JOINT ACCOUNT AGREEMENT
“Confidential
Treatment Requested” indicates portions of this document that have been deleted
and have been separately filed with the Securities and Exchange
Commission.
Joint
Account Agreement (the “Agreement”) dated as of January 2, 2008 by and between
Xxxxxxxxxxx & Co. Inc., a New York corporation (“Oppenheimer”), and
Eurobank, a Puerto Rico corporation (“Eurobank”).
WHEREAS,
the Government Development Bank for Puerto Rico (“GDB”) from time to time
selects underwriters for public debt issues of the Commonwealth of Puerto
Rico
(the “Commonwealth”) and its municipalities and public corporations (the
“Municipal Issuer Clients”);
WHEREAS,
Eurobank has relationships in Puerto Rico with Municipal Issuer Clients and
experience with structuring of municipal transactions and regularly conducts
research on the economy and financial matters related to the
Commonwealth and
the
Municipal Issuer Clients and issues reports in connection therewith (“Research
Reports”);
WHEREAS,
Oppenheimer is engaged in the business of providing municipal investment
banking
advisory services, such as structuring of municipal transactions, the
development of financing ideas, the management of due diligence processes
and
the preparation of sales presentations and undertakes distributions and sales
of
municipal securities; and
WHEREAS,
Eurobank and Oppenheimer desire to work together to jointly pursue underwritings
and other types of engagements with the Commonwealth and Municipal Issuer
Clients in accordance with the terms hereof.
NOW
THEREFORE, in consideration of the premises and the mutual promises hereinafter
set forth, the parties hereto, intending to be legally bound, hereby agree
as
follows:
1. |
Types
of Assignments to be Pursued;
Exclusivity
|
Eurobank
and Oppenheimer shall jointly pursue the following types of assignments
(“Prospective Assignments”): (a) the assignment of Eurobank and/or Oppenheimer
as “bookrunning” manager, co-senior manager, or co-manager in the underwriting
syndicates for public debt issues of Municipal Issuer Clients to be sold
in the
United States tax-exempt or taxable debt markets (“Government Municipal
Transactions”); (b) the engagement of Oppenheimer as a derivative advisor to
Municipal Issuer Client (“Derivative Engagements”) and not as a provider of
derivative products; and (c) the assignment of Eurobank and/or Oppenheimer
as
“bookrunning” manager, co-senior manager or co-manager for a non-government
issuer in the Commonwealth (including a government conduit financing) in
a bond
issue to be sold in the United States tax-exempt or taxable debt markets
(“Non-Government Municipal Transactions”). If Eurobank and/or Oppenheimer is
engaged to act in any of the foregoing capacities with respect to a Prospective
Assignment, such engagement will be referred to as a “Subject
Assignment.”
Oppenheimer
and Eurobank agree that the relationship set forth in this Agreement is
exclusive. In accordance therewith Oppenheimer and Eurobank agree that from
and
after the date of this Agreement until the later of December 31, 2008 or
the
termination of this Agreement, neither Oppenheimer nor Eurobank will, nor
will
they permit their respective officers, directors or employees to, directly
or
indirectly, undertake any of the following activities: (i) pursue or participate
in any Prospective Assignments with any third party, or (ii) enter into any
agreement with a third party regarding the pursuit of or participation in
Prospective Assignments; provided, however, that the foregoing restrictions
shall not prohibit either Oppenheimer or Eurobank from acting as a member
of the
syndicate in connection with an underwriting outside of the Commonwealth
and
shall not prohibit either Oppenheimer or Eurobank from acting as a member
of the
syndicate in connection with an underwriting for a Municipal Issuer Client
where
the other party declines to participate therein
2. |
Services
to be Rendered
|
a. |
By
Eurobank.
Eurobank will (i) assist Oppenheimer in securing the Subject Assignments
and maintaining good relationships in connection therewith, (ii)
provide
municipal investment banking advisor services with respect to each
Subject
Assignment (iii) provide to Oppenheimer copies of Research Reports
on a
regular basis as they become available and respond promptly to requests
by
Oppenheimer to conduct research relating to a prospective Subject
Assignment and (iv) undertake sales and distribution efforts for
Government Municipal Transactions and Non-Government Municipal
Transactions, as well as local issues or local portions thereof,
and/or
sales of municipal bonds to its clients and contacts wherever they
may be.
|
b. |
By
Oppenheimer.
Oppenheimer will (i) provide municipal investment banking advisor
services
with respect to each Subject Assignment and (ii) undertake sales
and
distribution efforts for Government Municipal Transactions and
Non-Government Municipal Transactions, as well as local issues or
local
portions thereof, and/or sales of municipal bonds to its clients
and
contacts wherever they may be.
|
3. |
Term
|
This
Agreement shall be effective as of the date hereof and, subject to the
termination provisions of this Agreement, shall extend until December 31,
2008,
and upon termination of such initial term shall be automatically renewed
for
additional one-year terms unless either party provides written notice to
the
other party of its intent to terminate the Agreement in accordance with Section
11. Termination of this Agreement will result in the termination of all duties
and authorities of each party, except as specifically set forth in this
Agreement.
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4. |
Compensation
|
a.
|
Fee
Sharing.
Oppenheimer and Eurobank will share the fees and commissions of
the
Subject Assignments received during the term of this Agreement
on a
transaction-by-transaction basis as
follows:
|
(i) |
Management
Fees.**
|
(ii) |
Takedown
(non-designated).**
|
(iii) |
Takedown
(designations).**
|
(iv) |
Derivative
Engagements.**
|
(v) |
Regarding
prior engagements with Puerto Rican based municipal issues that Eurobank
may have contracted. **
|
Any
payments required under this Section 4(a) shall be paid no later than thirty
(30) calendar days after receipt. The termination of this Agreement shall
not
affect the parties’ right to receive a share of fees and commissions payable
pursuant to this Section 4(a) with respect to any Subject Assignment that
closed
prior to the termination of this Agreement.
b.
|
Expenses.
To the extent that the syndicate agreement allows for reimbursement
of
syndicate members’ expenses, each party will be responsible for submitting
its own syndicate expenses. Each party shall pay its own expenses,
to the
extent not reimbursable pursuant to a syndicate agreement.
|
c.
|
No
Obligation to Participate.
Nothing herein shall obligate either party to participate in or
provide
municipal investment banking advisor services with respect to any
Subject
Assignment and or undertake sales and distribution efforts with
respect to
any Government Municipal Transaction or Non-Government Municipal
Transaction. In the event that either party determines that it
will not
participate in a Subject Assignment, that non-participating party
will
provide notice to the other party within 30 days of assignment
or within
30 days of a material change in the structure or credit quality
of the
Subject Assignment. However, if the accelerated timing of a Subject
Assignment makes the 30-day notice impractical or unworkable, the
non-participating party will provide immediate notice of its
non-participation.
|
_______________
**
Confidential Treatment Requested.
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d.
|
No
Obligation to Pay Prohibited Fees.
No payment will be made under this Agreement if such payment would
result
in a violation of applicable federal, state or local
laws.
|
5. |
Representations
and Warranties
|
Oppenheimer
and Eurobank each represents and warrants to the other that:
a.
|
It
has all rights, powers, authorizations and licenses necessary or
required
to enter to and fulfill its obligations pursuant to this Agreement
or any
agreement entered into pursuant hereto.
|
b.
|
The
execution and performance of this Agreement have been duly authorized
by
all necessary corporate action, and this Agreement constitutes
a valid and
binding agreement enforceable in accordance with its terms.
|
c.
|
The
execution, delivery and performance of this Agreement by such party
will
not conflict with or result in a violation of the organizational
documents
of such party, any agreement to which such party is a party or
any law,
regulation or court order to which such party is
subject.
|
d.
|
It
is registered under the Securities Exchange Act of 1934, as amended
(the
“1934 Act”), as a dealer or municipal securities
dealer.
|
e.
|
It
is either a bank or a department or a division or a subsidiary
of a bank
in good standing with its applicable regulatory authority, or a
member in
good standing of the Financial Industry Regulatory
Authority.
|
6. |
Compliance
with Laws.
|
Each
of
Oppenheimer and Eurobank shall perform its obligations under this Agreement
in
compliance with all applicable federal and state laws, rules, regulations
and
registration requirements and rules and regulations of all governmental,
regulatory and self-regulatory organizations, including but not limited to
the
rules of the Municipal Securities Rulemaking Board (“MSRB”).
7. |
Political
Contributions
|
Oppenheimer
represents to Eurobank that, to its knowledge after due inquiry, during the
two
years immediately preceding the date of this Agreement, no Oppenheimer Covered
Person has made a political contribution to an Official of a Municipal Issuer
Client, except for Permitted Political Contributions. Eurobank represents
to
Oppenheimer that, to its knowledge after due inquiry, during the two years
immediately preceding the date of this Agreement, no Eurobank Covered Person
has
made a political contribution to an Official of a Municipal Issuer Client,
except for Permitted Political Contributions.
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With
respect to any Subject Assignment, (a) Oppenheimer will use reasonable efforts
to confirm that no Oppenheimer Covered Person will make a political contribution
to an issuer of the Municipal Issuer Client relative to such Subject Assignment,
except for Permitted Political Contributions, and (b) Eurobank will use
reasonable efforts to confirm that no Eurobank Covered Person will make a
political contribution to an issuer of the Municipal Issuer Client relative
to
such Subject Assignment, except for Permitted Political
Contributions.
For
purposes of this section, the following terms shall have the following
meanings:
“Oppenheimer
Covered Person” means (1) Oppenheimer; (2) any municipal finance professional
(as such term is defined in MSRB Rule G-37) of Oppenheimer; and (3) any
political action committee controlled by Oppenheimer or municipal finance
professional of Oppenheimer.
“Official
of a Municipal Issuer Client” means any person (including any election committee
for such person) who was, at the time of the contribution, an incumbent,
candidate or successful candidate: (1) for elective office of the Municipal
Issuer Client which office is directly or indirectly responsible for, or
can
influence the outcome of, the hiring of a broker, dealer or municipal securities
dealer for municipal securities business by the Municipal Issuer Client;
or (2)
for any elective office of a state or of any political subdivision, which
office
has authority to appoint any person who is directly or indirectly responsible
for, or can influence the outcome of, the hiring of a broker, dealer or
municipal securities dealer for municipal securities business by the Municipal
Issuer Client.
“Permitted
Political Contributions” means (1) contributions to, the solicitation of
contributions for, or related political activities on behalf of: (A) the
President or members of the U.S. Congress (except as to candidates who would
fall within the definition of an Official of a Municipal Issuer Client);
(B)
political candidates for the state legislature (except as to candidates who
would fall within the definition of an Official of a Municipal Issuer Client);
(C) any judicial post (except as to candidates who would fall within the
definition of an Official of a Municipal Issuer Client); (D) any other public
office which has no authority to directly or indirectly influence the hiring
of
broker-dealers for the purpose of engaging in municipal securities business;
(2)
political contributions of $250 or less per election to any public official
or
candidate for office with respect to whom the donor is permitted to vote
for; or
(3) political contributions of $250 or less per political party per
year.
“Eurobank
Covered Person” means (1) Eurobank; (2) any municipal finance professional of
Eurobank; and (3) any political action committee controlled by Eurobank or
any
municipal finance professional of Eurobank.
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8. |
Confidential
Information
|
x.
|
Xxxxxxxxxxx
and Eurobank acknowledge that they may in the course of carrying
out their
responsibilities pursuant to this Agreement be exposed to or acquire
information which is proprietary or confidential to the other party,
its
affiliates, their clients, or third parties to whom such other
party owes
a duty of confidentiality. Any and all non-public information of
any form
obtained by either Oppenheimer or Eurobank in the performance of
this
Agreement shall be deemed to be confidential information. The parties
agree to hold such confidential information in strict confidence
and not
to disclose such information to third parties or to use the confidential
information for any purposes whatsoever other than in connection
with this
Agreement. The restrictions of this Section 8(a) shall not apply
to (a)
information in the public domain at the time it was disclosed or
which
thereafter passes into the public domain other than by an act of
the
receiving party or any of its agents or representatives; (b) information
known to the receiving party at the time of disclosure or which
thereafter
becomes known, provided such knowledge was or is derived from a
source
other than the disclosing party or any of its agents or representatives;
or (c) information independently developed by the receiving
party.
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b.
|
In
the event that a party receives any request to disclose any confidential
information under subpoena, or inquiry by a court of competent
jurisdiction or by a judicial or administrative agency or legislative
body
or committee or any self-regulatory organization, such party agrees
to (i)
immediately notify the other party of the existence, terms and
circumstances surrounding such request, (ii) consult with the other
party
on the advisability of taking legally available steps to resist
or narrow
such request and cooperate with the other party on any such steps
which
may be advisable and take such steps. Oppenheimer and Eurobank
shall
discuss and agree which party shall bear the legal fees and expenses
incurred to comply with this
provision.
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c.
|
It
is agreed and understood that, in the event of a breach of this
Section 8,
damages may not be an adequate remedy and either party shall be
entitled
to seek injunctive relief to restrain any such breach, threatened
or
actual.
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9. |
Disqualification
Based on Criminal or Disciplinary
History
|
Each
party represents and warrants to the other party that neither the party nor
any
associated person of such party is subject to a “statutory disqualification” (as
such term is defined in the 0000 Xxx) or subject to a disqualification that
would be a basis for censure, limitations on the activities, functions or
operations of, or suspension or revocation of the registration of such party
as
a broker-dealer or municipal securities dealer under the Exchange Act.
A
party
shall immediately notify the other party in the event that it becomes aware
that
(a) the foregoing representation and warranty was untrue when made or (b)
the
party or any associated person of such party is subject to a “statutory
disqualification” (as such term is defined in the 0000 Xxx) or subject to a
disqualification that would be a basis for censure, limitations on the
activities, functions or operations of, or suspension or revocation of the
registration of such party as a broker-dealer or municipal securities dealer
under the Exchange Act. After receipt of such notice, the receiving party
may
terminate this Agreement by providing written notice to the other party,
and
such termination may, at the option of the terminating party, take effect
immediately.
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10. |
Disclosure
of Agreement
|
a.
|
Neither
Oppenheimer nor Eurobank shall make, directly or indirectly, any
announcement of this Agreement nor otherwise disclose the contents
of this
Agreement or any agreements made pursuant hereto, or any information
about
the other party without the consent of the other party; provided,
however,
that (i) either Oppenheimer or Eurobank may disclose the existence,
nature
and terms of this Agreement, including the terms of the compensation
payable to the parties as well as the actual compensation paid,
to the
MSRB and any other securities regulatory or self-regulatory organization
that may request such information from either party, and (ii) either
Oppenheimer or Eurobank may disclose the existence, nature and
terms of
this Agreement to any of the Municipal Issuer Clients and to any
other
governmental entity that issues tax-exempt or taxable bonds, as
required
under applicable law. If a syndicate is formed in connection with
financing transactions conducted on behalf of the Municipal Issuer
Clients, either party hereto may disclose, at the request of such
syndicate member, the existence, nature and terms of this Agreement
to the
syndicate member.
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b.
|
In
the event that Oppenheimer or Eurobank receives any request to
disclose
the contents of this Agreement or any agreements made pursuant
hereto
under subpoena, or inquiry by a court of competent jurisdiction
or by a
judicial or administrative agency or legislative body or committee,
the
parties agree to (i) immediately notify the other party of the
existence,
terms and circumstances surrounding such request (ii) consult with
the
other party on the advisability of taking legally available steps
to
resist or narrow such request and cooperate with the other party
on any
such steps which may be advisable and to take such steps.
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x.
|
Xxxxxxxxxxx
and Eurobank agree that they will not, without the prior written
consent
of the other party in each instance (i) use in advertising, publicity
or
otherwise the name of the other party, nor any trade name, trademark,
trade device, advice xxxx, symbol or any abbreviation, contraction,
or
simulation thereof owned by the other party or its affiliates,
or (ii)
represent, directly or indirectly, that any product or any service
provided by such party has been approved or endorsed by the other
party.
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11. |
Termination
|
In
the
event of a breach of this Agreement, the non-breaching party may terminate
the
Agreement immediately upon written notice to the breaching party. This Agreement
may be terminated by either party at any time upon ninety (90) calendar days’
prior written notice to the other party.
12. |
Notice
|
All
notices to be provided pursuant to this Section 10 or any other section of
this
Agreement shall be delivered to the following address (or such address as
specified in writing).
To
Eurobank:
Xxxxx
X.
Xxxxxxxx, Xx.
Managing
Director
Eurobank
Investment Management
270
Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxxx
Xxxxx
Xxxx
Xxx,
Xxxxxx Xxxx 00000
Phone:
(000) 000-0000 x 000 Fax: (000) 000-0000
E-mail:
xxxxx.xxxxxxxx@xxxxxxxxxx.xxx
To
Oppenheimer:
Xxxxxxxx
X. Max
Senior
Managing Director
Municipal
Capital Markets Group
0000
Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx
Xxxx, Xxxxxxxx 00000
Phone:
(000) 000-0000 Fax: (000) 000-0000
E-mail:
xxxx.xxx@xxxx.xxx
13. |
Indemnification
|
Each
party shall indemnify, defend and hold harmless the other and its affiliates
and
each of the directors, officers and employees of the other from and against
any
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable attorney’s and other fees) (“Losses”) incurred by any of
them arising out of or in connection with (i) any breach by a party of any
representation, warranty or agreement contained in this Agreement; and (ii)
the
performance by a party of its obligations hereunder, except to the extent
that
such Losses are attributable to the gross negligence or willful misconduct
of
the other party.
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14. |
Governing
Law
|
This
Agreement shall be interpreted, construed, enforced and administered in
accordance with the internal laws of the State of New York, without regard
to
conflicts of laws principles. Each of the parties hereto submits to the personal
jurisdiction of the State of New York and each agrees that all proceedings
relating hereto may be brought in any state or federal court located within
the
State of New York.
15. |
Waiver
of Jury Trial
|
The
parties to this Agreement agree that each (a) irrevocably submits to the
jurisdiction of any state or federal court sitting in the Borough of Manhattan,
City of New York, for the purposes of any suit, action or other proceeding
arising out of or relating to this Agreement and Release, (b) waives and
agrees
not to assert in any such proceeding a claim that it is not personally subject
to the jurisdiction of the court referred to above, that the suit or action
was
brought in an inconvenient forum or that the venue of the suit or action
is
improper and (c) waives
its right to a trial by jury.
16. |
Limitations
on Assignment
|
Neither
Oppenheimer nor Eurobank shall assign, sublicense, sub-contract or otherwise
encumber any of its rights or obligations under this Agreement without the
prior
written consent of the other party except that either party may assign the
Agreement to (i) any entity which controls, is controlled by or is under
common
control with that party, (ii) any entity which succeeds to all or substantially
all of the assets of that party as long as the assignee is authorized under
applicable law and regulations to conduct the activities contemplated by
this
Agreement.
17. |
Waiver
|
The
waiver by any party hereto of a breach of any provision of this Agreement
shall
not operate or be construed as a waiver of any subsequent breach by any
party.
18. |
Entire
Agreement
|
This
Agreement constitutes the entire agreement of the parties hereto with respect
to
its subject matter and it is hereby agreed that any prior oral or written
agreements concerning such subject matter shall by null and void.
19. |
Severability
|
If
any
provision of this Agreement shall be held to be illegal or unenforceable,
such
illegality or unenforceability shall extend solely to that provision and
the
remainder of this Agreement shall be enforced as if such illegal or
unenforceable provision were not incorporated herein.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the day and hour first above written.
For
Eurobank:
/s/
Xxxxx X. Xxxxxxxx, Xx.
Name:
Xxxxx X. Xxxxxxxx, Xx.
Title:
Senior Vice President and Managing Director
For
Oppenheimer:
/s/
Xxxxxxxx X. Max
Name:
Xxxxxxxx X. Max
Title:
Senior Managing Director
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