPI + 1.5% 2016-2018 & CPI + 1.0% 2019-2023

GC12.4e Attachment 6 FC17.3(iii)

GSE Finance Committee Meeting 1 November 2014

RE: Lourdes Hill College and the Brenda Dale Trust Proposal

An Item 4 has arisen for the FC17 agenda on 1 November.

At FC15 on 31 August a letter from Lourdes Hill College requesting advice on a proposal from the Brenda Dale Trust for joint development of land that the Trust owns in close proximity to the College was discussed. The resulting minute is below:

2. Lourdes Hill – Letter re propertyMain discussion points:

a. The Colleges are demonstrating that they are aware of theneed to obtain approval from GSE for property matters

b. The property subject of the proposal is close to the Collegec. The College has very little access to its own playing fieldsd. Joint ownership of property could present unnecessary

complications and many challenges in the futuree. It is preferable for the College to pursue negotiations with the

Trust with a view to either total ownership of the property (asit is simpler from a management of use perspective) or a longterm lease arrangement

EO to convey to LHC that the FC supports the College in further exploring this commercial undertaking with a view to either ownership by the College or retention of ownership by the Trust with a long term lease held by the College.

The College invited me to participate in a meeting on 29 October with a view to making progress in obtaining concrete information on the Trust’s proposal. As a result of that meeting , the Trustee representing the Trust in the discussion agreed to provide a written outline of the legal structure that the Trust envisioned underpinning their proposal. The Trust’s preference is still for a structure that involves joint ownership of the land in question and believes that this gives the college greater security than a lease over the property.

The attached document was received yesterday afternoon. The following should be noted: 1. This is first time the framework being proposed by the Trust has been committed to paper2. No discussion has begun between the College and the Trust on this document3. No discussion has taken place on monetary values4. The College is seeking feedback from the FC as to whether there is a basis for continuing

discussions5. If the answer is in the affirmative, the expectation would be that the details of the agreement

would be negotiated between the College and the Trust for presentation to the FC and GCmeetings in February next year for approval of the ownership structure only

6. Detailed discussion would then be entered into on the financial dimension. The College doesnot wish to spend money on surveys etc unless GSE is approving of the agreement between theparties at a conceptual level.

There is very little possibility of land suitable for athletic purposes becoming available in the vicinity of the College so the College is keen to pursue this possibility but within a framework that is acceptable to GSE. It is assumed by all parties that it would be GSE that would hold ownership if something can be worked out that is suitable to GSE, the College and the Trust.

Steve has looked at the document provided by the Trust and his comments follow:

I have reviewed the attached outline document of a potential agreement/commercial arrangement between LHC/GSE, the BDD Trust and The Queensland Community Lawn Tennis Association Inc (QCLTA) with regard to co-ownership with the BDD Trust of some vacant land via a tenants in common structure

Late Paper FC17.4

(50:50 joint ownership) and a lease over a separate piece of land owned by QCLTA which it currently operates (and will continue to do so) as the Morningside Tennis Centre. There is quite a bit of detail to come that will be required to properly assess the proposal, but my preliminary comments to the FC are as follows:

1. As discussed at a recent FC meeting, the tenants in common structure makes the proposal a little more complicated, but that doesn’t mean the project isn’t viable or an acceptable arrangement can’t be reached.

2. Fundamentally, the proposal boils down to LHC/GSE meeting all development costs of the project (including associated additional costs such as legal costs, architectural & other consultants costs, council fees, etc) in return for receiving a half share in the vacant land via the tenants in common structure. To properly assess whether this is viable and a fair commercial arrangement, I believe the FC/GSE would require detailed information including the following:

• Valuation of the land • Financial analysis of the economic benefits and costs to the college of entering into this

arrangement (including the partial lease of the QCLTA land) • Detailed costings and estimates of the development/construction costs of the project and

associated consultant, legal, plan/design, council and other costs and fees • Council regulations and any obstacles/specific requirements as part of the Council DA

process • Any other state or other regulations (including environmental noting there may be potential

flooding considerations that were highlighted in earlier correspondence) that need to be observed or managed

• Legal advice on the tenants in common structure and of the detailed terms and conditions of the proposed agreements, so a clear understanding of the LHC/GSE rights and obligations can be gained.

I feel the above work would need be done and delivered to the FC before we can formally assess the proposal. For example, although the paper is just a broad outline at this stage, I noticed a couple of anomalies. Probably only a small point, but it suggested the college is required to pay charges for use of the 4 tennis courts (before 3.30pm) whilst QCLTA isn’t required to do so when it uses the courts. This seems unusual when there is joint ownership via the tenants in common structure. Presumably it has something to do with the Operator Agreement with TennisGear Management (who will manage the tennis courts) as part of their consideration appears to be some form of revenue sharing of bookings. Nonetheless I found this a little unusual & seemingly a disparity I didn’t quite understand. This is probably representative of the sorts of detail in the minutiae of the agreements that will need to be understood so as to ensure LHC/GSE is getting a fair commercial deal. I am happy to elaborate further at the FC breakfast meeting this Saturday. Steve Zuckerman

07 3171 2223 Suite 7, 63 MacGregor Terrace, Bardon QLD 4065 0418 787 864 PO Box 717 Indooroopilly QLD 4068 Liability limited by a scheme approved under Professional Standards Legislation.

m.sparksman@sparksmanlegal.com.au

Letter to Good Samaritan Education 29012014a

29 October 2014

Ms Kaye Herse, Executive Officer, Good Samaritan Education executiveofficer@goodsameducation.org.au

Robyn Anderson, Principal, Lourdes Hill College

randerson@lhc.qld.edu.au

Andrew Hines, Business Manager, Lourdes Hill College

ahines@lhc.qld.edu.au

Cath Parker, Director, Lourdes Hill College

cathparker@outlook.com

Lawrie Bertoldi, Architect for Lourdes Hill College lawrie@bertoldi.com.au

Mark Madden, President QCLTA maddoon@yahoo.com.au

Dear Kaye, Robyn, Cath, Lawrie and Mark

Lourdes Hill College and QCLTA - Land at 135 Beerlarong Street and 123 Beverley

Street, Morningside

I act for the Queensland Community Lawn Tennis Association Inc and the Trustees of the Brenda Dawn Dale Testamentary Trust that own the abovementioned land.

I refer to our meeting on 29 October 2014 and to the attached preliminary concept plan presented by Lourdes Hill College Architect, Lawrie Bertoldi for the development of further sporting facilities at 135 Beerlarong Street (“Vacant Land”) and 123 Beverley Street, Morningside (“Morningside Tennis Centre”) both collectively referred to as “the Site”. The purpose of this letter is to outline a potential legal structure that could govern the initial and continuing relationship between the parties including the development of the Site, land tenures, co-ownership arrangement and future maintenance, management and operation of the Site. It is expected to be a permanent and enduring relationship built on trust, respect and open accountability that will be underpinned by these legal documents to provide a framework for the easy and proper maintenance of those foundations.

Parties

GSE Good Samaritan Education, by the “Trustees of the Sisters of the Good Samaritan” which is a body corporate incorporated under the Roman Catholic Church Communities’ Land Act 1942 (NSW). It is assumed that the Site, which comprises Queensland land, can be held by GSE under this legislation which appears to govern only land in NSW.

LHC Lourdes Hill College, of 86 Hawthorne Road, Hawthorne, Qld is a company limited by guarantee incorporated under the Corporations Act 2001 (Cth).

QCLTA The Queensland Community Lawn Tennis Association Inc (ABN 559 2480 6394) being and association incorporated under the Associations Incorporation Act 1981 (Qld) and which has made application to transfer its incorporation to become a company limited by guarantee under the Corporations Act 2001 (Cth). The Morningside Tennis Centre land is owned by the QCLTA.

FC17.4(i)

Letter to Good Samaritan Education 29012014a 2

BDD Trust Brenda Dawn Dale Testamentary Trust by its Trustees Michael John Sparksman, Ron Hambleton and Sandra Field who are the registered owners of the Vacant Land, at 135 Beerlarong Street.

TGM TennisGear Management Pty Ltd (ACN 154 421 477) of 65 Russell Street, Everton Park, Qld, a company incorporated under the Corporations Act 2001 (Cth). TennisGear Management Pty Ltd is the operator and manager of the Morningside Tennis Centre under a licence agreement dated 1 June 2012, commencing on 1 January 2012 for an initial term of 10 years with an option to renew for a further 5 years. It has no legal or beneficial interest in the Site.

Documentation

It should be expected that the documents required to commence and complete the transactions contemplated by the parties are likely to be as follows:

Document Parties

Relationship and Development Agreement

BDD Trust (as Owner of the Vacant Land)

QCLTA (as Owner of the Morningside Tennis Centre)

GSE and LHC (as investors in facilities to be developed on the Site and future owner of the Vacant Land and Lessee of the Morningside Tennis Centre)

TGM (as a potential sole Operator of the Site, whether under one or two separate Operator Agreements)

Transfer – Form 1 RE Vacant Land

BDD Trust (as Transferor)

GSE (as Transferee)

Lease – Forms 7 and 20 RE Morningside Tennis Centre

QCLTA (as Lessor)

GSE (as Lessee)

Co-ownership Agreement RE Vacant Land

BDD Trust (as Tenant in Common in Equal Share)

GSE (as Tenant in Common in Equal Share)

LHC (as representative of the interests of GSE)

Operator Management Agreement RE Vacant Land

TGM (as the Operator)

BDD Trust and GSE (as the then owners of the Vacant Land) and LHC (as representative of the interest of GSE)

QCLTA (as the owner of the Morningside Tennis Centre)

Relationship and Development Agreement

This agreement outlines the project and development objectives of the parties, the contemplated consequential transactions which includes a land transfer, a long term lease, a relationship and co-ownership agreement and an operator agreement. Each of those documents would be annexed to the agreement and are more particularised in the following paragraphs of this letter.

Letter to Good Samaritan Education 29012014a 3

The consideration for this agreement will be the agreement by GSE/LHC to invest certain moneys (that are yet to be quantified and called “the Consideration”) in the development of agreed sporting facilities on the Site over an agreed period of time and subject to certain approvals of the Brisbane City Council and other authorities and perhaps other conditions precedent to be detailed in negotiations between the parties. However, it is expected that those conditions precedent might include the formal ratifications of the agreement by the various governing bodies for each of the parties.

Whilst the nature of the sporting facilities is yet to be determined and agreed the QCLTA and BDD Trust have the expectation that this would include 4 full sized championship tennis, hard courts suitable for championship matches with LED environment friendly night-lights and over court fabric covered structure to provide shade and light rain protection. Full fencing, umpire seats, posts and nets would also be included in the required works for QCLTA and BDD Trust. Other facilities that LHC may require are generally and in a conceptual way shown on the attached early concept drawing by Lawrie Bertoldi, Architect for LHC.

Upon satisfaction of the conditions precedent, the parties would be bound to execute the various agreements that would be contained in annexures. In the case of the land transfer and lease transactions these must be stamped and registered on title in due course. Survey plans, architectural drawings and other preliminary Site works and consultants will be the responsibility and at the cost of LHC / GSE.

This agreement would contemplate any development and building applications for all work on or about the Site including the construction of a school purposed building and the potential upgrade of the existing causeway across the flood way or watercourse between the Vacant Land and the Morningside Tennis Centre. All development, building and works applications, plans, designed and works would be the responsibility and at the cost of LHC. A project plan and budget would be developed in consultation between the parties but lead by the architect or project managers appointed by LHC.

Each party should pay its own legal fees save the Transfer, Lease, Co-ownership and Operator Management Agreement that will be at the cost of LHC and GSE. Should the Relationship and Development Agreement be executed then all GST, stamp duty, registration fees, survey fees, BCC fees and other development costs would be also payable by LHC and GSE.

This agreement would cease operation upon satisfaction of all conditions precedent and subsequent.

In exchange for the Consideration and contemporaneous satisfaction of all conditions precedent under the Relationship and Development Agreement (eg. various approvals), then the following documents would be executed and preformed:

Transfer – Form 1

BDD Trust would transfer a half interest in the Vacant Land to GSE to hold as tenant in common in equal share with the BDD Trust. This would be stamped, probably on the value of the Consideration payable by GSE/LHC under the Relationship and Development Agreement. It may be necessary to obtain a professional valuation (at the cost of GSE) to evidence and quantify the Transfer duty payable by GSE/LHC on the conveyance of the interest in land. It is unknown at this time whether GSE is exempt from stamp duty or eligible for any concession so I have assumed that stamp duty may be payable.

Lease – Forms 7 and 20

QCLTA would lease part of Morningside Tennis Centre land to GSE for the construction by GSE of a building for support of sporting and educational activities on parts of the Site by LHC. The area and location of the building on Morningside Tennis Centre land that is not used for or associated with the operations of QCLTA’s tennis business and activities, is an area yet to be identified, but it should be sufficient for a proposed building and potential car park area shown in the concept drawings.

The lease would be a long term lease (ie. 99 years). Associated with that lease would be a licence area to enable LHC to build a running track and other sporting facilities yet to be identified on land that is also used for common access by the members of QCLTA their invitees and operators of its tennis business, but which is suitable to joint use with LHC. This area might be a strip of land about or along the boundaries of Morningside

Letter to Good Samaritan Education 29012014a 4

Tennis Centre as shown in the concept drawings. The existing road way and car park might also be a common use area.

In the case of a long term lease of part of a lot, Queensland law requires that to register such a lease, the local Council must first seal a plan of subdivision for the premises pursuant to an application for reconfiguration of the lot (ie. comprising the Morningside Tennis Centre). QCLTA, as owner, would consent to the application. The subdivisional costs, sealing of the survey plan, surveyors and Council fees are to be borne by LHC and GSE.

It is not proposed that there be anything more than nominal rent payable with respect to the lease and licence, but that is subject to the general commercial Consideration yet to be negotiated and agreed.

It is assumed that there would be a sharing of land occupier related outlays (otherwise payable by the lessor). In the case of the proposed long term lease, the land tax, rates, water, sewerage and other service charges would be shared proportion to the areas used by LHC and the balance of the land. In the case of power, water, telecommunications and other utilities, security services, maintenance and repairs, these would be payable on a user pay basis, especially where meters are included in the building works.

It would not be permissible for there to be any charge over the Lease, nor a right of assignment, transfer or sublease of the Lease area. There would be no right to part with possession such that it is intended to be a lease that solely benefits LHC thought the long term of the lease.

Other more common commercial lease provisions would be negotiated between the QCLTA and LHC/GSE.

Co-ownership Agreement RE Vacant Land

BDD Trust and LHC/GSE would enter into an agreement to govern and maintain the good relations between the parties. It may be that the BDD Trust will transfer its interest to the QCLTA contemporaneous to this agreement to simplify the arrangements as QCLTA should then be a company limited by guarantee and as it is the sole beneficiary of the BDD Trust.

QCLTA requires exclusive use of the proposed 4 tennis courts for members and its invitees, after 3.30pm until 10pm. Shared access before 3.30pm would be managed by TGM (the operator and manager of the Morningside Tennis Centre) using an online bookings system (which already applies for the Morningside Tennis Centre). No charge would be levied for non-tennis use of the 4 proposed courts by LHC during the day before 3.30pm. No charge would be levied or payable by QCLTA for its use of the of the proposed 4 proposed courts at any time. However, use of the proposed 4 tennis courts by LHC during the daytime before 3.30pm for playing tennis, would be on a normal commercial terms and charge basis. Use of the proposed 4 tennis courts during the day time before 3.30pm over school holiday and weekend periods would also be subject to the same on line booking arrangement managed by TGM, but the QCLTA would be given priority of use for fixtures and tournaments booked within 6 months prior to those events. Conflicts in bookings not resolved by TGM will be subject to consultations between the President of QCLTA and Principal of LHC or their delegated representatives. If there is no resolution then the matter will be referred under a general Dispute Resolution Process.

It is assumed that LHC will want to fence the Vacant Land and provide access gates on the adjoining Streets and causeway crossing. Physical access to the proposed courts would be primarily from Beelarong Street or Algoori Street, but could also be via the causeway if that is constructed. Access to the 4 new courts would be controlled by TGM (the operator and manager of the Morningside Tennis Centre) using online bookings and remote gate and light control systems with integrated voice and security systems. No staff would be located on the Vacant Land post development for that QCLTA purpose. However, it is assumed that TGM would probably also manage the access gates to the Vacant Land. LHC can handle all notices and charges from government authorities and provide copies to QCLTA /BDD Trust.

LHC is interested in the day time use of the land (other than the proposed 4 courts) for sport and outdoor education purposes. LHC would have sole use and control of that land (ie not the 4 Tennis Courts and associated common access ways). It may be that a small car park is required for approvals to be secured and then common use of that parking area would be required.

Letter to Good Samaritan Education 29012014a 5

Maintenance and repairs of the tennis courts, and associated fencing, lighting and fabric covering above, nets and posts would be costs for QCLTA. A sensible low cost Dispute Resolution process would be incorporated.

Regular periodic meetings between the parties would be desirable and all other provisions should be fair, reasonable and negotiated in good faith between the future co-owners of the Vacant Land.

Operator Management Agreement RE Vacant Land

BDD Trust/QCLTA and GSE/LHC would enter into a new Operator Management Agreement with TGM for it to operate the 4 proposed tennis courts and to manage the Vacant Land to assist and achieve the objects of the Co-ownership Agreement.

The term of this agreement would be for the balance of the term and option period under the existing Operator Agreement for the Morningside Tennis Centre.

A breach of the existing Operator Agreement by TGM would be a breach of the new Operator Management Agreement.

Rights and obligations under the proposed Operator Management Agreement would not be assignable or transferable by TGM without the prior written consent of QCLTA and LHC.

It is anticipated that the consideration for the operation of the 4 proposed tennis courts would be an agreed share of revenue from bookings. Additional non-tennis management duties and responsibility for the care, maintenance, security and repair of the balance of the current Vacant Land (ie other than the 4 proposed courts) would be a cost for LHC. LHC would be at liberty to provide its own contractors to attend to the care, maintenance, security and repair of the balance of the current Vacant Land (ie other than the 4 proposed courts).

Other provisions may be considered for incorporation, such as those other provisions under the existing Operator Agreement between TGM and QCLTA. Details of that agreement can be made available if this matter proceeds beyond this letter.

Next Step

It is understood that the Finance Committee of GSE is meeting in a few days. It would be appreciated if GSE could indicate by return correspondence as soon as practicable whether GSE is generally in favour of the above structure and would favour proceeding with further negotiations.

If you have any questions or concerns please contact the writer.

Yours faithfully

Michael Sparksman Principal

FC17.4(ii)