US BANCORP FOR YOUR RECORDS
PIPER JAFFRAY
1200 Fifth Avenue, Suite 1500
P.O. Box 34090
Seattle, WA 98124-1930
206 257-8700
CONFIDENTIAL
January 19, 2000
TopTeam, Inc.
1111 Tamarind Avenue
Hollywood, California 90038
Attention: Robert M. Wallace
Chairman
Gentlemen:
This is to confirm the agreement between TopTeam, Inc. (the "Company") and U.S.
Bancorp Piper Jaffray Inc. ("U.S. Bancorp Piper Jaffray") as follows:
ENGAGEMENT. U.S. Bancorp Piper Jaffray will act as the Company's agent with
respect to the proposed acquisition of or merger with the Giant Step division of
Leo Burnett Company, Inc. (the "Target"). For purposes of the agreement,
"acquisition" means any transaction or combination of transactions whereby 20%
or more of the equity interest in the Target, or any of its businesses or
assets, is transferred to the Company, any affiliate of the Company or any group
of which the Company or any Company affiliate is a member.
SERVICES. Working with the Company's legal counsel and others where appropriate,
U.S. Bancorp Piper Jaffray will (i) advise the Company concerning valuation,
acquisition strategy and deal structure, (ii) assist the Company in negotiations
related to the transaction, (iii) advise the Company with respect to the
principal financial provisions of major documents involved in the transaction
and (iv) provide such other directly related, customary services as reasonably
requested by the Company.
In the event requested by the Company, in connection with an acquisition of or
merger with the Target, render an opinion to the Board of Directors of the
Company as to the fairness, from a financial point of view, of the consideration
to be paid by the Company, U.S. Bancorp Piper Jaffray understands that its
fairness opinion may be described in and annexed to proxy materials distributed
to the Company shareholders. The Company hereby agrees that U.S. Bancorp Piper
Jaffray will have the right to review and approve the form and content of any
reference to U.S. Bancorp Piper Jaffray or its opinion in such proxy materials
or in other written materials distributed by the Company or filed by the Company
with any governmental agency or securities exchange.
Nondeposit investment products are not insured by the FDIC, are not deposits or
other obligations of or guaranteed by U.S. Bancorp National Association or its
affiliates, and involve investment risks, including possible loss of the
principal amount invested. Securities products and services are offered through
U.S. Bancorp Piper Jaffray Inc., member SPC(_) and NYSE, Inc., a subsidiary of
U.S. Bancorp.
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TopTeam, Inc.
Page 2
January 19, 2000
FEES AND EXPENSES. In consideration of U.S. Bancorp Piper Jaffray's services,
the Company shall pay U.S. Bancorp Piper Jaffray the following fees:
(a) $250,000 in cash upon rendering the opinion, if any, referred
to above;
(b) in the event an acquisition of the Target is consummated
pursuant to an agreement or commitment which is entered into
(i) during the term of this agreement or (ii) during the 12
month period following termination of this agreement, a cash
fee equal to $600,000; and
(c) in the event the Company does not consummate an acquisition of
Target, but receives some form of break-up fee or similar form
of consideration or compensation ("Break-Up Fee") in
connection with its attempt to complete an acquisition of
Target, the Company shall pay to U.S. Bancorp Piper Jaffray an
in-kind fee equal to 33% of the Break-Up Fee.
The entire fee payable pursuant to item (b) above shall be paid in cash via wire
transfer to U.S. Bancorp Piper Jaffray at closing. Any fee payable pursuant to
item (c) above shall be paid at the time such Break-Up Fee is received by the
Company.
In the event a cash fee is payable pursuant to item (b) above, the Company shall
immediately issue to U.S. Bancorp Piper Jaffray a warrant or warrants (the
"Warrants") to purchase 50,000 shares of the Company's most senior equity
securities at the time of the consummation of the acquisition of Target. All
Warrants shall be exercisable at a price equal to the lower of $7.50 or the fair
value of the Company at the time of the acquisition of Target. For purposes of
this letter, the fair value of the Company at the time of the acquisition of
Target is defined as the total value of the combined entity divided by the
number of shares of equity securities outstanding immediately following the
closing. The Warrants shall be in form mutually acceptable to each of the
Company and U.S. Bancorp Piper Jaffray. The Warrants shall include mutually
acceptable provisions customary in private equity transactions, including
without limitation, anti-dilution protection, continuation of warrant exercise
rights following any redemption or conversion of the Securities, registration
rights, and cashless exercise rights. The Warrants shall expire on the earlier
of (i) the tenth anniversary of their issuance, or (ii) the fourth anniversary
of the initial underwritten public offering of the Company's Common Stock which
results in mandatory conversion of the Securities.
Upon receipt of an invoice, the Company will also reimburse U.S. Bancorp Piper
Jaffray for its reasonable out-of-pocket expenses, including fees and
disbursements of counsel, whether or not an acquisition is consummated;
provided, that such expenses shall not exceed $50,000 without the consent of the
Company.
TERM. The term of our engagement hereunder will extend from the date hereof
until termination by either party upon 30 days' written notice; provided such
notice shall not be given prior to three months from the date hereof.
INDEMNIFICATION. The Company agrees (i) to indemnify and hold U.S. Bancorp Piper
Jaffray (which term includes its directors, controlling persons (as such term is
defined under the Securities Act of 1933), officers, employees and agents)
harmless against and from all losses, claims, damages or liabilities, and all
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TopTeam, Inc.
Page 3
January 19, 2000
actions, claims, proceedings and investigations in respect thereof, arising out
of or in connection with this engagement or U.S. Bancorp Piper Jaffray's
services rendered in connection with this engagement, and to reimburse U.S.
Bancorp Piper Jaffray for all reasonable legal and other out-of-pocket expenses
as incurred by U.S. Bancorp Piper Jaffray in connection with investigating,
preparing or defending any such action, claim, proceeding or investigation; and
(ii) that U.S. Bancorp Piper Jaffray shall not have any liability to the Company
or its affiliates, directors, officers, employees, agents, creditors or
shareholders, directly or indirectly, related to or arising out of this
engagement; provided, however, the Company shall not be so liable for
indemnification and U.S. Bancorp Piper Jaffray shall not be exculpated from
liability to the extent that any such loss, claim, damage or liability is
finally judicially determined to have resulted primarily and directly from U.S.
Bancorp Piper Jaffray's gross negligence or willful misconduct.
If for any reason the foregoing indemnification and reimbursement is unavailable
to U.S. Bancorp Piper Jaffray or insufficient to hold it harmless, then the
Company shall contribute to the amount paid or payable by U.S. Bancorp Piper
Jaffray as a result of such loss, claim, damage or liability in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and U.S. Bancorp Piper Jaffray on the other hand, the relative
fault of the Company and of U.S. Bancorp Piper Jaffray and any relevant
equitable considerations, provided that, in no event, will the aggregate
contribution of U.S. Bancorp Piper Jaffray hereunder exceed the amount of fees
actually received by U.S. Bancorp Piper Jaffray pursuant to this agreement.
The reimbursement, indemnity and contribution obligations of the Company under
this agreement shall be in addition to any liability which the Company may
otherwise have, shall survive any termination of this agreement and shall be
binding upon and extend to the benefit of any successors, assigns, heirs and
personal representatives of the Company and U.S. Bancorp Piper Jaffray.
MISCELLANEOUS. Our agreement represented by this letter shall be governed by the
laws of Minnesota. Any dispute or controversy arising out of this agreement
shall be determined by arbitration conducted in accordance with the rules of the
New York Stock Exchange or the National Association of Securities Dealers, Inc.
then in effect. Any arbitration award shall be final and binding upon the
Company and U.S. Bancorp Piper Jaffray, and judgment upon the award may be
entered in any court having jurisdiction. The Company agrees that U.S. Bancorp
Piper Jaffray has the right to place advertisements in mailings and financial
and other newspapers and journals at its own expense describing its services to
the Company hereunder for any completed transactions and using the Company logo.
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TopTeam, Inc.
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January 19, 2000
If this letter correctly sets forth the understanding between us, please so
indicate by signing on the designated space below and returning a signed copy to
us, whereupon this letter shall constitute the agreement between us.
Sincerely,
U.S. BANCORP PIPER JAFFRAY INC.
By /s/ JOHN R. JACOBS
---------------------------------
John R. Jacobs, Managing Director
Agreed and accepted this 19th day of January 2000.
TOPTEAM, INC.
By /s/ BRIAN P. BURNS, JR.
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Title Secretary
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