A

Agenda Item 7.3 - Appendix 4

dated 20[ ]

Homes for Northumberland Limited

and

Building for Northumberland Limited

Intragroup Agreement

Trowers & Hamlins LLP

3 Bunhill Row

London

EC1Y 8YZ

t +44 (0)20 7423 8000

f +44 (0)20 7423 8001

www.trowers.com 1

draft (1) dated 28/10/13

PSEC.2521405.1 1 IGD.49992.4

Intragroup Agreement

dated [ ]

Parties

(1) Homes for Northumberland Limited a company limited by guarantee registered with

Companies House in England under number 4375380, whose registered office is at Blyth

Civic Centre, Renwick Road, Blyth, Northumberland NE24 2BX (the Parent);

(2) Building for Northumberland Limited a company limited by guarantee registered with

Companies House in England under number 8668889, whose registered office is at Blyth

Civic Centre, Renwick Road, Blyth, Northumberland NE24 2BX (BfN); an

Introduction

(A) The Parent is the head of a group of entities which undertake a range of community, social

and other activities including housing and care.

(B) BfN is a Registered Provider of social housing, and is regulated by the Regulator.

(C) The parties have agreed to express their common objectives and disciplines on the terms

set out in this Agreement.

Agreed terms

1 Interpretation

1.1 In this Agreement where the context so admits the following words and phrases shall bear

the following meanings:

Budget means each of the Subsidiaries' budgets for the current year set in accordance

with clause 8;

Business Plan means each of the Subsidiaries' current business and financial plans set

in accordance with clause 8;

Competent Authority means, insofar as each of these has regulatory authority over any

of the parties, the Regulator, the Registrar of Companies or any other statutory body;

Council means Northumberland County Council or any successor body thereto;

Group means the parties and any other entity which is a subsidiary or associate of

another party in the Group (including the Council) (together Group Members);

[Group Chief Executive] means the most senior executive officer of the Parent appointed

in accordance with clause 10.3;

Group Policies means a policy or policies adopted by the Parent following consultation

with the Subsidiaries and publicised in accordance with clause 7;

Parent Board means the board of management of the Parent;

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Parent Constitution means the constitution of the Parent as amended from time to time;

Registered Provider means a social housing provider registered with the Regulator;

Regulator means the Homes and Communities Agency acting through the Regulation

Committee established by it pursuant to Part 2 of the Housing and Regeneration Act 2008

or any statutory successor carrying on the same or similar regulatory functions.

Regulatory Standard means any standards or requirements established by the Regulator

under Sections 193 and 194 of the Housing and Regeneration Act 2008;

Service Agreement means an agreement in the form set out in Schedule 3 to be entered

into by setting out the terms upon which Services are to be provided to one party by

another;

Services mean any services to be provided by one party to another pursuant to this

Agreement and the relevant Service Agreement;

Subsidiaries mean BfN;

Subsidiaries' Constitutions means the constitutions of the Subsidiaries in the form

approved by the Parent as amended from time to time in accordance with the terms of this

Agreement;

Subsidiary Board means the board of management of the relevant Subsidiary.

1.2 Words denoting the singular shall include the plural and vice versa, words denoting the

masculine gender shall include the feminine gender and vice versa and words denoting

persons shall include corporations.

1.3 Reference to any statutory provisions or instruments shall be deemed to include reference

to any such provisions or instruments as from time to time amended, varied, replaced,

extended or re-enacted and to any orders or regulations under such provisions.

1.4 Reference to a clause or a Schedule shall be deemed to be references to a clause or a

schedule to this Agreement and references to a paragraph shall be deemed to be

references to a paragraph of the Schedule in which the reference appears.

1.5 In this Agreement clause headings are included for ease of reference only and shall not

affect this Agreement or the interpretation hereof.

1.6 Covenants by or with more than one party are joint and several.

2 Group objectives

2.1 The parties wish to record their intention that they should be treated as a Group and each

party covenants to carry on its business in accordance with the Group objectives as set

out in this clause 2.

2.2 The objective underlying the Group is that of strong member organisations, which provide

a range of housing, regeneration, community development and care solutions in the

communities in which they operate, but which subscribe to common values and

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disciplines, and which operate effectively in order to meet the aims of the Group’s strategic

plan.

2.3 The business focus of the Group is expected to reflect these objectives and values.

3 Parent covenants

3.1 The Parent agrees that at all times it will comply with the Group Policies.

3.2 The Parent also covenants with the Subsidiaries in the terms set out in Part 2 of Schedule

1 in relation to:

3.2.1 co-operating with the Subsidiaries;

3.2.2 acknowledging BfN's status as a Registered Provider.

4 Subsidiaries' covenants

4.1 Each of the Subsidiaries agrees that:

4.1.1 it shall ensure that the composition of the Subsidiary Board shall satisfy the

governance requirements set out in any Group Policies, or otherwise agreed

with the Parent;

4.1.2 it will obtain the approval of the Parent Board prior to appointing an employee

who is to be the [chief officer] of the Subsidiary and shall not make such an

appointment otherwise than in accordance with clause 10;

4.1.3 it will obtain the approval of the Parent Board prior to appointing a chair to the

Subsidiary Board;

4.1.4 the Subsidiary Board will not exercise its own removal and appointment powers

(set out in the Subsidiary's Constitution) in respect of its board members without

the consent of the Parent.

4.2 Each of the subsidiaries agrees that (subject in the case of BfN, to compliance with

paragraph 14 of Part 2 of Schedule 1) the Parent may at any time, at its complete

discretion, exercise its powers of appointment and removal of board members under the

Subsidiary's Constitution, and that it may exercise these powers in relation to all or any

members of the Subsidiary Board.

4.3 Each Subsidiary shall have the right to establish committees following consultation with

the Parent, provided that no such committee may be established where the Parent is of

the reasonable opinion that the work of such committee would duplicate the work of any

committee of the Parent’s Board.

4.4 Each Subsidiary also covenants with the Parent on the terms set out in Part 1 of Schedule

1.

5 Responsibilities of the parties

5.1 It is agreed that each party should have sole responsibility for all aspects of its business

referred to as its responsibility in Schedule 2.

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5.2 It is further agreed that the Parent Board and the Subsidiary Boards should have the right

to manage their respective businesses in accordance with the objects set out in the Parent

Constitution or the Subsidiaries' Constitutions (as appropriate) and in its best interests,

subject only to acting in accordance with Regulatory Standards (in the case of BfN), Group

Policies, the provisions of this Agreement, the Business Plan and Budget and the Group’s

overall business and financial strategy set in accordance with the terms of this Agreement.

6 Provision of assistance

6.1 In the event that BfN does not or may not be able to comply with one or more of the

Regulatory Standards, the Parent and BfN will work together to determine what, if any,

assistance the Parent might provide to BfN and/or what steps need to be taken by BfN to

address the actual or potential breach of the Regulatory Standard(s). Following this the

Parent may:

6.1.1 provide such support as it assesses to be appropriate in the circumstances,

and/or

6.1.2 issue directions to BfN to take specific steps to remedy an actual breach or

avoid a potential breach.

6.2 Where BfN is required to do so under the Regulatory Standards, or pursuant to any other

formal requirement of the Regulator, BfN will notify the Regulator of an actual or potential

breach of the Regulatory Standards, the steps it intends to take in respect of that breach

and any assistance which is to be provided or directions which have been issued by the

Parent under clause 6.1.1 and/or 6.1.2.

6.3 Any directions given by the Parent under clause 6.1.2 shall not require BfN act in such a

way as to place it in further or additional breach of a Regulatory Standard or which would

prevent it from meeting any other Regulatory Standard or other formal requirement of the

Regulator.

7 Group Policies

7.1 The Parent shall designate as Group Policies all such policies, standing orders and

financial regulations and standards as apply to the Subsidiaries.

7.2 The Parent shall have the power to adopt such other or different Group Policies from time

to time (after consultation with the Subsidiaries) as it shall consider appropriate.

7.3 In adopting Group Policies, the Parent shall draft these in such a way as to ensure that

BfN is able to comply with Regulatory Standards. The Parent shall also bear in mind the

need to ensure:

7.3.1 compliance with:

(a) reasonable standards of financial and business probity;

(b) good practice in governance and risk assessment;

7.3.2 that the business of each Subsidiary is carried on in accordance with the

Subsidiaries' Constitutions and with the Group’s corporate plan (or the relevant

part thereof);

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and otherwise shall bear in mind such matters as the Parent Board shall from time to time

consider appropriate.

7.4 Subject to the division of responsibilities referred to in clause 5, matters of operational

policy relating to the Subsidiaries' business shall not be a matter for Group Policies and

each Subsidiary shall have the right to set its own operational policies and amend these

from time to time. Each Subsidiary shall notify the Parent of all amendments to its

operational policies.

8 Group business plans

8.1 The Parent shall by no later than 30 November in each year deliver to each Subsidiary the

details of the Group’s Business Plan parameters (including any support to be provided by

the Parent or another Group Member) and of the assumptions to be used by the

Subsidiaries in preparation of their Business Plans and Budgets for the following year.

8.2 Each Subsidiary shall deliver to the Parent its updated Budget by 31 January and updated

Business Plan by 31 March (or such other dates as may be agreed between the Parent

and the relevant party) in the form approved by the Parent Board and shall confirm to the

Parent that such Business Plan and Budget meets any requirements set by the Parent

from time to time in relation to business plan and budget matters.

8.3 The Parent Board shall as soon as practicable after receipt of the updated Business Plan

and Budget pursuant to clause 8.2 confirm to each Subsidiary whether it has any issues of

concern with such Business Plan and Budget, and each Subsidiary shall make such

amendments to its draft Business Plan and Budget as the Parent Board may reasonably

require.

8.4 The Parent shall notify the relevant Subsidiary of the reasons for raising issues of concern

with its draft Business Plan and Budget and the Parent and the relevant Subsidiary will

use all reasonable endeavours to work together to agree a revised Business Plan and

Budget for approval by the Parent Board as soon as possible. Until such issues are

resolved the draft Business Plan and Budget shall not become the relevant Subsidiary's

Business Plan and Budget for the purposes of this Agreement and the preceding year’s

Business Plan and Budget of that Subsidiary shall continue to have effect.

8.5 Each Subsidiary covenants to carry on its business and only to enter into commitments as

envisaged by the Business Plan and Budget or where any matter is outside the Business

Plan and Budget with the consent of the Parent (which shall not be unreasonably

withheld).

9 Group services

9.1 Each subsidiary agrees it will procure any external services through the Parent and other

Group Members able to provide the required services save, subject to clause 9.2, where

the Subsidiary is able to demonstrate that it would be unreasonable to do so taking into

account considerations of quality, timeliness, performance or price and the other external

providers available to that Subsidiary.

9.2 Subject to relevant legal and regulatory constraints, it is intended that the primary central

service provider will be the Parent and the Parent shall have the right to designate, in

order to achieve cost efficiency across the Group, that certain services shall be provided

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by the Parent or another Group Member or externally, provided that the Subsidiaries shall

have the right to source the services they require outside the Group in the event that the

Parent or other Group Members are unable to provide such services in accordance with

and to the standard required by the relevant Service Agreement or any other agreement

for the provision of services between the Subsidiaries and the Parent or the Subsidiaries

and any other Group Member such that a termination has occurred in accordance with

paragraph 7 of such Service Agreement or where an event which would trigger termination

has occurred under any other relevant agreement for services.

9.3 Where Services are to be provided by the Parent the parties shall enter into a Service

Level Agreement as set out in Schedule 3 recording the agreed services to be provided,

the relevant performance standards, quality considerations, term of the agreement and

pricing.

9.4 The Parent may enter into any agreements it deems appropriate or desirable with any

contractors, consultants, or specialist firms for the provision of the Services.

9.5 The parties shall designate a specific officer who shall be responsible for the operation of

the Service Agreements and all related liaison between the parties.

10 Staffing

10.1 Each Party agrees that:

10.1.1 staff shall be employed from time to time in accordance with all relevant Group

Policies;

10.1.2 service provision by the Parent shall be in accordance with the Service

Agreement entered into pursuant to this Agreement; and

10.1.3 it will comply with the terms of any intragroup secondment agreement or

intragroup employee services agreement to which it is a party from time to time.

10.2 The Parent shall employ such staff as it shall reasonably deem appropriate to provide the

Services within budgets and may vary the staffing levels as it shall reasonably deem

necessary for the performance of the Services.

10.3 The Group Chief Executive shall be appointed by and be accountable to the Parent Board

but shall owe a duty of care to the Subsidiaries.

10.4 All staff recruitment, management and remuneration shall be carried out in accordance

with Group Policies relating to human resources and the relevant party shall have ultimate

responsibility for the management of all staff in the case of any conflict between the Parent

and a Subsidiary.

11 Variations

11.1 It is anticipated by the Parties that pursuant to their overall aim and intention to co-operate

for the benefit of the Group as a whole, the provisions of this Agreement may from time to

time require amendment.

11.2 It is accordingly agreed between the parties that they shall formally review the operation of

this Agreement annually and shall report thereon to the Parent Board and the Subsidiaries'

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Boards. One party may thereupon propose to the other parties that a variation be made to

this Agreement, and in such event the parties hereto shall negotiate in good faith with a

view to reaching agreement upon the variation proposed.

11.3 In the event of a failure to agree the matter in dispute shall be considered pursuant to the

procedure set out in clause 12.

11.4 In the event of a variation being agreed the same shall be recorded in a deed of variation

or replacement agreement executed by the parties.

12 Resolution of disputes

12.1 It is the declared intention of the parties that all matters of disagreement should be

resolved by negotiation and discussion between the parties and each agrees to use its

best endeavours to apply the terms of this Agreement without the necessity for

implementing the dispute resolution procedures of this clause.

12.2 In the event that there is any disagreement or dispute between the parties as to the

operation of this Agreement each party agrees that its chair and another member of its

board shall meet with a view to resolving any issues of concern.

12.3 In the event that, notwithstanding the discussions and meetings envisaged by clauses

12.1 and 12.2 above having occurred any dispute or other failure to agree continues

between the parties in relation to the matters which are the subject of this Agreement or

any Service Agreement which cannot be resolved by negotiation and discussion as

envisaged by clauses 12.1 and 12.2 the parties shall observe the following procedure for

the resolution of the same:

12.3.1 Any party may serve upon another, a dispute notice. Such notice shall state the

subject matter of the dispute and shall specify the proposals of the party serving

the notice for the resolution of the dispute.

12.3.2 No later than fourteen days after the date of service of a dispute notice and if

the proposals for resolution set out in the dispute notice are not acceptable to it,

the party upon whom such notice shall have been served may serve a counter

notice specifying its proposals for the resolution of the dispute, and specifying a

date (which shall be not less than fourteen nor more than twenty eight days

after the service of the counter notice) for a meeting to resolve the dispute.

12.3.3 The meeting referred to in clause 12.3.2 shall be attended by two board

members from each party and shall be held at the Parent's registered office or

at some other place to be agreed between the parties.

12.3.4 Those persons present at such meeting shall use their best endeavours in a

reasonable manner to resolve the dispute between the parties, but if the dispute

shall not be resolved the matter shall, be referred to advisory conciliation.

12.3.5 Advisory conciliation shall be carried out by an independent person who shall

be appointed jointly by the affected parties or, failing agreement upon such

appointment, shall be nominated by the Chief Executive for the time being of

the National Federation of ALMOs following a reference to him by either party

within fourteen days of the meeting referred to in clause 12.3.3.

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12.3.6 The parties agree to co-operate with the person appointed or nominated to

carry out the advisory conciliation pursuant to clause 12.3.5, and shall act in

good faith with a view to reaching agreement upon the matter in dispute with

the assistance of such advisory conciliation.

12.3.7 The person appointed or nominated to carry out the advisory conciliation shall

as a term of his appointment or nomination be required to present a report of

his findings. Such report shall be copied to each party who shall by notice in

writing to the other served within fourteen days of receipt of the report indicate

its willingness or otherwise to settle the dispute upon the basis suggested in the

report. The costs of any advisory conciliation shall be shared equally by the

affected parties.

12.3.8 In the event that the matter in dispute:

(a) is referred to advisory conciliation, but is not resolved; or

(b) is not referred to advisory conciliation;

the matter shall be referred to the Parent Board which shall consider all the

relevant matters relating to the dispute and whose decision reached by majority

vote shall be final and binding upon all affected parties.

12.3.9 Any decision made by the Parent pursuant to clause 12.3.8 shall be subject to

paragraph 13 of Part 2 of Schedule 1.

13 Notices

13.1 Any notice to be served on the Parent under the terms of this Agreement shall be in writing

and addressed to the Group Chief Executive at the address shown on the front of this

Agreement or to such other address as the Parent may from time to supply in writing to the

Subsidiaries and shall be deemed to be duly served:

13.1.1 on delivery, if delivered by hand and receipted for by the recipient;

13.1.2 48 hours after dispatch by recorded delivery;

13.1.3 if faxed or emailed, one hour after transmission provided that no transmission

notification of non-delivery or error has been received by the person

transmitting the communication and the transmission is to the fax number or

email address of the officer referred to in clause 13.1 as last notified by one

party to the other parties.

13.2 Any notice to be served on the Subsidiary under the terms of this Agreement shall be in

writing and addressed to the most senior executive officer of the Subsidiary at the address

shown on the front of this Agreement or to such other address as the Subsidiary may from

time to supply in writing to the Parent and shall be deemed to be duly served:

13.2.1 on delivery, if delivered by hand and receipted for by the recipient;

13.2.2 48 hours after dispatch by recorded delivery;

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13.2.3 if faxed or emailed, one hour after transmission provided that no transmission

notification of non-delivery or error has been received by the person

transmitting the communication and the transmission is to the fax number or

email address of the officer mentioned in clause 13.2 as last notified by one

party to the other parties.

13.3 A change of address under clause 13.1 or 13.2 must be duly notified by the relevant party

in writing to the other parties.

14 Jurisdiction

This Agreement shall be governed by English law and the Courts of England that have

exclusive jurisdiction to determine any dispute between the parties.

15 Third parties

A person who is not a party to this Agreement shall have no rights under the Contracts

(Rights of Third Parties) Act 1999 to enforce any of its terms.

This Agreement has been executed as a deed and is delivered and takes effect on the date stated

at the beginning of it

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Schedule 1

Part 1

Subsidiaries' covenants

Each Subsidiary will co-operate with the Parent as follows:

1 By complying with all requests of any Competent Authority.

2 By complying with all reasonable advice from the Parent in relation to probity, standards of

competence, management and fidelity, and customer services.

3 By implementing and complying with Group Policies.

4 By carrying on its business and only entering into financial commitments in accordance

with and as envisaged by its Business Plan.

5 By working closely with all appropriate local agencies in seeking to satisfy local housing

needs in their areas of operation.

6 By attending liaison meetings with the Parent if requested and providing such relevant

information as may be requested by the Parent as to the performance of the Subsidiary in

relation to strategic policy and financial matters.

7 By reporting to the Parent quarterly upon its financial, housing management and other

operational functions in such form as the Parent shall from time to time reasonably require.

8 By providing the Parent with copy board reports and papers circulated to the Subsidiary's

board members (at the time of circulation to board members) and minutes of meetings of

the Subsidiary's Board and of all committees promptly following those meetings.

9 By permitting the Group Chief Executive to attend all Subsidiary Board and committee

meetings.

10 By providing all information upon any aspect of its affairs reasonably requested from time

to time by the Parent and co-operate fully with any investigations into its affairs initiated by

the Parent from time to time.

11 By appointing the Group’s auditors as its auditors and using the Group’s panel of bankers,

solicitors and any other consultants (other than consultants of a temporary or minor nature

employed for day to day work) and by making appropriate recommendations to the Parent

of consultants who could join the Group’s panel.

12 By appointing the secretary of the Parent from time to time as the secretary of the

Subsidiary.

13 By respecting confidentiality of all material and negotiations (otherwise than in respect of

those already in the public domain) and only disclosing any confidential information

pertaining to the Group with the prior agreement of the Parent (except where required to

do so by any law or regulation).

14 By operating in accordance with its own standing orders and financial regulations.

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15 By appointing and removing the executive directors of the Subsidiary after consultation

with and after having considered any approval from the Parent Board and the [Group Chief

Executive].

16 By complying with the reasonable requests of the Parent to contribute to specific areas of

the Group business at particular times.

17 By only contracting as itself and not attempting to commit the Parent, or any other Group

Member, as an agent or otherwise in any contractual arrangement.

18 In all communications with third parties (e.g. letters) acknowledging that the Subsidiary is

part of the Group in such form as shall be agreed between the parties from time to time.

In the case of BfN:

19 By remaining registered with the Regulator as a Registered Provider and complying with

the Regulatory Standards and other regulatory requirements of the Regulator from time to

time.

20 By preparing for and co-operating with any monitoring of its activities by the Regulator and

by providing copies to the Parent of all communications with the Regulator relating to the

Regulator's role as regulator of BfN as a Registered Provider.

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Schedule 1

Part 2

Covenants by the Parent

Co-operation covenants:

The Parent will co-operate with each Subsidiary as follows:

1 By providing high level professional and other advice and support as required by the

Subsidiary relating to significant policy matters generally, including advice on regulatory

requirements in relation to performance expectations, monitoring and good professional

standards.

2 By implementing and complying with any relevant Group Policies.

3 By advising the Subsidiary on and assisting with the selection and appointment of

bankers, solicitors and other consultants.

4 By appointing:

4.1 external auditors for the Group;

4.2 internal auditors for the Subsidiary following consultation with the Subsidiary.

5 By complying with all reasonable requests of the Regulator.

6 By implementing all its adopted strategic policies.

7 By providing such advice and assistance as the Subsidiary may reasonably require in the

preparation of its Business Plan, Budget, financial plans, statements, financial reports and

cash flows.

8 By complying with its responsibilities in relation to the approval of the Business Plans and

Budgets under clause 8.

9 By advising and assisting the Subsidiary in the appointment of its most senior executive

officer.

10 By respecting confidentiality of all material and negotiations.

11 By operating in accordance with its own standing orders and financial regulations.

12 By operating in accordance with the Group’s core values and vision.

Covenants relating to BfN's status as a Registered Provider:

13 Not to direct or require BfN to do anything that would prejudice BfN's ability to comply with

Regulatory Standards or other applicable regulatory requirements of the Regulator.

14 Not to exercise its powers to appoint or remove board members of BfN in such a way as to

cause BfN to contravene any Regulatory Standards [in respect of BfN's board, its

operations or any related matters].

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15 To ensure that Group accounts are maintained in accordance with any applicable

statement of recommended practice.

16 Not to take nor omit to take any action nor make any statements which imply or could lead

a third party to believe that BfN has any legal responsibility or liability for the Parent's

activities, liabilities, acts or omissions.

17 Not to require BfN to provide any financial assistance to the Parent which would have the

effect of prejudicing BfN's ability to comply with any Regulatory Standards.

18 Not to require BfN to use its social housing assets for any purposes other than social

housing.

19 Not to exercise its powers of control over BfN in a manner which is intended to or has the

effect of obstructing hindering or precluding the exercise by the Regulator of its regulatory

powers.

20 Not to remove any member of BfN's Board appointed by the Regulator in the exercise of

its regulatory powers.

Schedule 2

Group responsibilities

1 Parent

The Parent is responsible for the following functions:

1.1 Strategic direction – including overall culture and values; business planning and

budget guidelines, setting and monitoring of core values and performance standards.

1.2 Approval of the Group’s overall budgets and capital programmes.

1.3 Approval of bids to the Homes and Communities Agency.

1.4 Regular review of governance arrangements with input from each Subsidiary.

1.5 Receipt of reports from [the Audit Committee].

1.6 Development – subject to input from the BfN's board on specific schemes. Parent

responsibility will include development of strategy and standards, approval of

development programme and management of approved development programme.

1.7 The approval and review of the Group’s Policies and standing orders and financial

regulations including the framework of delegation to staff.

1.8 Contractor role – in relation to services provided to the Subsidiaries.

1.9 Personnel and recruitment functions.

1.10 Information technology.

1.11 Financial services.

1.12 Setting the borrowing and financial management framework.

1.13 Procurement of all external services to the Group including maintenance of lists of

approved contractors and consultants – but with local input as appropriate to the

service.

1.14 Research.

1.15 New initiatives – where these involve significant use of resources, whether existing or

new.

1.16 Monitoring the compliance by BfN with all Regulatory Standards and taking the action

envisaged by this Agreement in the event of non compliance.

1.17 Setting the treasury management policies for the Group.

1.18 Arranging internal and external audit.

1.19 Taking appropriate steps to help ensure the financial and business viability of the

Subsidiaries and that all regulatory requirements affecting the Group are complied

with and that the Group’s overall reputation and good standing is protected at all

times.

1.20 Setting the health and safety framework for the Group.

1.21 Setting the risk management framework for the Group.

1.22 Setting policies and procedures in relation to human resources for the Group,

including setting levels of remuneration for staff across the Group.

1.23 Monitoring key performance indicators.

1.24 Managing Group external communications.

1.25 Any other function that the Parent may from time to time designate as a function of the

Parent (following consultation with the Subsidiaries).

2 Subsidiaries

The Subsidiaries are responsible for the following functions (insofar as relevant to their

respective business and operation):

2.1 Ensuring their business is carried out in accordance with:

2.1.1 the Subsidiaries' Constitutions and the requirements of any Competent

Authority; and

2.1.2 (in the case of BfN) the Regulatory Standards and any other formal

requirement of the Regulator

and that their overall business objectives are furthered in the manner the Subsidiary

Boards consider most appropriate subject only to the provisions of this Agreement.

2.2 Running all operational, management and day to day aspects of their business and in

BfN's case including the setting of strategic and operational frameworks within the

context of its Business Plan and overall Group Policies.

2.3 Regular review of operational policies and procedures in accordance with a defined

programme.

2.4 Tenant or customer involvement and participation.

2.5 Housing or property repairs – all aspects except contract procurement.

2.6 Development – input into development brief from both management and area

viewpoints; final decision as to whether to develop particular scheme/service, subject

to prior approval of the Parent.

2.7 Development of summary and detailed budgets (within guidelines), which will be

subject to the approval of the Parent.

2.8 Definition of service standards for service agreements.

2.9 Monitoring of performance standards.

2.10 Reporting to the Parent Board as required by this Agreement.

2.11 Client function in relation to centrally operated services.

2.12 Generation of new operational initiatives.

2.13 Ensuring their business is operated in accordance with the objectives, goals and

values of the Group from time to time.

2.14 Taking action on internal and external audit findings.

2.15 Maintaining good relationships with any external parties including the Council and

other statutory bodies and agencies.

2.16 Monitoring key performance indicators and reporting to the Parent.

2.17 Implementation of reports from the [Group Risk Management] and [Audit Committee].

2.18 Any other function that the Parent may from time to time designate as a function of the

Subsidiaries.

Schedule 3

Service Level Agreement

2014/15

For Provision of Corporate Services

Between

Homes for Northumberland Limited (Service Providers)

And

Building for Northumberland Limited (The Client)

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Service Level Agreement

Between

Building for Northumberland Ltd (Client) and

Homes for Northumberland (Service Providers)

1. Introduction

1.1 This agreement forms the basis of a contract between Building for Northumberland Ltd (BfN) and Homes for Northumberland Ltd (HfN) for the provision of Corporate Services including Finance, Procurement, IT, HR and Risk Management.

1.2 The aims of this SLA are:

To clarify the respective roles of each party involved in the arrangement; and

To set minimum service standards.

1.3 In addition to this agreement, the Service Level Agreement between Homes for Northumberland and NCC Finance will be widened to incorporate Building for Northumberland as well.

2. Finance

2.1 HfN will provide all required Finance support including:

preparation of monthly management accounts with comparison against budget and

identification of any risks to achievement of planned outturns

cash management and regular cash forecasting to ensure sufficient liquidity at all

times

financial planning and forecasting as required

preparation of statutory accounts and filing of annual returns etc

processing of invoices and payment of suppliers

maintenance of appropriate asset register

management of all inter-group funding arrangements

monitoring and payment of all business loans or other funding instruments

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3. Procurement

3.1 HfN will provide a full procurement service including:

Sourcing of all required suppliers through approved processes adhering to

approved delegated authorities

Management of tender processes for the procurement of new build schemes

Negotiation of ancillary contracts as required ensuring best value is obtained at all

times

Placing of all orders on approved suppliers

4. I.T. Support

4.1 HfN will provide and maintain all required IT systems:

Provision of core IT systems and appropriate infrastructure

Maintenance of all hardware including PC’s, Printers, Phones etc

Software support for all packages in operation

5. HR Support

5.1 HfN will provide a comprehensive HR and Organisational Development Function:

Provision of HR advice as required

Maintenance of Organisational structures

Recruitment of resources when the business has developed sufficiently

Provision of payroll services in the event that BfN employs its own staff.

6. Risk Management

6.1 HfN will provide risk management services to ensure the BfN Board is kept fully informed of

all potential risks to the delivery of the business plan including:

Maintenance of appropriate Risk Register in line with the Risk management

framework of BfN (to be developed)

Reporting of any additional risks identified

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7. Service Availability

7.1 HfN will provide this service between 08:00 – 17.00 Monday – Friday (excluding Bank Holidays).

8. Service standards

8.1 Service standards for each area will be agreed and quarterly reviews will be conducted to ensure the quality of the service is maintained.

8.2 Response timescales will be reported at monthly Account Meetings (see below) and if

falling below stated times a jointly agreed action plan will be created to address issues and work toward continuous improvement

8.3 In the event of any issues or concerns over the delivery of the service then Paul Harrison,

Director of Corporate Services, should be contacted on 01670 622869,

Paul.Harrison@hfn.uk.com

9.0 Liaison, monitoring, penalties and arbitration

Monthly meetings 9.1 BfN and HfN will develop appropriate documents and procedures for the exchange of

information relating to this contract.

9.2 Monthly Account Meetings will be established to resolve any issues arising out of the day-to-day operation of this agreement and seek to identify and implement continuous improvements.

Penalties 9.3 The parties to this SLA will seek to resolve disputes and concerns through negotiation and

discussion without the need to resort to formal dispute resolution. However, where services are not provided in line with this agreement and the fault lies with HfN, BfN reserves the right to reduce the agreed fee. BfN will reduce the annual fee under this contract by 0.2% for every occasion on which the service standards set out above are breached. Any reduction in the annual fee arising in this way will be discussed in the Account Meetings.

Annual review 9.4 The parties agree to review this contract annually to:

Review progress against targets;

Agree any amendments to performance measures and targets;

Review the agreement

Establish ways to improve service provision.

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Other matters

Confidentiality 9.5 Neither party shall disclose to any other party any information in connection with the

provision of the service or any information contained in the agreement other than in compliance with the agreed information format specified in the agreement or in compliance with the provisions of the Data Protection Act 1998.

Assignment and Subcontracting 9.6 The Service Provider shall not transfer or assign this agreement and shall not subcontract

the provision of the service without the prior written permission of the Client, such permission to be not unreasonably withheld.

10.0 Cost of the service

10.1 Initially, due to the small scale of BfN’s operations, the cost of providing this service will be absorbed by HfN into other project management costs. However HfN reserves the right to charge BfN for its services as the business grows.

11.0 Agreement

11.1 The above agreement is accepted on behalf of Homes for Northumberland:

Name: ………...…………………………………………….

Position: ……...…………………………………………….

Signature: ………………………………………………….

Date: ………………………………………………………..

Countersigned on behalf of Building for Northumberland:

Name: ………...…………………………………………….

Position: ……...…………………………………………….

Signature: …………………………………………………..

Date: ………………………………………………………..

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Intragroup agreement – execution page

SIGNED by )

duly authorised on behalf of )

[HOMES FOR NORTHUMBERLAND )

LIMITED] in the presence of: )

SIGNED by )

duly authorised on behalf of )

[BUILDING FOR NORTHUMBERLAND )

LIMITED] in the presence of: