<PAGE>

                                                                    EXHIBIT 10.1

                           EMPLOYEE BENEFITS AGREEMENT

                                 BY AND BETWEEN

                                  U.S. BANCORP

                                       AND

                             PIPER JAFFRAY COMPANIES

                                   DATED AS OF
                                DECEMBER 22, 2003

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                      <C>
ARTICLE I       DEFINITIONS............................................................   1
     1.1        Affiliate..............................................................   1
     1.2        Agreement..............................................................   1
     1.3        Ancillary Agreements...................................................   1
     1.4        Approved Leave of Absence..............................................   1
     1.5        Auditing Party.........................................................   1
     1.6        Award..................................................................   2
     1.7        Benefit Plan...........................................................   2
     1.8        Close of the Distribution Date.........................................   2
     1.9        COBRA..................................................................   2
     1.10       Code...................................................................   2
     1.11       Committee..............................................................   2
     1.12       Covered Employees......................................................   2
     1.13       Distribution...........................................................   2
     1.14       Distribution Date......................................................   2
     1.15       Distribution Year......................................................   2
     1.16       ERISA..................................................................   2
     1.17       Former Parent Employee.................................................   3
     1.18       Former Piper Jaffray Employee..........................................   3
     1.19       Health and Welfare Plans...............................................   3
     1.20       HIPAA..................................................................   3
     1.21       Immediately after the Distribution Date................................   3
     1.22       Independent Third Party................................................   3
     1.23       Liabilities............................................................   3
     1.24       Match Date.............................................................   3
     1.25       Non-parties............................................................   3
     1.26       NYSE...................................................................   3
     1.27       Option.................................................................   3
     1.28       Parent.................................................................   3
     1.29       Parent Common Stock....................................................   3
     1.30       Parent Employee........................................................   4
     1.31       Parent Entities........................................................   4
     1.32       Parent Executive Benefit Plans.........................................   4
     1.33       Parent Flexible Benefit Plans..........................................   4
     1.34       Parent Long-Term Incentive Plans.......................................   4
     1.35       Parent Non-Qualified Retirement Plan...................................   4
     1.36       Parent Non-Qualified Retirement Plan Participant.......................   4
     1.37       Parent Opening Stock Value.............................................   4
     1.38       Parent Pension Plan....................................................   4
     1.39       Parent Post-Retirement Welfare Benefits Plan...........................   4
     1.40       Parent Savings Plan....................................................   5
     1.41       Parent Severance Pay Program...........................................   5
     1.42       Parent Stock Value.....................................................   5
     1.43       Participating Company..................................................   5
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                      <C>
     1.44       Person.................................................................   5
     1.45       Piper Jaffray..........................................................   5
     1.46       Piper Jaffray Business.................................................   5
     1.47       Piper Jaffray Common Stock.............................................   5
     1.48       Piper Jaffray Employee.................................................   5
     1.49       Piper Jaffray Entities.................................................   5
     1.50       Piper Jaffray Executive Benefit Plans..................................   6
     1.51       Piper Jaffray Flexible Benefit Plan....................................   6
     1.52       Piper Jaffray Long-Term Incentive Plan.................................   6
     1.53       Piper Jaffray Non-Qualified Retirement Plan............................   6
     1.54       Piper Jaffray Savings Plan.............................................   6
     1.55       Piper Jaffray Savings Plan Trust.......................................   6
     1.56       Restricted Stock.......................................................   6
     1.57       Restricted Stock Unit..................................................   6
     1.58       Separation.............................................................   6
     1.59       Separation and Distribution Agreement..................................   6
     1.60       Subsidiaries...........................................................   6
     1.61       Tax Sharing Agreement..................................................   6
     1.62       Transferred Account Balances...........................................   7
     1.63       Transition Date........................................................   7
     1.64       U.S....................................................................   7

ARTICLE II      GENERAL PRINCIPLES.....................................................   7
     2.1        Employment of Piper Jaffray Employees..................................   7
     2.2        Assumption and Retention of Liabilities; Related Assets................   7
     2.3        Piper Jaffray Participation in Parent Benefit Plans....................   7
     2.4        Service Recognition....................................................   8
     2.5        Approval by Parent as Sole Stockholder.................................   8

ARTICLE III     DEFINED CONTRIBUTION AND DEFINED BENEFIT PLANS.........................   8
     3.1        Savings Plan...........................................................   8
     3.2        Company Match..........................................................   8
     3.3        Parent Pension Plan....................................................   9
                (a)    Retention of Parent Pension Plan................................   9
                (b)    Commencement of Pension.........................................   9
                (c)    Vesting.........................................................   9

ARTICLE IV      HEALTH AND WELFARE PLANS...............................................  10
     4.1        General................................................................  10
                (a)    Establishment of Piper Jaffray Health and Welfare Plans.........  10
                (b)    Retention of Sponsorship and Liabilities........................  10
                (c)    Certain Specific Claims.........................................  10
     4.2        Flexible Benefit Plan..................................................  11
     4.3        Workers' Compensation Liabilities......................................  11
     4.4        Payroll Taxes and Reporting of Compensation............................  11
     4.5        Parent Post-Retirement Welfare Benefits Plan...........................  12
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<S>                                                                                      <C>
                (a)    Retention of Parent Post-Retirement Welfare Benefits Plan.......  12
                (b)    Piper Jaffray Post-Retirement Welfare Benefits Plans............  12
     4.6        COBRA and HIPAA Compliance.............................................  12

ARTICLE V       EXECUTIVE BENEFITS AND OTHER BENEFITS..................................  12
     5.1        Assumption of Obligations..............................................  12
     5.2        Parent Executive Incentive Plan and the Annual Incentive Plan..........  13
                (a)    Piper Jaffray Bonus Awards......................................  13
                (b)    Parent Bonus Awards.............................................  13
     5.3        Parent Long-Term Incentive Plans.......................................  13
                (a)    Parent Options..................................................  13
                (b)    Parent Restricted Stock.........................................  14
                (c)    Restricted Stock Units..........................................  15
                (d)    Incentive Stock Options; Foreign Grants/Awards..................  16
                (e)    Miscellaneous Option and Other Award Terms......................  14
                (f)    Waiting Period for Exercisability of Options and Grant
                       of Options and Awards...........................................  15
                (g)    Restrictive Covenants...........................................  16
     5.4        Registration Requirements..............................................  16
     5.5        Parent Non-Qualified Retirement Plans..................................  16
     5.6        Severance Plans........................................................  16
     5.7        Employee Cash Awards in Connection with the Distribution...............  17

ARTICLE VI      GENERAL AND ADMINISTRATIVE.............................................  17
     6.1        Sharing of Participant Information.....................................  17
     6.2        Reasonable Efforts/Cooperation.........................................  18
     6.3        No Third-Party Beneficiaries...........................................  18
     6.4        Audit Rights With Respect to Information Provided......................  18
     6.5        Fiduciary Matters......................................................  19
     6.6        Consent of Third Parties...............................................  19

ARTICLE VII     MISCELLANEOUS..........................................................  19
     7.1        Effect If Distribution Does Not Occur..................................  19
     7.2        Relationship of Parties................................................  19
     7.3        Affiliates.............................................................  20
     7.4        Notices................................................................  20
     7.5        Incorporation of Separation and Distribution Agreement Provisions......  20

SIGNATURES OF THE PARTIES
</TABLE>

                                     -iii-

<PAGE>

                           EMPLOYEE BENEFITS AGREEMENT

         This EMPLOYEE BENEFITS AGREEMENT, dated as of December 22, 2003 is by
and between U.S. Bancorp, a Delaware corporation ("Parent"), and Piper Jaffray
Companies, a Delaware corporation ("Piper Jaffray"). Capitalized terms used
herein and not otherwise defined shall have the respective meanings assigned to
them in Article I hereof or assigned to them in the Separation and Distribution
Agreement (as defined below), as applicable.

         WHEREAS, the Board of Directors of Parent has determined that it is in
the best interests of Parent and its stockholders to separate Parent's existing
businesses into two independent companies;

         WHEREAS, in furtherance of the foregoing, Parent and Piper Jaffray have
entered into a Separation and Distribution Agreement, dated as of the date
hereof (the "Separation and Distribution Agreement"), and other ancillary
agreements that will govern certain matters relating to the Separation and the
relationship of Parent, Piper Jaffray and their respective Subsidiaries
following the Distribution Date; and

         WHEREAS, pursuant to the Separation and Distribution Agreement, Parent
and Piper Jaffray have agreed to enter into this Agreement for the purpose of
allocating assets, Liabilities and responsibilities with respect to certain
employee compensation and benefit plans and programs between and among them.

         NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         For purposes of this Agreement, the following terms shall have the
following meanings:

         1.1      "Affiliate" has the meaning given that term in the Separation
and Distribution Agreement.

         1.2      "Agreement" means this Employee Benefits Agreement, including
all the Schedules hereto.

         1.3      "Ancillary Agreements" has the meaning given that term in the
Separation and Distribution Agreement.

         1.4      "Approved Leave of Absence" means an absence from active
service (i) due to an individual's inability to perform his or her regular job
duties by reason of illness or injury and resulting in eligibility to receive
benefits pursuant to the terms of the Parent Short-Term Disability Program or
the Parent Long-Term Disability Program, or (ii) pursuant to an approved leave
policy with a guaranteed right of reinstatement.

         1.5      "Auditing Party" has the meaning set forth in Section 6.4(a).
<PAGE>

         1.6      "Award," when immediately preceded by "Parent," means Parent
Restricted Stock and Parent Restricted Stock Units and, when immediately
preceded by "Piper Jaffray," means Piper Jaffray Restricted Stock and Restricted
Stock Units.

         1.7      "Benefit Plan" shall mean, with respect to an entity or any of
its Subsidiaries, (a) each "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA) and all other employee benefits arrangements, policies or
payroll practices (including, without limitation, severance pay, sick leave,
vacation pay, salary continuation, disability, retirement, deferred
compensation, bonus, stock option or other equity-based compensation,
hospitalization, medical insurance or life insurance) sponsored or maintained by
such entity or by any of its Subsidiaries (or to which such entity or any of its
Subsidiaries contributes or is required to contribute) and (b) all "employee
pension benefit plans" (as defined in Section 3(2) of ERISA), occupational
pension plan or arrangement or other pension arrangements sponsored, maintained
or contributed to by such entity or any of its Subsidiaries (or to which such
entity or any of its Subsidiaries contributes or is required to contribute).
When immediately preceded by "Parent," Benefit Plan means any Benefit Plan
sponsored, maintained or contributed to by Parent or a Parent Entity. When
immediately preceded by "Piper Jaffray," Benefit Plan means any Benefit Plan
sponsored, maintained or contributed to by Piper Jaffray or any Piper Jaffray
Entity. The Piper Jaffray Benefit Plans in effect prior to the Distribution are
listed in Schedule 1.7 hereto.

         1.8      "Close of the Distribution Date" means 11:59:59 P.M., Eastern
Standard Time or Eastern Daylight Time (whichever shall then be in effect), on
the Distribution Date.

         1.9      "COBRA" means the continuation coverage requirements for
"group health plans" under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B
and ERISA Sections 601 through 608.

         1.10     "Code" means the Internal Revenue Code of 1986, as amended, or
any successor federal income tax law. Reference to a specific Code provision
also includes any proposed, temporary or final regulation in force under that
provision.

         1.11     "Committee" has the meaning set forth in Section 5.3(a).

         1.12     "Covered Employees" has the meaning set forth in Section
4.2(i).

         1.13     "Distribution" has the meaning given that term in the
Separation and Distribution Agreement.

         1.14     "Distribution Date" has the meaning given that term in the
Separation and Distribution Agreement.

         1.15     "Distribution Year" means the calendar year during which the
Distribution Date occurs.

         1.16     "ERISA" means the Employee Retirement Income Security Act of
1974, as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary or final regulation in force under that provision.

                                      -2-
<PAGE>

         1.17     "Former Parent Employee" means any individual who is a former
employee of Parent or a Parent Entity as of the Distribution Date.

         1.18     "Former Piper Jaffray Employee" means any individual who is a
former employee of Piper Jaffray or a Piper Jaffray Entity as of the
Distribution Date.

         1.19     "Health and Welfare Plans" shall mean any plan, fund or
program which was established or is maintained for the purpose of providing for
its participants or their beneficiaries, through the purchase of insurance or
otherwise, medical, dental, surgical or hospital care or benefits, or benefits
in the event of sickness, accident, disability, death or unemployment, or
vacation benefits, apprenticeship or other training programs or day care
centers, scholarship funds, or prepaid legal services, including any such plan,
fund or program as defined in Section 3(1) of ERISA. When immediately preceded
by "Parent," Health and Welfare Plans means each Health and Welfare Plan that is
a Parent Benefit Plan. When immediately preceded by "Piper Jaffray," Health and
Welfare Plans means each Health and Welfare Plan that is a Piper Jaffray Benefit
Plan.

         1.20     "HIPAA" means the health insurance portability and
accountability requirements for "group health plans" under the Health Insurance
Portability and Accountability Act of 1996, as amended.

         1.21     "Immediately after the Distribution Date" means on the first
moment of the day after the Distribution Date.

         1.22     "Independent Third Party" has the meaning set forth in Section
5.3(f)(vi) of this Agreement.

         1.23     "Liabilities" has the meaning given that term in the
Separation and Distribution Agreement.

         1.24     "Match Date" has the meaning set forth in Section 3.2.

         1.25     "Non-parties" has the meaning set forth in Section 6.4(b).

         1.26     "NYSE" means the New York Stock Exchange, Inc.

         1.27     "Option," when immediately preceded by "Parent," means an
option (either nonqualified or incentive) to purchase shares of Parent Common
Stock pursuant to a Parent Long-Term Incentive Plan. When immediately preceded
by "Piper Jaffray," Option means an option (either nonqualified or incentive) to
purchase shares of Piper Jaffray Common Stock pursuant to the Piper Jaffray
Long-Term Incentive Plan.

         1.28     "Parent" is defined in the preamble to this Agreement.

         1.29     "Parent Common Stock" has the meaning set forth in the
Separation and Distribution Agreement.

                                      -3-
<PAGE>

         1.30     "Parent Employee" means any individual who, immediately prior
to the Close of the Distribution Date, is either actively employed by, or then
on Approved Leave of Absence from, any Parent Entity.

         1.31     "Parent Entities" means the members of the Parent Group, as
defined in the Separation and Distribution Agreement, and their respective
Subsidiaries and Affiliates, excluding any business or operations (whether
current or historical, regardless of whether discontinued or sold) that are
included in the Piper Jaffray Business.

         1.32     "Parent Executive Benefit Plans" means the executive benefit
and nonqualified plans, programs, and arrangements established, sponsored,
maintained, or agreed upon, by any Parent Entity for the benefit of employees
and former employees of any Parent Entity before the Close of the Distribution
Date.

         1.33     "Parent Flexible Benefit Plans" means the Parent Flexible
Benefit Plan, as in effect as of the time relevant to the applicable provision
of this Agreement.

         1.34     "Parent Long-Term Incentive Plans" means any of the U.S.
Bancorp 2001 Stock Incentive Plan, the U.S. Bancorp 2001 Employee Stock
Incentive Plan, the U.S. Bancorp 1999 Stock Incentive Plan, the Firstar
Corporation 1999 Employee Stock Incentive Plan, the Firstar Corporation 1998
Employee Stock Incentive Plan, the U.S. Bancorp 1998 Executive Stock Incentive
Plan, the U.S. Bancorp 1997 Stock Incentive Plan, the Star Banc Corporation 1996
Starshare Stock Incentive Plan for Employees, the 1991 Performance and Equity
Incentive Plan of the former U.S. Bancorp, the Piper Jaffray 1993 Omnibus Stock
Plan, the U.S. Bancorp 1991 Executive Stock Incentive Plan and any other stock
incentive plan of Parent, all as in effect as of the time relevant to the
applicable provisions of this Agreement.

         1.35     "Parent Non-Qualified Retirement Plan" means the U.S. Bancorp
Non-Qualified Retirement Plan in effect as of the time relevant to the
applicable provision of this Agreement.

         1.36     "Parent Non-Qualified Retirement Plan Participant" means any
individual who has an accrued balance in the Parent Non-Qualified Retirement
Plan as of the Distribution Date.

         1.37     "Parent Opening Stock Value" means the opening per-share price
of Parent Common Stock as listed on the NYSE as of the opening of trading on the
first trading day following the Distribution Date; provided, however, that if
the Distribution occurs at a time when the NYSE is open for trading, Parent
Opening Stock Value shall mean the price at which Parent Common Stock trades as
of the moment immediately after the Distribution; and provided, further, that if
the Distribution occurs prior to opening of trading on the NYSE on the
Distribution Date, the Parent Opening Stock Value shall mean the price at which
Parent Common Stock first trades on the Distribution Date.

         1.38     "Parent Pension Plan" means the U.S. Bancorp Pension Plan in
effect as of the time relevant to the applicable provision of this Agreement.

         1.39     "Parent Post-Retirement Welfare Benefits Plan" means the
Health and Welfare Plan of Parent providing medical, dental or death benefits
for retirees.

                                      -4-
<PAGE>

         1.40     "Parent Savings Plan" means the U.S. Bancorp 401(k) Savings
Plan as in effect as of the time relevant to the applicable provision of this
Agreement.

         1.41     "Parent Severance Pay Program" means the U.S. Bancorp
Severance Pay Program and the Parent Severance Pay Excess Plan, including any
severance benefits payable under the U.S. Bancorp Comprehensive Welfare Benefit
Plan or any component Benefit Plans thereof such as the U.S. Bancorp
Comprehensive Welfare Benefit Middle Management Change in Control Excess Plan,
each as in effect as of the time relevant to the applicable provision of this
Agreement.

         1.42     "Parent Stock Value" means the closing per-share price of the
Parent Common Stock trading "regular way with due bills" as listed on the NYSE
as of 4:00 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall
then be in effect) on the Distribution Date; provided, however, that if the
Distribution occurs at a time when the NYSE is open for trading, Parent Stock
Value shall mean the price at which Parent Common Stock trades "regular way with
due bills" as of the moment immediately prior to the Distribution; and,
provided, further, that if the Distribution occurs prior to opening of trading
on the NYSE on the Distribution Date, Parent Stock Value shall mean the closing
per-share price of the Parent Common Stock trading "regular way with due bills"
as listed on the NYSE as of 4:00 P.M., Eastern Standard Time or Eastern Daylight
Time (whichever shall then be in effect) on the trading date immediately
preceding the Distribution Date.

         1.43     "Participating Company" means (a) Parent, (b) any Person
(other than an individual) that Parent has approved for participation in, and
which is participating in, a plan sponsored by any Parent Entity, and (c) any
Person (other than an individual) which, by the terms of such a plan,
participates in such plan or any employees of which, by the terms of such plan,
participate in or are covered by such plan.

         1.44     "Person" has the meaning given that term in the Separation and
Distribution Agreement.

         1.45     "Piper Jaffray" is defined in the preamble to this Agreement.

         1.46     "Piper Jaffray Business" has the meaning given to that term in
the Separation and Distribution Agreement.

         1.47     "Piper Jaffray Common Stock" means the Piper Jaffray Common
Stock as defined in the Separation and Distribution Agreement.

         1.48     "Piper Jaffray Employee" means any individual who, immediately
prior to the Distribution, is either actively employed by, or then on Approved
Leave of Absence from, a Piper Jaffray Entity.

         1.49     "Piper Jaffray Entities" means the Piper Jaffray Group as
defined in the Separation and Distribution Agreement and any business or
operations (whether current or historical regardless of whether discontinued or
sold) included in the Piper Jaffray Business.

                                      -5-
<PAGE>

         1.50     "Piper Jaffray Executive Benefit Plans" means the executive
benefit and nonqualified plans, programs, and arrangements established,
sponsored, maintained, or agreed upon, by any Piper Jaffray Entity for the
benefit of employees and former employees of any Piper Jaffray Entity before the
Close of the Distribution Date.

         1.51     "Piper Jaffray Flexible Benefit Plan" means the flexible
benefit plan to be established by Piper Jaffray pursuant to Section 4.2 of this
Agreement as in effect as of the time relevant to the applicable provision of
this agreement.

         1.52     "Piper Jaffray Long-Term Incentive Plan" means the long-term
incentive plan or program to be established by Piper Jaffray, effective
immediately prior to the Distribution Date, in connection with the treatment of
Awards as described in Article V.

         1.53.    "Piper Jaffray Non-Qualified Retirement Plan" has the meaning
set forth in Section 5.5.

         1.54     "Piper Jaffray Savings Plan" means the 401(k) and profit
sharing plan to be established by Piper Jaffray pursuant to Section 3.1 of this
Agreement, as in effect as of the time relevant to the applicable provision of
this agreement.

         1.55     "Piper Jaffray Savings Plan Trust" means a trust relating to
the Piper Jaffray Savings Plan intended to qualify under Section 401(a) and be
exempt under Section 501(a) of the Code.

         1.56     "Restricted Stock," when immediately preceded by "Parent,"
means shares of Parent Common Stock issued under a Parent Long-Term Incentive
Plan subject to forfeiture in the event that certain terms and conditions are
not satisfied and, when immediately preceded by "Piper Jaffray," means shares of
Piper Jaffray Common Stock issued under the Piper Jaffray Long-Term Incentive
Plan subject to forfeiture in the event that certain terms and conditions are
not satisfied.

         1.57     "Restricted Stock Unit" when immediately preceded by "Parent,"
means units representing hypothetical shares of Parent Common Stock issued under
a Parent Benefit Plan and, when immediately preceded by "Piper Jaffray," means
units representing hypothetical shares of Piper Jaffray Common Stock issued
under the Piper Jaffray Long-Term Incentive Plan.

         1.58     "Separation" has the meaning given that term in the Separation
and Distribution Agreement.

         1.59     "Separation and Distribution Agreement" is defined in the
preamble to this Agreement.

         1.60     "Subsidiaries" has the meaning given that term in the
Separation and Distribution Agreement.

         1.61     "Tax Sharing Agreement" means the Tax Sharing Agreement
entered into as of the date hereof between Parent and Piper Jaffray.

                                      -6-
<PAGE>

         1.62     "Transferred Account Balances" has the meaning set forth in
Section 4.2(i).

         1.63     "Transition Date" has the meaning set forth in Section 4.1(a).

         1.64     "U.S." means the 50 United States of America and the District
of Columbia.

                                   ARTICLE II

                               GENERAL PRINCIPLES

         2.1      Employment of Piper Jaffray Employees. All Piper Jaffray
Employees shall continue to be employees of Piper Jaffray or another Piper
Jaffray Entity, as the case may be, immediately after the Distribution.

         2.2      Assumption and Retention of Liabilities; Related Assets.

                  (a)      As of the Distribution Date, except as expressly
provided in this Agreement, the Parent Entities shall assume or retain and
Parent hereby agrees to pay, perform, fulfill and discharge, in due course in
full (i) all Liabilities under all Parent Benefit Plans, (ii) all Liabilities
with respect to the employment or termination of employment of all Parent
Employees, Former Parent Employees and their dependents and beneficiaries, and
other service providers (including any individual who is, or was, an independent
contractor, temporary employee, temporary service worker, consultant,
freelancer, agency employee, leased employee, on-call worker, incidental worker,
or nonpayroll worker of any Parent Entity or in any other employment,
non-employment, or retainer arrangement, or relationship with any Parent
Entity), in each case to the extent arising in connection with or as a result of
employment with or the performance of services to any Parent Entity, and (iii)
any other Liabilities expressly assigned to Parent under this Agreement. All
assets held in trust to fund the Parent Benefit Plans and all insurance policies
funding the Parent Benefit Plans shall be Parent Assets (as defined in the
Separation and Distribution Agreement), except to the extent specifically
provided otherwise in this Agreement.

                  (b)      From and after the Distribution Date, except as
expressly provided in this Agreement, Piper Jaffray and the Piper Jaffray
Entities shall assume or retain, as applicable, and Piper Jaffray hereby agrees
to pay, perform, fulfill and discharge, (i) all Liabilities under all Piper
Jaffray Benefit Plans, (ii) all Liabilities with respect to the employment or
termination of employment of all Piper Jaffray Employees and other service
providers (including any individual who is, or was, an independent contractor,
temporary employee, temporary service worker, consultant, freelancer, agency
employee, leased employee, on-call worker, incidental worker, or nonpayroll
worker of Piper Jaffray or a Piper Jaffray Entity or in any other employment,
non-employment, or retainer arrangement, or relationship with Piper Jaffray or a
Piper Jaffray Entity), and their dependents and beneficiaries, and (iii) all
Liabilities that are expressly assigned to Piper Jaffray or any Piper Jaffray
Entity under this Agreement.

         2.3      Piper Jaffray Participation in Parent Benefit Plans. Except as
expressly provided in this Agreement, effective as of the Close of the
Distribution Date, Piper Jaffray and each other Piper Jaffray Entity shall cease
to be a Participating Company in any Parent Benefit Plan, and

                                      -7-
<PAGE>

Parent and Piper Jaffray shall take all necessary action before the Distribution
Date to effectuate such cessation as a Participating Company.

         2.4      Service Recognition. Piper Jaffray shall cause the Piper
Jaffray Benefit Plans with respect to which service is a relevant factor to
credit Piper Jaffray Employees who are employed by Piper Jaffray immediately
following the Distribution with service before the Distribution Date recognized
by Parent under the terms of Parent Benefit Plans with respect to which service
is a relevant factor, except (a) to the extent duplication of benefits would
result and (b) for purposes of benefit accruals under any defined benefit
pension plan.

         2.5      Approval by Parent as Sole Stockholder. Prior to the
Distribution, Parent shall cause Piper Jaffray to adopt the Piper Jaffray 2003
Long-Term Incentive Plan substantially in the form attached hereto as Exhibit A.

                                  ARTICLE III

                 DEFINED CONTRIBUTION AND DEFINED BENEFIT PLANS

         3.1      Savings Plan. As soon as practicable (and in no event later
than 30 days) after the Distribution Date, Piper Jaffray shall establish the
Piper Jaffray Savings Plan and the Piper Jaffray Savings Trust. As soon as
practical following the establishment of the Piper Jaffray Savings Plan and the
Piper Jaffray Savings Trust, Parent shall cause the accounts (including any
outstanding loan balances) of the Piper Jaffray Employees who elect a transfer
under the Parent Savings Plan to be transferred to the Piper Jaffray Savings
Plan and the Piper Jaffray Savings Trust in cash or such other assets as
mutually agreed by Parent and Piper Jaffray, and Piper Jaffray shall cause the
Piper Jaffray Savings Plan to assume and be solely responsible for all
Liabilities under the Piper Jaffray Savings Plan to or relating to Piper Jaffray
Employees who elect a transfer of their accounts (to the extent assets related
to those accounts are transferred from the Parent Savings Plan). Piper Jaffray
will cause the Piper Jaffray Savings Plan to accept direct and indirect
rollovers from the Parent Savings Plan of any account balances of such Piper
Jaffray Employees in accordance with the applicable provisions of the Code.
Notwithstanding the foregoing, the Piper Jaffray Savings Plan shall not be
required to accept a rollover of any Parent Common Stock that is held in the
accounts of Piper Jaffray Employees. Any outstanding participant loans to Piper
Jaffray Employees who elect a transfer under the Parent Savings Plan of their
account to the Piper Jaffray Savings Plan shall be transferred to the Piper
Jaffray Savings Plan in kind. Parent and Piper Jaffray agree to cooperate in
making all appropriate filings and taking all reasonable actions required to
implement the provisions of this Section 3.1; provided that Piper Jaffray
acknowledges that it will be responsible for complying with any requirements and
applying for any determination letters with respect to the Piper Jaffray Savings
Plan.

         3.2      Company Match. Prior to the Distribution, Parent shall amend
the Parent Savings Plan to provide for the making of matching contributions
under the Parent Savings Plan to Piper Jaffray Employees for contributions made
to the Parent Savings Plan by such Piper Jaffray Employees on or prior to the
Distribution Date. As soon as possible following the Distribution Date (the
"Match Date"), Parent shall, to the extent (a) permissible under Treasury
regulations and (b) such contributions are deemed to be qualified contributions,
pursuant to compliance testing of the Parent Savings Plan, contribute to
accounts of Piper Jaffray Employees under the

                                      -8-
<PAGE>

Parent Savings Plan all matching contributions, if any, due to the Piper Jaffray
Employees who participate in the Parent Savings Plan through the Distribution
Date pursuant to the terms and conditions of the Parent Savings Plan. As soon as
practicable following the end of the year in which the Distribution Date occurs,
Piper Jaffray shall, to the extent (a) permissible under Treasury regulations
and (b) such contributions are deemed to be qualified contributions, pursuant to
compliance testing of the Piper Jaffray Savings Plan, contribute to the Piper
Jaffray Savings Plan all matching contributions, if any, due under the terms and
conditions of the Piper Jaffray Savings Plan to the Piper Jaffray Employees who
participate in the Piper Jaffray Savings Plan from the Distribution Date through
the end of the year in which the Distribution Date occurs.

         3.3      Parent Pension Plan.

                  (a)      Retention of Parent Pension Plan. Effective as of the
Close of the Distribution Date, Parent shall retain:

                           (i)      sponsorship of the Parent Pension Plan and
its related trust and any other trust or other funding arrangement established
or maintained with respect to such plan, or any assets held as of the
Distribution Date with respect to such plan; and

                           (ii)     all Liabilities relating to, arising out of
or resulting from claims incurred by or on behalf of any individuals with
respect to benefits under the Parent Pension Plan.

                  (b)      Commencement of Pension. Effective as of the Close of
the Distribution Date, each Piper Jaffray Employee who is a participant in the
Parent Pension Plan shall be deemed to have terminated employment with Parent
and, to the extent vested in his or her benefit under the plan, shall be
eligible to request distribution of his or her pension in accordance with the
terms of such plan.

                  (c)      Vesting. Following the Close of the Distribution
Date, each Piper Jaffray Employee who is a participant in the Parent Pension
Plan as of immediately prior to the Distribution Date and not vested in his or
her benefit under the Parent Pension Plan as of the Distribution Date shall
continue to vest in his or her benefit under the Parent Pension Plan for so long
as such Piper Jaffray Employee remains employed with Piper Jaffray or a Piper
Jaffray Entity, but upon termination of such employment such Piper Jaffray
Employee's benefit shall no longer continue to vest. Piper Jaffray shall notify
Parent on a quarterly basis at the end of each quarter following the
Distribution Date of any participant in the Parent Pension Plan who is not
vested in his or her benefit under the Parent Pension Plan who has terminated
employment with Piper Jaffray and the Piper Jaffray Entities.

                                      -9-
<PAGE>

                                   ARTICLE IV

                            HEALTH AND WELFARE PLANS

         4.1      General.

                  (a)      Establishment of Piper Jaffray Health and Welfare
Plans. Effective as of January 1, 2004 (the "Transition Date"), Piper Jaffray
shall adopt Health and Welfare Plans for the benefit of Piper Jaffray Employees,
and Piper Jaffray shall be responsible for all Liabilities relating to, arising
out of or resulting from health and welfare coverage or claims incurred by or on
behalf of Piper Jaffray Employees or their covered dependents under the Piper
Jaffray Health and Welfare Plans on or after the Transition Date.

                  (b)      Retention of Sponsorship and Liabilities. As of
immediately prior to the Transition Date, Parent shall retain:

                           (i)      sponsorship of all Parent Health and Welfare
Plans and any trust or other funding arrangement established or maintained with
respect to such plans, including any "voluntary employee's beneficiary
association", or any assets held as of the Transition Date with respect to such
plans;

                           (ii)     all Liabilities relating to, arising out of,
or resulting from health and welfare coverage or claims incurred by or on behalf
of Parent Employees, Former Parent Employees, Piper Jaffray Employees and Former
Piper Jaffray Employees, or their covered dependents under the Parent Health and
Welfare Plans on or before the Transition Date; and

                           (iii)    except as provided in Section 4.1(c), all
Liabilities relating to health and welfare coverage or claims incurred by or on
behalf of Parent Employees, Former Parent Employees and Former Piper Jaffray
Employees or their covered dependents on or after the Transition Date under the
Parent Health and Welfare Plans.

Except as provided in Section 4.1(c), Parent shall not assume any Liability
relating to health and welfare claims incurred by or on behalf of Piper Jaffray
Employees or their covered dependents on or after the Transition Date, and such
claims shall be satisfied pursuant to Section 4.1(a). Except as provided in
Section 4.1(c), a claim or Liability (1) for medical, dental, vision and/or
prescription drug benefits shall be deemed to be incurred upon the rendering of
health services giving rise to the obligation to pay such benefits; (2) for life
insurance and accidental death and dismemberment and business travel accident
insurance benefits and workers' compensation benefits shall be deemed to be
incurred upon the occurrence of the event giving rise to the entitlement to such
benefits; (3) for salary continuation or other disability benefits shall be
deemed to be incurred upon the effective date of an individual's disability
giving rise to the entitlement to such benefits; and (4) for a period of
continuous hospitalization shall be deemed to be incurred on the date of
admission to the hospital.

                  (c)      Certain Specific Claims. Parent shall be responsible
for all Liabilities under the applicable Parent Health and Welfare Plan that
relate to, arise out of or result from any period of continuous hospitalization
of a Piper Jaffray Employee or Former Piper Jaffray Employee or his or her
covered dependent that begins before the Transition Date under a Parent Health
and Welfare Plan and continues after the Transition Date; provided, however,
that Parent

                                      -10-
<PAGE>

shall not be responsible for Liabilities in excess of the benefits otherwise
provided by the terms of the respective plans. Parent also shall be responsible
for all Liabilities under the applicable Parent Health and Welfare Plan that
relate to, arise out of or result from any denture work, bridge work, crown
installation or root canal therapy for a Piper Jaffray Employee, Former Piper
Jaffray Employee or his or her covered dependent for which preparatory dental
services have been rendered under a Parent Health and Welfare Plan on or before
the Transition Date and such dental treatment continues after the Transition
Date, provided that such dental treatment is concluded within allowable time
limitations under the applicable Parent Health and Welfare Plan. Coverage for
any such hospitalization or dental services shall be provided after the
Transition Date without interruption under the appropriate Parent Health and
Welfare Plan until such hospitalization or treatment for such condition is
concluded or discontinued subject to applicable plan rules and limitations.

         4.2      Flexible Benefit Plan. Parent shall be responsible for all
Liabilities of the Piper Jaffray Employees who are participants in the Parent
Flexible Benefit Plan (the "Covered Employees") under the health care
reimbursement program, the transit and parking reimbursement program and the
dependent care reimbursement program of the Parent Flexible Benefit Plan for
claims incurred at any time during the 2003 plan year of the Parent Flexible
Benefit Plan and submitted to the Parent in accordance with the terms and
conditions of the Parent Flexible Benefit Plan.

         4.3      Workers' Compensation Liabilities. Except as provided below,
all workers' compensation Liabilities relating to, arising out of, or resulting
from any claim by a Parent Employee, Former Parent Employee, Piper Jaffray
Employee and Former Piper Jaffray Employee that results from an accident
occurring, or from an occupational disease which becomes manifest, before the
Close of the Distribution Date shall be retained by Parent; provided, however,
that all amounts payable by Parent relating to, arising out of or resulting from
any such claim by a Piper Jaffray Employee shall be deemed to be a Piper Jaffray
Liability for purposes of the Insurance Matters Agreement and shall be paid by
Parent or Piper Jaffray as set forth in the Insurance Matters Agreement. All
workers' compensation Liabilities relating to, arising out of, or resulting from
any claim by a Parent Employee, Former Parent Employee or Former Piper Jaffray
Employee that results from an accident occurring, or from an occupational
disease which becomes manifest, on or after the Distribution Date shall be
retained by Parent. All workers' compensation Liabilities relating to, arising
out of, or resulting from any claim by a Piper Jaffray Employee that results
from an accident occurring, or from an occupational disease which becomes
manifest, on or after the Distribution Date shall be retained by Piper Jaffray.
For purposes of this Agreement, a compensable injury shall be deemed to be
sustained upon the occurrence of the event giving rise to eligibility for
workers' compensation benefits or an occupational disease becomes manifest, as
the case may be. Parent, Piper Jaffray and the other Piper Jaffray Entities
shall cooperate with respect to any notification to appropriate governmental
agencies of the Distribution and the issuance of new, or the transfer of
existing, workers' compensation insurance policies and claims handling
contracts.

         4.4      Payroll Taxes and Reporting of Compensation. Parent and Piper
Jaffray shall, and shall cause the other Parent Entities and the other Piper
Jaffray Entities to, respectively, take such action as may be reasonably
necessary or appropriate in order to minimize Liabilities related to payroll
taxes after the Distribution Date. Parent and Piper Jaffray shall, and shall
cause

                                      -11-
<PAGE>

the other Parent Entities and the other Piper Jaffray Entities to, respectively,
each bear its responsibility for payroll tax obligations and for the proper
reporting to the appropriate governmental authorities of compensation earned by
their respective employees after the Close of the Distribution Date, including
compensation related to the exercise of Options.

         4.5      Parent Post-Retirement Welfare Benefits Plan.

                  (a)      Retention of Parent Post-Retirement Welfare Benefits
Plan. As of the Distribution Date, Parent shall retain (i) sponsorship of all
Parent Post-Retirement Welfare Benefits Plans and any trust or other funding
arrangement established or maintained with respect to such plans, or any assets
held as of the Distribution Date with respect to such plans and (ii) all
Liabilities relating to, arising out of, or resulting from retiree health and
welfare coverage or claims incurred by or on behalf of Parent Employees, Former
Parent Employees, Former Piper Jaffray Employees or their covered dependents
under the Parent Post-Retirement Welfare Benefits Plans. Parent shall not assume
any Liability relating to post-retirement welfare claims incurred by or on
behalf of Piper Jaffray Employees or their covered dependents after the
Distribution Date, and such claims shall be satisfied by Piper Jaffray pursuant
to Section 4.5(b).

                  (b)      Piper Jaffray Post-Retirement Welfare Benefits Plans.
Effective as of the Distribution Date, (i) Piper Jaffray may, in its sole
discretion, adopt Post-Retirement Welfare Benefits Plans for the benefit of
Piper Jaffray Employees, and (ii) Piper Jaffray shall be responsible for all
Liabilities relating to, arising out of or resulting from health and welfare
coverage or claims incurred by or on behalf of Piper Jaffray Employees or their
covered dependents under the Piper Jaffray Post-Retirement Welfare Benefits
Plans.

         4.6      COBRA and HIPAA Compliance. Parent shall be responsible for
administering compliance with the health care continuation requirements of
COBRA, the certificate of creditable coverage requirements of HIPAA, and the
corresponding provisions of the Parent Health and Welfare Plans with respect to
Piper Jaffray Employees and their covered dependents who incur a COBRA
qualifying event or loss of coverage under the Parent Health and Welfare Plans
at any time on or before December 31, 2003. Effective on the Transition Date,
Piper Jaffray or another Piper Jaffray Entity shall be responsible for
administering compliance with the health care continuation requirements of
COBRA, the certificate of creditable coverage requirements of HIPAA, and the
corresponding provisions of the Piper Jaffray Health and Welfare Plans with
respect to Piper Jaffray Employees and their covered dependents who incur a
COBRA qualifying event or loss of coverage under the Piper Jaffray Health and
Welfare Plans at any time after December 31, 2003. The parties hereto agree that
the consummation of the transactions contemplated by this Agreement and the
Separation Agreement shall not constitute a COBRA qualifying event for any
purpose of COBRA.

                                   ARTICLE V

                      EXECUTIVE BENEFITS AND OTHER BENEFITS

         5.1      Assumption of Obligations. Except as provided in this
Agreement, effective as of the Distribution Time, Piper Jaffray shall assume and
be solely responsible for all Liabilities to or relating to Piper Jaffray
Employees under all Parent Executive Benefit Plans and Piper Jaffray

                                      -12-
<PAGE>

Executive Benefit Plans. None of the transactions contemplated by the Separation
and Distribution Agreement or any of the Ancillary Agreements, including,
without limitation, this Agreement, constitutes a change in control for purposes
of any Employee Benefit Plan.

         5.2      Parent Executive Incentive Plan and the Annual Incentive Plan.

                  (a)      Piper Jaffray Bonus Awards. Piper Jaffray shall be
responsible for determining all bonus awards that would otherwise be payable
under the U.S. Bancorp Executive Incentive Plan and the U.S. Bancorp Annual
Incentive Plan to Piper Jaffray Employees for the Distribution Year. Piper
Jaffray shall also determine for Piper Jaffray Employees (i) the extent to which
established performance criteria (as interpreted by Piper Jaffray, in its sole
discretion) have been met, and (ii) the payment level for each Piper Jaffray
Employee. Piper Jaffray shall assume all Liabilities with respect to any such
bonus awards payable to Piper Jaffray Employees for the Distribution Year and
thereafter.

                  (b)      Parent Bonus Awards. Parent shall be responsible for
determining all bonus awards that would otherwise be payable under the U.S.
Bancorp Executive Incentive Plan and the U.S. Bancorp Annual Incentive Plan to
Parent Employees for the Distribution Year. Parent shall also determine for
Parent Employees (i) the extent to which established performance criteria have
been met, and (ii) the payment level for each such Parent Employee. Parent shall
retain all Liabilities with respect to any such bonus awards payable to Parent
Employees for the Distribution Year and thereafter.

         5.3      Parent Long-Term Incentive Plans. Parent and Piper Jaffray
shall use their reasonable best efforts to take all actions necessary or
appropriate so that each outstanding Option and Award granted under any Parent
Long-Term Incentive Plan held by any individual shall be adjusted as set forth
in this Article V.

                  (a)      Parent Options. As determined by the Compensation
Committee of the Parent Board of Directors (the "Committee") in its sole
discretion pursuant to its authority under any of the Parent Long-Term Incentive
Plans, each Parent Option shall be subject to the same terms and conditions
after the Distribution as the terms and conditions applicable to such Parent
Option immediately prior to the Distribution; provided, however, that from and
after the Close of the Distribution (i) the number of shares of Parent Common
Stock subject to such Parent Option, rounded to the nearest whole share, shall
be equal to the product of (x) the number of shares of Parent Common Stock
subject to such Parent Option immediately prior to the Distribution Date and (y)
the quotient obtained by dividing the Parent Stock Value by the Parent Opening
Stock Value and (ii) the exercise price of such Parent Option, rounded to the
nearest whole cent, shall be equal to the quotient obtained by dividing (x) the
exercise price of such Parent Option immediately prior to the Distribution by
(y) the quotient obtained by dividing the Parent Stock Value by the Parent
Opening Stock Value; provided, however, that, in the case of any Parent Option
to which Section 421 of the Code applies by reason of its qualification under
Section 422 of the Code as of the Distribution, the exercise price, the number
of shares of Parent Common Stock subject to such option and the terms and
conditions of exercise of such option shall be determined in a manner consistent
with the requirements of Section 424(a) of the Code.

                                      -13-
<PAGE>

                  (b)      Parent Restricted Stock. As determined by the
Committee in its sole discretion pursuant to its authority under any of the
Parent Long-Term Incentive Plans, each share of Parent Restricted Stock shall be
subject to the same terms and conditions after the Distribution as the terms and
conditions applicable to such Parent Restricted Stock immediately prior to the
Distribution; provided, however, that on the Close of the Distribution, the
holder of the Parent Restricted Stock (including any Piper Jaffray Employee who
held Parent Restricted Stock as of immediately prior to the Distribution) shall
receive a number of shares of Piper Jaffray Common Stock determined in the
manner set forth in Section 3.1 of the Separation and Distribution Agreement.
Notwithstanding anything in any award agreement evidencing the grant of such
Parent Restricted Stock to the contrary, in no event shall the Piper Jaffray
Common Stock received with respect to such Parent Restricted Stock be subject to
any restriction.

                  (c)      Parent Restricted Stock Units. As determined by the
Committee in its sole discretion pursuant to its authority under any of the
Parent Long-Term Incentive Plans, each Parent Restricted Stock Unit shall be
subject to the same terms and conditions after the Distribution as the terms and
conditions applicable to such Parent Restricted Stock Unit immediately prior to
the Distribution; provided, however, that from and after the Close of the
Distribution the number of shares of Parent Common Stock subject to such Parent
Restricted Stock Unit, rounded to the nearest whole share, shall be equal to the
product of (x) the number of shares of Parent Common Stock subject to such
Parent Restricted Stock Unit immediately prior to the Distribution Date and (y)
the quotient obtained by dividing the Parent Stock Value by the Parent Opening
Stock Value.

                  (d)      Incentive Stock Options; Foreign Grants/Awards. To
the extent that the Parent Awards or any of the Parent Options are granted to
non-U.S. employees under any domestic or foreign equity-based incentive program
sponsored by a Parent Entity, subject to the provisions of Sections 5.3(a),
5.3(b), 5.3(c) and 5.3(d), Parent and Piper Jaffray shall use their commercially
reasonable efforts to preserve, at and after the Distribution, the value and tax
treatment accorded to such Parent Options and such Parent Awards granted to
non-U.S. employees under any domestic or foreign equity-based incentive program
sponsored by a Parent Entity. The parties hereby delegate to the Parent
Executive Vice President-Human Resources, for periods before the Distribution
Date, the authority to determine an appropriate methodology for adjusting such
grants or awards in a manner that is, to the extent possible, consistent with
the treatment of such awards and grants for U.S. employees.

                  (e)      Miscellaneous Option and Other Award Terms.

                           (i)      After the Distribution Date, Parent Options
and Parent Awards adjusted pursuant to Section 5.3, regardless of by whom held,
shall be settled by Parent pursuant to the terms of the Parent Long-Term
Incentive Plan, and Piper Jaffray Options and Piper Jaffray Awards, regardless
of by whom held, shall be settled by Piper Jaffray pursuant to the terms of the
Piper Jaffray Long-Term Incentive Plan. The Distribution shall constitute a
termination of employment for all Piper Jaffray Employees for purposes of any
Parent Option or Parent Award.

                           (ii)     Parent or a Parent Entity shall claim the
benefit of federal, state, and local tax deductions related to the exercise of
all adjusted Parent Options and the vesting or settlement, as applicable, of
Parent Awards after the Distribution Date and none of Piper Jaffray

                                      -14-
<PAGE>

or any Piper Jaffray Entity shall claim any such tax deductions. After the
Distribution Date, Parent and the Parent Entities shall be responsible for the
proper payroll tax treatment and the proper reporting to the appropriate
governmental authorities of compensation relating to all option exercises of
Parent Options and vesting or settlement, as applicable, of Parent Awards.

                           (iii)    Piper Jaffray or a Piper Jaffray Entity
shall claim the benefit of federal, state and local tax deductions related to
the exercise of Piper Jaffray Options and the vesting or settlement, as
applicable, of Piper Jaffray Awards after the Distribution Date and neither
Parent nor any Parent Entity shall claim any such tax deductions. After the
Distribution Date, Piper Jaffray and the Piper Jaffray Entities shall be
responsible for the proper payroll tax treatment and the proper reporting to the
appropriate governmental authorities of compensation relating to all option
exercises of Piper Jaffray Options and vesting or settlement, as applicable, of
Piper Jaffray Awards.

                           (iv)     Parent and Piper Jaffray agree to act (or to
take such action) with respect to such federal, state, or local tax deductions,
and with respect to fulfilling the payroll tax and reporting obligations on
compensation as are reasonably necessary or appropriate to achieve, maintain
and/or preserve such tax results.

                           (v)      If (A) as a result of a determination (as
defined in Section 1313 of the Code) or (B) in the opinion of nationally
recognized tax counsel to Parent or Piper Jaffray, which opinion and tax counsel
are reasonably acceptable to the other party hereto, as a result of final or
pending Treasury Regulations, Internal Revenue Service announcement or
otherwise, in each case, there is a substantial likelihood that the tax
deductions related to the exercise of Options or Awards under this Agreement
and/or the payroll tax and reporting obligations related to the exercise of
Options or vesting or settlement of Awards, will be inconsistent with all or any
part of Section 5.3 above, the parties shall negotiate in good faith to
restructure the arrangements set forth herein so that (I) if, pursuant to the
determination or opinion, a party gets a tax deduction it was not entitled to
claim under the terms of this Agreement, that party shall pay over to the party
entitled to claim the deduction under the terms of this Agreement, as if and for
the tax year(s) recognized through a reduction in taxes due and/or the receipt
of a refund in an amount equal to the lesser of (X) its tax benefit and (Y) the
benefit otherwise available to the party entitled to such deduction under the
terms of this Agreement, as if and for the tax year(s) when such deduction would
have resulted in a reduction in taxes due and/or the receipt of a refund and
(II) the reporting and financial burden of the payroll taxes are, to the extent
practicable, as described above. Any such amounts shall be payable within 30
days of the filing of the return in which the benefit described in (X) or (Y) of
the preceding sentence, whichever is later, is reflected. If the parties are
unable to reach an agreement on how to restructure the arrangements set forth
herein within 90 days of such determination or the receipt of the opinion of
counsel described in the first sentence of this subparagraph (vi) such
disagreement shall be resolved by a nationally recognized law firm or accounting
firm ("Independent Third Party"), selected in a manner similar to the procedure
set forth in Section 3(b)(iii) of the Tax Sharing Agreement, whose judgment
shall be conclusive and binding upon the parties. The cost of any Independent
Third Party shall be shared equally between the parties.

                  (f)      Waiting Period for Exercisability of Options and
Grant of Options and Awards. The Parent Options and Piper Jaffray Options shall
not be exercisable during a period

                                      -15-
<PAGE>

beginning on a date prior to the Distribution Date determined by Parent in its
sole discretion, and continuing until the Parent Opening Stock Value and the
Parent Stock Value are determined immediately after the Distribution, or such
longer period as Parent determines necessary to implement the provisions of this
Section 5.3. In addition, Piper Jaffray shall not grant any Piper Jaffray Option
or Piper Jaffray Award under the Piper Jaffray Long-Term Incentive Plan during
the period commencing on the Distribution Date and ending on the date that is 90
days after the Distribution Date.

                  (g)      Restrictive Covenants. Following the Distribution
Date, Piper Jaffray shall use its reasonable best efforts to monitor the Piper
Jaffray Employees and Former Piper Jaffray Employees to determine whether any
such Piper Jaffray Employees or Former Piper Jaffray Employees have breached any
of the restrictive covenants in the agreements evidencing the terms of their
Parent Options and Parent Awards. As soon as practicable following Piper
Jaffray's reasonable belief that a Piper Jaffray Employee or Former Piper
Jaffray Employee has breached any such covenant, Piper Jaffray shall provide
Parent in writing with the name and address of such employee or former employee
and the name and address of the enterprise in which such employee or former
employee is believed to have been engaged. Notwithstanding the foregoing or
anything in any agreement evidencing the terms of any Parent Options and Parent
Awards to the contrary, it shall not be a violation of any non-competition or
non-solicitation of clients or customers covenant for a holder of a Parent
Option or Parent Award to engage in acts on behalf of Piper Jaffray or a Piper
Jaffray Entity that are otherwise prohibited by the terms of such
non-competition or non-solicitation of clients or customers covenants.

         5.4      Registration Requirements. As soon as possible following the
time as of which the Registration Statement (as defined in the Separation and
Distribution Agreement) is declared effective by the Securities and Exchange
Commission but in any case before the Distribution Date and before the date of
issuance or grant of any Piper Jaffray Option and/or shares of Piper Jaffray
Common Stock pursuant to this Article V, Piper Jaffray agrees that it shall file
a Form S-8 Registration Statement with respect to and cause to be registered
pursuant to the Securities Act of 1933, as amended, the shares of Piper Jaffray
Common Stock authorized for issuance under the Piper Jaffray Long-Term Incentive
Plan as required pursuant to such Act and any applicable rules or regulations
thereunder, with such registration to be effective prior to the Distribution
Date.

         5.5      Parent Non-Qualified Retirement Plans. Effective as of the
Distribution Date, Piper Jaffray shall establish a non-qualified pension plan
(the "Piper Jaffray Non-Qualified Retirement Plan") that is substantially
identical to the Parent Non-Qualified Retirement Plan to provide benefits to
Piper Jaffray Employees and Former Piper Jaffray Employees from and after the
Distribution Date who were participants in the Parent Non-Qualified Retirement
Plan as of immediately prior to the Distribution Date. Effective as of the
Distribution Date, Piper Jaffray shall assume and be solely responsible for all
Liabilities of Parent for, or relating to, benefits accrued through the
Distribution Date by or with respect to Piper Jaffray Employees and Former Piper
Jaffray Employees under the Parent Non-Qualified Retirement Plan and the Piper
Jaffray Non-Qualified Retirement Plan.

         5.6      Severance Plans. The Parent Severance Pay Program provides for
the payment of certain compensation and benefits in the event of the termination
of employment of the

                                      -16-
<PAGE>

individual covered by the terms of such plans. As of the Close of the
Distribution Date, Parent shall retain all Liabilities relating to the Parent
Severance Pay Program and all Liabilities relating to, arising out of, or
resulting from claims incurred by or on behalf of any Parent Employee or Former
Parent Employee under such plans. A Piper Jaffray Employee shall not be deemed
to have terminated employment for purposes of determining eligibility for
benefits under the Parent Severance Pay Program or other similar plans and
programs in connection with or in anticipation of the consummation of the
transactions contemplated by the Separation and Distribution Agreement, and
shall cease to be covered thereby as of the Close of the Distribution Date.
Piper Jaffray shall be solely responsible for all Liabilities in respect of all
costs arising out of payments and benefits relating to the termination or
alleged termination of any Piper Jaffray Employee's employment that occurs as a
result of or in connection with or following the consummation of the
transactions contemplated by the Separation and Distribution Agreement,
including any amounts required to be paid (including any payroll or other
taxes), and the costs of providing benefits, under any applicable severance,
separation, redundancy, termination or similar plan, program, practice,
contract, agreement, law or regulation (such benefits to include any medical or
other welfare benefits, outplacement benefits, accrued vacation, and taxes). The
Parent shall retain all Liabilities with respect to the termination of any Piper
Jaffray Employee or Former Piper Jaffray employee prior to the Distribution
Date.

         5.7      Employee Cash Awards in Connection with the Distribution.
Piper Jaffray shall use the Capital Contribution contributed pursuant to clause
(1) of Section 2.6 of the Separation and Distribution Agreement as well as an
additional $23,500,000 (the "Employee Cash Award Pool") for the sole purpose of
providing each Piper Jaffray Employee selected by the Compensation Committee of
the Board of Directors of Piper Jaffray (the "Piper Jaffray Compensation
Committee") with a cash award (an "Employee Cash Award") in an amount determined
by the Piper Jaffray Compensation Committee, which shall generally be payable as
on the terms and conditions not inconsistent herewith as are approved by the
Committee and the Piper Jaffray Compensation Committee and as are set forth in
the agreements evidencing the grant of the Employee Cash Awards substantially in
the forms attached hereto on Exhibit A, provided that in no event shall Piper
Jaffray allocate any amount of the Employee Cash Award Pool or pay or provide
any other bonus or amount or other compensation or consideration at any time
with respect to any Parent Options or Parent Awards granted to Piper Jaffray
Employees under the U.S. Bancorp 2001 Employee Stock Incentive Plan or the U.S.
Bancorp 1998 Executive Stock Incentive Plan, and, notwithstanding the provisions
of this Agreement or any other agreement to the contrary, Piper Jaffray shall be
responsible for and shall indemnify Parent against all Liabilities arising under
or in connection with the Employee Cash Award Pool.

                                   ARTICLE VI

                           GENERAL AND ADMINISTRATIVE

         6.1      Sharing of Participant Information. Parent and Piper Jaffray
shall share, and Parent shall cause each other Parent Entity to share, and Piper
Jaffray shall cause each other Piper Jaffray Entity to share with each other and
their respective agents and vendors (without obtaining releases) all participant
information necessary for the efficient and accurate administration of each of
the Piper Jaffray Benefit Plans and the Parent Benefit Plans. Parent and Piper
Jaffray and their respective authorized agents shall, subject to applicable
laws, be

                                      -17-
<PAGE>

given reasonable and timely access to, and may make copies of, all information
relating to the subjects of this Agreement in the custody of the other party, to
the extent necessary for such administration. Until the Close of the
Distribution Date, all participant information shall be provided in the manner
and medium applicable to Participating Companies in Benefit Plans of Parent
generally, and thereafter until December 31, 2003, all participant information
shall be provided in a manner and medium as may be mutually agreed to by Parent
and Piper Jaffray.

         6.2      Reasonable Efforts/Cooperation. Each of the parties hereto
will use its commercially reasonable efforts to promptly take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement. Each of the parties hereto shall
cooperate fully on any issue relating to the transactions contemplated by this
Agreement for which the other party seeks a determination letter or private
letter ruling from the Internal Revenue Service, an advisory opinion from the
Department of Labor or any other filing, consent or approval with respect to or
by a governmental agency.

         6.3      No Third-Party Beneficiaries. This Agreement is solely for the
benefit of the Parties and is not intended to confer upon any other Persons any
rights or remedies hereunder. Except as expressly provided in this Agreement,
nothing in this Agreement shall preclude Parent or any other Parent Entity, at
any time after the Close of the Distribution Date, from amending, merging,
modifying, terminating, eliminating, reducing, or otherwise altering in any
respect any Parent Benefit Plan, any benefit under any Benefit Plan or any
trust, insurance policy or funding vehicle related to any Parent Benefit Plan.
Except as expressly provided in this Agreement, nothing in this Agreement shall
preclude Piper Jaffray or any other Piper Jaffray Entity, at any time after the
Close of the Distribution Date, from amending, merging, modifying, terminating,
eliminating, reducing, or otherwise altering in any respect any Piper Jaffray
Benefit Plan, any benefit under any Benefit Plan or any trust, insurance policy
or funding vehicle related to any Piper Jaffray Benefit Plan.

         6.4      Audit Rights With Respect to Information Provided.

                  (a)      Each of Parent and Piper Jaffray, and their duly
authorized representatives, shall have the right to conduct reasonable audits
with respect to all information required to be provided to it by the other party
under this Agreement. The party conducting the audit (the "Auditing Party") may
adopt reasonable procedures and guidelines for conducting audits and the
selection of audit representatives under this Section 6.4. The Auditing Party
shall have the right to make copies of any records at its expense, subject to
any restrictions imposed by applicable laws and to any confidentiality
provisions set forth in the Separation and Distribution Agreement, which are
incorporated by reference herein. The party being audited shall provide the
Auditing Party's representatives with reasonable access during normal business
hours to its operations, computer systems and paper and electronic files, and
provide workspace to its representatives. After any audit is completed, the
party being audited shall have the right to review a draft of the audit findings
and to comment on those findings in writing within ten business days after
receiving such draft.

                  (b)      The Auditing Party's audit rights under this Section
6.4 shall include the right to audit, or participate in an audit facilitated by
the party being audited, of any Subsidiaries

                                      -18-
<PAGE>

and Affiliates of the party being audited and to require the other party to
request any benefit providers and third parties with whom the party being
audited has a relationship, or agents of such party, to agree to such an audit
to the extent any such persons are affected by or addressed in this Agreement
(collectively, the "Non-parties"). The party being audited shall, upon written
request from the Auditing Party, provide an individual (at the Auditing Party's
expense) to supervise any audit of a Non-party. The Auditing Party shall be
responsible for supplying, at the Auditing Party's expense, additional personnel
sufficient to complete the audit in a reasonably timely manner. The
responsibility of the party being audited shall be limited to providing, at the
Auditing Party's expense, a single individual at each audited site for purposes
of facilitating the audit.

         6.5      Fiduciary Matters. It is acknowledged that actions required to
be taken pursuant to this Agreement may be subject to fiduciary duties or
standards of conduct under ERISA or other applicable law, and no party shall be
deemed to be in violation of this Agreement if it fails to comply with any
provisions hereof based upon its good faith determination that to do so would
violate such a fiduciary duty or standard. Each party shall be responsible for
taking such actions as are deemed necessary and appropriate to comply with its
own fiduciary responsibilities and shall fully release and indemnify the other
party for any Liabilities caused by the failure to satisfy any such
responsibility.

         6.6      Consent of Third Parties. If any provision of this Agreement
is dependent on the consent of any third party (such as a vendor) and such
consent is withheld, the parties hereto shall use their reasonable best efforts
to implement the applicable provisions of this Agreement to the full extent
practicable. If any provision of this Agreement cannot be implemented due to the
failure of such third party to consent, the parties hereto shall negotiate in
good faith to implement the provision in a mutually satisfactory manner. The
phrase "reasonable best efforts" as used herein shall not be construed to
require any party to incur any non-routine or unreasonable expense or Liability
or to waive any right.

                                   ARTICLE VII

                                  MISCELLANEOUS

         7.1      Effect If Distribution Does Not Occur. If the Separation and
Distribution Agreement is terminated prior to the Distribution Date, then all
actions and events that are, under this Agreement, to be taken or occur
effective immediately prior to or as of the Close of the Distribution Date, or
Immediately after the Distribution Date, or otherwise in connection with the
Separation Transactions shall not be taken or occur except to the extent
specifically agreed by Parent and Piper Jaffray.

         7.2      Relationship of Parties. Nothing in this Agreement shall be
deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, it being understood and agreed that no provision contained herein, and
no act of the parties, shall be deemed to create any relationship between the
parties other than the relationship set forth herein.

                                      -19-
<PAGE>

         7.3      Affiliates. Each of Parent and Piper Jaffray shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by another Parent Entity
or a Piper Jaffray Entity, respectively.

         7.4      Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given to a
party when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); (b) sent by facsimile with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses and facsimile numbers and marked to the
attention of the person (by name or title) designated below (or to such other
address, facsimile number or person as a party may designate by notice to the
other parties):

                  (a)      if to Parent:

                           U.S. Bancorp
                           800 Nicollet Mall
                           Minneapolis, Minnesota 55402
                           Attention: General Counsel
                           Fax: (612) 303-0898

         with copies to:

                           Wachtell, Lipton, Rosen & Katz
                           51 West 52nd Street
                           New York, NY 10019
                           Attention: Adam D. Chinn
                           Facsimile No.: (212) 403-2209

                  (b)      if to Piper Jaffray:

                           Piper Jaffray Companies
                           800 Nicollet Mall
                           Minneapolis, Minnesota 55402
                           Attention: General Counsel
                           Fax: (612) 303-1772

         7.5      Incorporation of Separation and Distribution Agreement
Provisions. The following provisions of the Separation and Distribution
Agreement are hereby incorporated herein by reference, and unless otherwise
expressly specified herein, such provisions shall apply as if fully set forth
herein (references in this Section 7.5 to an "Article" or "Section" shall mean
Articles or Sections of the Separation and Distribution Agreement, and
references in the material incorporated herein by reference shall be references
to the Separation and Distribution Agreement): Article IV (relating to Survival
and Indemnification); Article V (relating to Certain Additional Covenants);
Article VI (relating to Access to Information); Article VII (relating to No
Representations or Warranties); Article VIII (relating to Terminations); Article
IX (relating to Miscellaneous).

                                      -20-
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Employee Benefits
Agreement to be duly executed as of the day and year first above written.

                                          U.S. BANCORP

                                          By: /s/ Lee R. Mitau
                                              ----------------------------------
                                          Name: Lee R. Mitau
                                          Title: Executive Vice President

                                          PIPER JAFFRAY COMPANIES

                                          By: /s/ James L. Chosy
                                              ----------------------------------
                                          Name: James L. Chosy
                                          Title: Secretary

                                      -21-