BUSINESS ALLIANCE AGREEMENT

 

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                                                                    EXHIBIT 10.4

 

                           BUSINESS ALLIANCE AGREEMENT

 

                                 by and between

 

                                  U.S. BANCORP

 

                                        and

 

                             PIPER JAFFRAY COMPANIES

 

                          Dated as of December 23, 2003

 

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                                TABLE OF CONTENTS

 

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ARTICLE I.         SCOPE OF AGREEMENT............................................        2

     1.1           Scope.........................................................        2

 

ARTICLE II.        BUSINESS AGREEMENTS...........................................        2

     2.1            General.......................................................        2

     2.2           Investment Funds..............................................        2

     2.3           Capital Market Services Collaboration.........................        3

     2.4           Joint Products and Services...................................        4

     2.5           Settlement, Safekeeping and Other Banking Services............        5

     2.6           Customer Information Sharing and Access.......................        6

     2.7           Securities Dealer Services....................................        6

     2.8           Transition Matters............................................        7

 

ARTICLE III.       ALLIANCE MANAGEMENT...........................................        8

     3.1           Alliance Managers.............................................        8

     3.2           Meetings......................................................        8

     3.3           Responsibilities..............................................        8

 

ARTICLE IV.        TERM AND TERMINATION..........................................        8

     4.1           Term..........................................................        8

     4.2           Termination...................................................        8

     4.3           Effect of Termination.........................................       10

 

ARTICLE V.         GENERAL TERMS AND CONDITIONS..................................       10

     5.1           Complete Agreement............................................       10

     5.2           Expenses......................................................       11

     5.3           Governing Law.................................................       11

     5.4           Notices.......................................................       11

     5.5           Amendment, Modification or Waiver.............................       11

     5.6           Successors and Assigns; No Third Party Beneficiaries..........       12

     5.7           Counterparts..................................................       12

     5.8           Dispute Resolution............................................       12

     5.9           Interpretation................................................       12

     5.10          Severability..................................................       12

     5.11          No Joint Venture..............................................       12

     5.12          No Individual Authority.......................................       12

     5.13          Non-Exclusivity...............................................       13

     5.14          Basis of Bargain..............................................       13

     5.15          Force Majeure.................................................       13

     5.16          Priority......................................................       13

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EXHIBIT A -- Alliance Managers

 

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                           BUSINESS ALLIANCE AGREEMENT

 

                  This BUSINESS ALLIANCE AGREEMENT (this "Agreement"), dated as

of December 23, 2003, is made and entered into by and between U.S. Bancorp, a

Delaware corporation ("Parent"), and PIPER JAFFRAY COMPANIES, a Delaware

corporation and an indirect, wholly owned subsidiary of Parent ("Piper

Jaffray"). Parent and Piper Jaffray are sometimes referred to herein

individually as a "Party" and collectively as the "Parties". Capitalized terms

used in this Agreement that are not otherwise defined herein shall have the

meanings ascribed to them in the Separation Agreement (as defined herein).

 

                                    RECITALS

 

                  WHEREAS, Parent and Piper Jaffray have entered into a certain

Separation and Distribution Agreement dated as of the date hereof (as it may be

amended from time to time, the "Separation Agreement"), which sets forth the

principal corporate transactions required to effect the separation of Parent's

businesses into two independent public companies;

 

                   WHEREAS, pursuant to the provisions of the Separation

Agreement, from and after the consummation of the Merger and the Contribution,

(i) the Piper Jaffray Group will be engaged in the Piper Jaffray Business, (ii)

the Parent Group will be engaged in the Parent Business, (iii) the Piper Jaffray

Group will own and control the Piper Jaffray Assets and assume and be

responsible for the Piper Jaffray Liabilities, and (iv) the Parent Group will

own and control the Parent Assets and assume and be responsible for the Parent

Liabilities;

 

                  WHEREAS, Section 3.2(c) of the Separation Agreement provides

that prior to the Distribution, each of Parent and Piper Jaffray shall enter

into this Agreement, which is the Business Alliance Agreement referred to in the

Separation Agreement;

 

                  WHEREAS, Section 2.4 of the Separation Agreement provides,

among other things, that on or before the Contribution Effective Time, each of

Parent and Piper Jaffray shall enter into, or cause appropriate members of the

Group of which it is a member to enter into, such other agreements, certificates

and other documents as may be deemed to be advisable by Parent in connection

with the Separation; and

 

                  WHEREAS, the Parties desire to enter into this Agreement to

set forth the terms of their agreement regarding certain business alliances,

arrangements, understandings and relationships between and among them and the

other members of each of their respective Groups following the completion of the

Separation (the "Alliance"), including without limitation, the following: (i)

the referral of selected business between the Groups; (ii) the marketing and

distribution of certain financial products and services of the Groups; (iii) the

continued joint provision of certain services by certain members of each Group;

and (iv) certain other matters intended to facilitate the transition of the

Piper Jaffray Business to the Piper Jaffray Group set forth below in this

Agreement.

 

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                  NOW, THEREFORE, in consideration of the premises, and of the

representations, warranties, covenants and agreements set forth herein, and

intending to be legally bound hereby, the Parties hereby agree as follows:

 

                                     ARTICLE I

 

                               SCOPE OF AGREEMENT

 

                  SECTION 1.1 Scope. In furtherance of, and in order to document

in its entirety, the Alliance between the Parties, each of Parent and Piper

Jaffray agrees to comply, and to cause the appropriate members of the Group of

which it is a member to comply, with all of the terms and conditions of this

Agreement and the Business Agreements (as defined below) contemplated hereby to

which it, or the applicable member of its Group, is a party.

 

                                   ARTICLE II

 

                               BUSINESS AGREEMENTS

 

                  SECTION 2.1 General. Subject to the immediately following

sentence, the Parties currently desire to enter into the agreements provided for

in this Article II below (the "Business Agreements") on the terms set forth

below and otherwise on such other terms and conditions as are customary for

similar business arrangements, but the Parties agree that the identity and

description of the terms of the Business Agreements hereunder may be modified

from time to time by mutual agreement of the Parties. Notwithstanding anything

herein to the contrary, neither Party shall have any obligation to enter into

any such Business Agreement if the Parties are unable to reach agreement on the

terms thereof on or prior to the date that is six months after the Distribution

Date after negotiating in good faith. Each Business Agreement shall, subject to

Section 5.16 hereof, constitute a separate and complete agreement between the

Parties with respect to the subject matter thereof but may reference or

incorporate the terms and conditions of this Agreement, any other Business

Agreement and/or the Separation Agreement if and when appropriate.

 

                  SECTION 2.2 Investment Funds. The Parties and/or the

appropriate members of each of their respective Groups shall negotiate in good

faith to enter into Business Agreements pursuant to which Piper Jaffray shall

offer customers of the Piper Jaffray Group various investment fund products

currently managed by Parent's asset management subsidiary on behalf of First

American Funds ("FAF"). The Parties currently contemplate the following specific

Business Agreements that shall be negotiated in good faith and entered into by

and between Piper Jaffray and U.S. Bancorp Asset Management, Inc., a wholly

owned subsidiary of U.S. Bank ("USBAM"):

 

                  (a)       Money Market funds for Piper Jaffray Clients. Under

         an agreement to be entered into between Piper Jaffray and USBAM, money

         market balances held in various Piper Jaffray Group client accounts

         shall be invested in one or more classes of money market funds of FAF

         managed by USBAM. Such money market funds shall be the exclusive

         non-state specific retail sweep money market funds offered by the Piper

         Jaffray Group during the term of the agreement except as required by

         applicable law and

 

 

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         regulations including Piper Jaffray's obligation to offer suitable

         investments to its clients.

 

         This agreement shall provide that shares and/or one or more classes of

         FAF will be named or renamed so as to relate to Piper Jaffray and that

         such shares and/or classes shall have distinct pricing and fee

         arrangements designed for the Piper Jaffray Group. The Piper Jaffray

         Group shall provide omnibus shareholder account record keeping such

         that transactions for its clients shall be made through a single

         account for each money market fund or class of FAF. USBAM and Piper

         Jaffray also shall enter into other service arrangements related to

         operational and compliance matters in connection with the investments

         in FAF by Piper Jaffray Group clients. The agreement shall provide for

         agreed-upon payments to Piper Jaffray for making FAF available to Piper

         Jaffray Group clients under this arrangement and shall have an initial

         term of two years and be renewable annually.

 

                  (b)       Long-term Mutual Funds for Piper Jaffray Clients.

         Piper Jaffray shall include the long-term (non-money market) mutual

          funds of FAF on its preferred list of mutual fund families provided

         that Piper Jaffray continues to maintain such a list or any similar

         program created in future and that such FAF funds meet the criteria

         Piper Jaffray applies equally to all long-term mutual funds considered

         for inclusion on such list or in such program. Pursuant to an existing

         agreement between Piper Jaffray and Quasar Distributors, Piper Jaffray

         shall continue to receive commissions and trailer fees based upon the

         investments of Piper Jaffray Group clients in long-term funds of FAF.

         This agreement shall be renewable annually.

 

                  (c)       Referrals by Piper Jaffray to USBAM Institutional

         Advisory Group. Under an agreement to be entered into between Piper

         Jaffray and USBAM, Piper Jaffray may solicit clients for the

         Institutional Advisory Group of USBAM, which manages separate accounts

         for corporations, governmental entities, endowments, foundations,

         unions and other entities. USBAM shall pay a referral fee to Piper

         Jaffray for introductions or leads that result in new clients for this

         USBAM advisory activity. The agreement shall conform to the applicable

         requirements under the Investment Advisers Act of 1940 with respect to

         cash payments for client solicitations and all other legal or

         regulatory requirements.

 

                  (d)       Piper Private Equity Fund. If the USBAM Institutional

         Advisory Group determines that it would like to make available

         interests in Private Equity Partners II, LP, a private equity fund

         sponsored by Piper Jaffray, or a similar fund, to clients of the

         Institutional Advisory Group through its affiliate U.S. Bancorp

         Investments, Inc. ("USBII"), USBAM, Piper Jaffray and USBII shall enter

         into an agreement that will address the specific obligations on the

         part of Piper Jaffray Private Capital Group, USBAM Institutional

         Advisory Group and USBII as part of this process and shall provide for

         the payment of amounts to the appropriate parties for their appropriate

         services.

 

                  SECTION 2.3 Capital Market Services Collaboration. The Parties

and/or the appropriate members of each of their respective Groups shall

negotiate in good faith to enter into Business Agreements pursuant to which

Parent and/or members of the Parent Group shall

 

 

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recommend the Piper Jaffray Group as a preferred provider of capital market

services to clients of the Parent Group. Such services shall include both (i)

investment banking services and (ii) investment account services. The investment

banking services shall consist of both (A) debt capital market transactions

including senior secured, senior unsecured, subordinated notes, medium term note

programs, brokered CD programs, trust preferred securities, non-convertible

preferred securities and commercial paper programs (but excluding any municipal

finance transactions), and (B) equity capital market transactions including

public equity offerings, public or private convertible securities, merger and

acquisition transactions and private equity transactions. The investment account

services shall include services provided by Piper Jaffray's fixed income capital

markets sales force and corporation cash management programs. Such agreement or

agreements shall provide for the payment by the Piper Jaffray Group of referral

fees to the Parent Group if a Parent Group client uses any of such preferred

provider services of the Piper Jaffray Group and the same results in a net

profit to the Piper Jaffray Group.

 

                  SECTION 2.4 Joint Products and Services. The Parties and/or

the appropriate members of each of the respective Groups shall negotiate in good

faith to enter into Business Agreements pursuant to which the Parties shall

jointly provide certain financial products and services of certain members of

each Group to shared customers of the Groups. The Parties currently contemplate

that such agreements will include, without limitation, the following specific

agreements:

 

                  (a)       Retirement Solution Plan Product. Under an agreement

         to be entered into between Piper Jaffray and U.S. Bank National

         Association, a national banking association and a wholly owned

         subsidiary of Parent ("U.S. Bank"), Piper Jaffray and U.S. Bank shall

         continue to market and manage the bundled retirement plan product known

         as "Retirement Solution." Specifically, pursuant to the provisions of

         this agreement, Retirement Solution shall continue to be managed by the

         Institutional Trust and Custody group of U.S. Bank ("IT&C"), and USBAM

         and IT&C shall continue to support the Piper Jaffray Group in its sales

         activities relating to Retirement Solution. IT&C and the Piper Jaffray

         Group shall agree upon new procedures and pricing for new clients,

         including procedures for the payment of commissions, and communication

         processes determined to be desirable or necessary in light of the

         post-Separation structure in order to continue to provide high service

         levels to shared clients and to retain this business. Pricing on

         retirement plan customers as of the Merger and the Contribution, shall

         remain unchanged for one year.

 

                  (b)       Solution Online Retirement Plan Product. Under an

         agreement to be entered into between Piper Jaffray and U.S. Bank, Piper

         Jaffray's financial advisors shall continue to market and IT&C shall

         continue to manage the online bundled retirement plan product known as

         "Solution Online." Neither the management and distribution of Solution

         Online nor the process by which the Piper Jaffray Group receives

         payments for the distribution of Solution Online shall be fundamentally

         affected by the Separation. IT&C and Piper Jaffray shall agree upon any

         modifications that may be necessary or desirable regarding how the

         product is marketed and distributed.

 

 

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                   (c)       Premier Portfolio Trust Product (Piper Jaffray

         Managed Fiduciary Trust Accounts at Parent). Under an agreement to be

         entered into between U.S. Bank and Piper Jaffray, U.S. Bank and Piper

         Jaffray shall continue to provide in partnership a Premier Portfolio

         Trust product, pursuant to which certain of the investment assets of

         the Piper Jaffray Group clients are held in fiduciary trust accounts at

         U.S. Bank while managed by Piper Jaffray Group financial advisors. This

         agreement shall set forth the framework and requirements respecting the

         Premier Portfolio Trust partnership, including the new technology,

         information access and communication processes that will be necessary

         to continue to jointly offer this product following the completion of

         the Separation.

 

                  (d)       Mortgage Joint Venture. Piper Jaffray and U.S. Bank

         have formed a joint venture for the purpose of satisfying the mortgage

         product needs of Piper Jaffray Group clients.

 

                  SECTION 2.5 Settlement, Safekeeping and Other Banking

Services. The Parties and/or the appropriate members of each of their respective

Groups shall negotiate in good faith to enter into Business Agreements pursuant

to which U.S. Bank shall provide to the Piper Jaffray Group's corporate cash

management