LONDON BOROUGH OF BARNET BRENT CROSS SOUTH DOCUMENT OVERVIEW 1 INTRODUCTION 1.1 The regeneration of Brent Cross South is to be delivered by a joint venture between the Council and Argent/Related. The joint venture entity will be an English Limited Partnership ('BXS LP'). Through ownership of interests in the General Partner, BXS LP will effectively be controlled on a 50:50 basis by the Council and Argent/Related. The main legal documentation which will be put in place is as follows: A project agreement to be entered into by the Council and BXS LP this is a conditional development agreement that provides for the phased drawdown of land for development. A limited partnership agreement which governs the financial arrangements of BXS LP. (c) A shareholders' agreement which governs the basis on which decisions are made and BXS LP's delivery of the project. A development management and infrastructure development agreement between BXS LP and an Argent/Related entity (called "the Development Manager") which provides for the delivery of the obligations assumed by BXS LP under the Project Agreement. 1.2 In addition, the Council proposes to enter into a deed of variation of both the property development agreement and co-operation agreement that relates to Brent Cross North. All of the above documentation is intended to be entered into simultaneously. We set out below a summary of the four main documents that relate to Brent Cross South. A separate report has been prepared in relation to CPO1 that summarises the Brent Cross North documentation. 2 PROJECT AGREEMENT 2.1 The Project Agreement is to be entered into by the Council and BXS LP. Details of the BXS LP structure and its formation are contained in paragraph 4 below. Legal02#59575044v1[RVB1] 1
2.2 The redevelopment of Brent Cross South pursuant to the project agreement is conditional (which conditions may be waived by BXS LP) upon two key events (amongst other things): the unconditional date occurring in relation to the development of Brent Cross North (see the separate report in this regard); and the Council proceeding with the development of the Thameslink station having secured Network Change. 2.3 An initial proposal for the first Phase of the project (including that part of the Whitefield estate relocation site which is to be delivered by BXS LP) is required by 31 December 2016 (assuming viability is achievable) and the obligations in relation to the delivery of that first Phase are to be progressed following confirmation of CPO2; and CPO3 (and each being immune from challenge) and network change and consents for the Thameslink station being secured. Business Plan and identifying Phases 2.4 BXS LP must deliver the regeneration of Brent Cross South in accordance with a pre-agreed business plan to be updated from time to time. The contents of the initial business plan are approved by BXS LP. The business plan contains key principles and strategies that will drive the development and will evolve to reflect proposals for the delivery of a phased development including the proposed content of the Phases, projections of their financial viability and a programme for implementation of the Phase and project as each Phase is defined. Changes to the business plan need to be approved by either the Council's appointed directors on the board of BXS LP's General Partner or by the Council as a shareholder in the General Partner (see paragraph 4.1 below). 2.5 BXS LP will appoint the Development Manager to develop more detailed proposals for the bringing forward of individual Phases. Once the Development Manager has worked up proposals for a Phase, it will put these to the board of BXS LP's General Partner for approval or, as the case may be, to the shareholders in the General Partner for approval. The Phase Proposal will contain details of the proposed development on a Phase, the timetable for development, and also a calculation of the Council's potential entitlement to land value and a share in surpluses. Legal02#59575044v1[RVB1] 2
Phase approval process 2.6 Once approved by BXS LP, the Phase Proposal will be put to the Council under the terms of the Project Agreement for approval. Satisfying pre-conditions 2.7 Once the Phase Proposal is approved, subject to the pre-steps referred to in paragraph 2.3 regarding CPO2; CPO3; Network Change and station consents) BXS LP must seek to satisfy pre-conditions before it can drawdown land including planning consents, land assembly and confirmation of any future CPO, funding and financial viability. Infrastructure and development works 2.8 Following satisfaction of the pre-conditions and drawdown of a licence to undertake infrastructure works, BXS LP is under an obligation to procure that the Development Manager delivers infrastructure on the infrastructure land. Once areas on which common parts are located are practically complete a long infrastructure lease is granted by the Council to a management company to facilitate the delivery of estate wide management services. 2.9 Development Plots (for substantive development of valuable assets) are drawdown by way of long lease after satisfaction of the pre-conditions and will either be developed by members of the Argent/Related group or by third parties. Guarantees 2.10 In order to secure delivery of Brent Cross South, guarantees from Related are provided in relation to the following documents: the CPO2 indemnity agreement and (where required) other CPO indemnity agreements; the obligations of Argent/Related under the Limited Partnership Agreement and the Shareholders' Agreement (which may include an obligation to fund BXS LP); Legal02#59575044v1[RVB1] 3
(c) the obligations assumed by the Development Manager in the development management and infrastructure agreement and owed to BXS LP and, to the Council (via a collateral warranty); the obligations owed to the Council contained in infrastructure licences and (where required) Development Plot leases; (e) (where required) the obligations owed to BXS LP contained in Plot development agreements; (f) any infrastructure agreements which the Council is required to enter into as landowner. Brent Cross North 2.11 The Project Agreement deals with a number of other aspects that relate to the interface with Brent Cross North. Principally, these are: proposals to acquire Cricklewood Regeneration Limited and with it, the ability to exercise an option over Network Rail's land; options for the Council to acquire HSL landholdings within Brent Cross South to facilitate development; (c) specific provisions to deal with the interface between Brent Cross North and Brent Cross South including the ability for BXS LP to inform the manner in which the Council engages with HSL where such matters have a significant impact on the development of Brent Cross South. ; addressing matters for the delivery of Brent Cross North and Brent Cross South including the decoupling of certain planning obligations and a coordinated approach to delivering highways, the Living Bridge and critical infrastructure; 3 DEVELOPMENT MANAGEMENT AND INFRASTRUCTURE AGREEMENT Whilst the Council secures various commitments from BXS LP under the terms of the Project Agreement, a number of those obligations are in turn fulfilled by the Development Manager Legal02#59575044v1[RVB1] 4
under the terms of a development management and infrastructure agreement. The Council receives a collateral warranty in respect of these services. 4 THE JOINT VENTURE STRUCTURE 4.1 The joint venture entity will be an English Limited Partnership ('BXS LP'). Through ownership of interests in the General Partner, BXS LP will effectively be controlled on a 50:50 basis by the Council and Argent/Related. The BXS LP has a general partner which is charged with the day to day management of the BXS LP. The General Partner is a new limited liability company that will be owned 50:50 by the Council and Argent/Related. 4.2 The limited partners do not get involved in the management. Each of the Council and Argent/Related will hold a limited partnership interest in BXS LP. The Council will hold its interest as limited partner through a new wholly owned company ('LBB SPV'). The Council and Argent/Related will be entitled to receive profit/surplus through their limited partner interests. 4.3 The Limited Partnership Agreement ('LPA') will be entered into by the General Partner and the Limited Partners as partners. The Argent/Related obligations are guaranteed by Related. The key provisions of the LPA relate to financial obligations, distributions of income and proceeds and default. 4.4 The Shareholders' Agreement will be entered into by the Council and Argent/Related, being the shareholders in the General Partner, and the General Partner itself. The key provisions of the Shareholders' Agreement relate to decision making and deadlock, appointment of directors and voting and conflicts of interest. The Council will have a 50% representation on the board of the General Partner enabling it to inform decision making. Matters which are not agreed can be referred to shareholders for resolution or to dispute resolution as appropriate. As shareholders, again, the Council will have a 50% representation. Gowling WLG - 16 May 2015 (2105100/RVB1) Legal02#59575044v1[RVB1] 5