PIPER JAFFRAY COMPANIES
INSURANCE MATTERS AGREEMENT
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>9
<FILENAME>c82510exv10w3.txt
<DESCRIPTION>INSURANCE MATTERS AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.3

                           INSURANCE MATTERS AGREEMENT

                                 by and between

                                  U.S. Bancorp

                                       and

                             Piper Jaffray Companies

                          Dated as of December 23, 2003

<PAGE>

                  This INSURANCE MATTERS AGREEMENT, dated as of December 23,
2003, 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", and together with Parent, the "Parties"
and each a "Party").

                  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, the Parties have agreed to enter into this Agreement for the purpose
of setting forth certain agreements regarding insurance matters.

                  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 -- Definitions

                  Capitalized terms used in this Agreement that are not defined
in Article I or other provisions of this Agreement shall have the meanings
assigned to them in the Separation and Distribution Agreement.

                  1.1.     "Agreement" means this Insurance Matters Agreement,
including all the Schedules hereto.

                  1.2.     "Current Parent Policies" means Property and Casualty
insurance policies that insure Parent and one or more of its Subsidiaries or
Affiliates and that have policy periods that begin before and end after the
Distribution Date.

                  1.3.     "Other Policies" means Property and Casualty
insurance policies with policy periods that begin and end before the
Distribution Date and that provide insurance coverage to Parent or one or more
of its Subsidiaries or Affiliates as a result of the acquisition of assets or
shares of, or mergers or consolidations with, other Persons that had previously
purchased such policies or that had succeeded to rights to obtain coverage from
such policies prior to the time of the acquisition, merger or consolidation by
or with Parent or one or more of its Subsidiaries or Affiliates.

                  1.4.     "Prior Parent Policies" means Property and Casualty
insurance policies with policy periods that begin and end before the
Distribution Date that provide insurance coverage to Parent or one or more of
its Subsidiaries or Affiliates and that are neither Current Parent Policies nor
Other Policies.

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                  1.5.     "Property and Casualty" means property and casualty
as that term is commonly used in the insurance business and includes but is not
limited to liability policies (such as directors and officers liability
policies, employment practices liability policies, errors and omissions
liability policies, general liability policies), first party property policies,
crime and bond policies, mail policies, Excess SIPIC policies, excess securities
policies, and workers compensation policies.

                     ARTICLE II -- Current Parent Policies

                  2.1.     With respect to the Current Parent Policies listed in
Schedule A to this Agreement, which were issued for the period from August 1,
2003 to August 1, 2004, Parent hereby agrees, to the extent permitted by the
insurance policy or insurance contract and upon request by Piper Jaffray, to
provide the Piper Jaffray Group such insurance with respect to the Piper Jaffray
Liabilities as is afforded by those policies to the extent that Parent has the
right to do so without paying or incurring any additional premium or costs under
those policies. Prior to the currently scheduled expiration date of those
policies, August 1, 2004, unless earlier terminated by the applicable insurer,
Parent shall not cancel, terminate or amend those policies in a manner that
materially and adversely affects coverage for Piper Jaffray or the Piper Jaffray
Group. Prior to the Distribution Date, Piper Jaffray shall use its commercially
reasonable efforts to obtain written confirmation from the insurers that issued
those policies that Piper Jaffray and the Piper Jaffray Group shall continue to
be "Insured(s)" under those policies (as the term "Insured(s)" is defined in
those policies) from the Distribution Date to August 1, 2004. In the event that
Parent does not have the right to make Piper Jaffray and the Piper Jaffray Group
"Insureds" under those policies (or the insurers refuse to provide confirmation
of Parent's right to do so), Piper Jaffray shall at its own expense obtain
replacement coverage (or bear the risk that such coverage is not available under
the Current Parent Policies) and Parent shall not be directly or indirectly
liable for any failure on the part of Piper Jaffray to obtain coverage or
receive reimbursement under such policies from the insurers.

                  2.2.     With respect to the Current Parent Policies listed in
Schedule B to this Agreement, the period of such policies shall be deemed to end
as of the Distribution Date insofar as Piper Jaffray and the Piper Jaffray Group
are concerned, and Piper Jaffray and the Piper Jaffray Group shall have no right
to extend the period for reporting claims, circumstances or occurrences under
such policies. Piper Jaffray shall use commercially reasonable efforts to
obtain, for the period commencing with the Distribution Date, replacement
insurance policies for risks that would otherwise have been covered by such
policies, or shall self-insure such risks and Parent shall not be directly or
indirectly liable for any failure on the part of Piper Jaffray to insure for
such risks.

                  2.3.     With respect to the coverage of the type provided by
Current Parent Policies, Piper Jaffray shall use commercially reasonable efforts
to obtain its own separate replacement policies that provide substantially
equivalent coverage with commercially appropriate limits for the period
commencing with the Distribution Date. Piper Jaffray shall inform Parent about
the replacement policies that it plans to obtain, and, with respect solely to
the first set of replacement policies obtained for the period

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                                      -3-

commencing with the Distribution Date, obtain the consent of Parent to the type
of coverage and the limits obtained by Piper Jaffray, provided that Parent may
not unreasonably withhold such consent.

       ARTICLE III -- Rights in Policies with Inception Dates Prior to the
                                Distribution Date

                  3.1.     As of the Distribution Date, Parent and the Parent
Group assign to Piper Jaffray and the Piper Jaffray Group all rights to
insurance coverage provided for Piper Jaffray Liabilities under the Current
Parent Policies, Prior Parent Policies and Other Policies in accordance with the
terms of such policies and applicable principles of law and equity, subject to
the applicable limits of such policies.

                  3.2.     As of the Distribution Date, Parent and the Parent
Group retain all rights to insurance coverage provided for Parent Liabilities
under the Current Parent Policies, Prior Parent Policies and Other Policies in
accordance with the terms of such policies and applicable principles of law and
equity, subject to the applicable limits of such policies.

                  3.3.     For purposes of the exhaustion of any limits that
apply to coverage available under Current Parent Policies, Prior Parent Policies
or Other Policies, amounts shall be allocated to the policies on a first
come/first served basis. That means that amounts covered by such policies shall
be allocated to such policies in the order in which such amounts were paid by or
on behalf of Parent or the Parent Group, or Piper Jaffray or the Piper Jaffray
Group, with respect to the Parent Liabilities or the Piper Jaffray Liabilities,
respectively. Where the policies provide coverage with respect to the Parent
Liabilities or the Piper Jaffray Liabilities for amounts that are not paid by or
on behalf of Parent or the Parent Group, or Piper Jaffray or the Piper Jaffray
Group, such as for example in the case of first party coverage for the value of
property that is destroyed but not replaced, amounts shall be allocated to
policies in the order in which the relevant losses occurred.

            ARTICLE IV -- Self-Insured Retentions and Related Matters

                  4.1.     With respect to Parent Liabilities, Parent shall pay
or cause to be paid any self-insured retentions, deductibles, retrospective
premiums or other amounts payable by an insured that apply under Current Parent
Policies, Prior Parent Policies or Other Policies. With respect to such
liabilities, Parent shall also pay amounts that are not otherwise covered by the
Current Parent Policies, Prior Parent Policies or Other Parent Policies. In
addition, to the extent that there is any obligation after the Distribution Date
to provide or continue to provide security or collateral to any insurer with
respect to Parent Liabilities, Parent shall provide or cause to be provided such
security or collateral and pay or cause to be paid the cost of doing so.

                  4.2.     With respect to Piper Jaffray Liabilities, Piper
Jaffray shall pay or cause to be paid any self-insured retentions, deductibles,
retrospective premiums or other amounts payable by an insured that apply under
Current Parent Policies, Prior Parent Policies or Other Policies. With respect
to such liabilities, Piper Jaffray shall also pay
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                                      -4-

amounts that are not otherwise covered by the Current Parent Policies, Prior
Parent Policies or Other Parent Policies. In addition, to the extent that there
is any obligation after the Distribution Date to provide or continue to provide
security or collateral to any insurer with respect to Piper Jaffray Liabilities,
Piper Jaffray shall provide or cause to be provided such security or collateral
and pay or cause to be paid the cost of doing so.

                  4.3.     To the extent that Parent continues after the
Distribution Date to make any payments or incur any costs that Piper Jaffray is
obligated to make or incur under Section 4.2, for any reason, including as a
result of contractual obligations or for the purpose of ensuring a smooth
transition, Piper Jaffray shall promptly reimburse Parent for the amount of such
payments or costs. Similarly, to the extent that Piper Jaffray continues after
the Distribution Date to make any payments or incur any costs that Parent is
obligated to make or incur under Section 4.1, for any reason, including as a
result of contractual obligations or for the purpose of ensuring a smooth
transition, Parent shall promptly reimburse Piper Jaffray for such payments or
costs.

                  4.4.     To the extent that Parent continues after the
Distribution Date to provide security or collateral to any insurer with respect
to Piper Jaffray Liabilities, Piper Jaffray shall: (a) use commercially
reasonable efforts, in cooperation with Parent, to persuade the insurer to
release Parent from such obligation and to substitute security or collateral
from Piper Jaffray; (b) to the extent requested to do so by Parent, until Parent
is released from such obligations, provide Parent at the expense of Piper
Jaffray with equivalent security or collateral; (c) reimburse Parent for the
cost of continuing to provide such security or collateral; and (d) to the extent
not satisfied by the security or collateral contemplated by subsection (b), at
Parent's option either pay on behalf of Parent any collateral or security
amounts that become due with respect to Piper Jaffray Liabilities or promptly
reimburse Parent for security or collateral amounts paid by Parent with respect
to such liabilities.

                  4.5.     For purposes of the exhaustion of any limits that
apply to self-insured retentions, deductibles, retrospective premiums or other
amounts payable by an insured that apply under Current Parent Policies, Prior
Parent Policies or Other Policies, amounts shall be allocated to such limits on
a first come/first served basis. That means that amounts shall be allocated to
such limits in the order in which such amounts were paid by or on behalf of
Parent or the Parent Group, or Piper Jaffray or the Piper Jaffray Group, with
respect to the Parent Liabilities or the Piper Jaffray Liabilities,
respectively. Where the limits with respect to the Parent Liabilities or the
Piper Jaffray Liabilities apply to amounts that are not paid by or on behalf of
Parent or the Parent Group, or Piper Jaffray or the Piper Jaffray Group, such as
for example in the case of first party coverage for the value of property that
is destroyed but not replaced, amounts shall be allocated to such limits in the
order in which the relevant losses occurred.

                  4.6.     Piper Jaffray, on its own behalf and on behalf of the
Piper Jaffray Group, and their directors, officers and employees, hereby agrees
that insurance policies issued by Midwest Indemnity Inc. do not provide any
insurance coverage to Piper Jaffray or any member of the Piper Jaffray Group or
any of the directors, officers or employees of the foregoing in their capacity
as such.
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                                      -5-

                  4.7.     With respect to Piper Jaffray Liabilities that are
insured under Current Parent Policies, Other Policies, and Prior Parent Policies
issued by commercial insurers who are entitled to reinsurance or indemnification
for such liabilities in whole or in part from Parent or a member of the Parent
Group, Piper Jaffray shall: (a) use commercially reasonable efforts, in
cooperation with Parent, to persuade the insurer to release Parent and the
Parent Group from such reinsurance or indemnification obligation and substitute
a reinsurance or indemnification obligation from Piper Jaffray or one of the
Piper Jaffray Subsidiaries; (b) until Parent and the Parent Group are released
from such obligations, provide Parent at the expense of Piper Jaffray with
commercially reasonable security or collateral; and (c) to the extent not
satisfied by the security or collateral contemplated by subsection (b), at
Parent's option either pay on behalf of Parent any reinsurance or
indemnification amounts that become due with respect to Piper Jaffray
Liabilities or promptly reimburse Parent for reinsurance or indemnification
amounts paid by Parent or the Parent Group with respect to such liabilities.

      ARTICLE V - Cooperation With Respect to Claims and Insurance Matters

                  5.1.     With respect to Parent Liabilities, Parent shall have
the right and the responsibility to provide appropriate notice to insurers,
administer claims to the extent necessary or appropriate, submit claims to
insurers for payment, negotiate coverage questions that may arise, and to
arbitrate, litigate and/or compromise coverage disputes and Parent shall not
incur any liability for the failure to do any of the above.

                  5.2.     With respect to Piper Jaffray Liabilities, with
respect only to Current Parent Policies and Prior Parent Policies, Parent shall
have the right but not the obligation to provide appropriate notice to insurers,
submit claims to insurers for payment, negotiate coverage questions that may
arise, and to arbitrate, litigate and/or compromise coverage disputes. Piper
Jaffray shall give prompt written notice to Parent of all claims or losses that
are potentially eligible for coverage under Current Parent Policies and Prior
Parent Policies or that have the potential to reduce deductibles or self-insured
retentions applicable to such policies. Piper Jaffray shall reimburse Parent for
out-of-pocket costs, expenses and fees, including attorneys fees, reasonably
incurred by Parent for services performed by Parent pursuant to this section in
connection with Piper Jaffray Liabilities. In the event that Parent elects not
to exercise its rights under this section with respect to particular claims or
losses after having received notice of such claims or losses from Piper Jaffray,
Parent shall promptly notify Piper Jaffray of that election so that Piper
Jaffray may exercise its rights and responsibilities with respect to such claims
or losses under section 5.3, below.

                  5.3.     With respect to Other Policies, and to the extent
that Parent chooses not to do so under Current Parent Policies and Prior Parent
Policies, Piper Jaffray shall have the right and the responsibility with respect
to Piper Jaffray Liabilities to provide appropriate notice to insurers,
administer claims to the extent necessary or appropriate, submit claims to
insurers for payment, negotiate coverage questions that may arise, and to
arbitrate, litigate and/or compromise coverage disputes.
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                                       -6-

                  5.4.     (a) Parent and Piper Jaffray shall cooperate with
each other, and use commercially reasonable efforts to take or cause to be taken
all appropriate actions required of such Party, and to do or cause to be done
all things necessary or appropriate to effectuate the provisions and purposes of
this Agreement and the transactions contemplated hereby, including the execution
of any additional documents or instruments of any kind, the obtaining of
consents which may be reasonably necessary or appropriate to carry out any of
the provisions hereof, and the taking of all such other actions as such Party
may reasonably be requested to take by the other Party from time to time
consistent with the terms of this Agreement; provided however, that nothing
herein shall require Parent to incur any additional premiums or costs with
respect to the Current Parent Policies, Prior Parent Policies or Other Policies.

                  (b)      By way of enumeration of and not of limitation:

                           (i)      each Party shall provide copies of insurance
policies (to the extent that copies are available) or evidence of the existence
of insurance (where actual copies of the policies are not available), to the
other to the extent reasonably required to effectuate the provisions and
purposes of this Agreement;

                           (ii)     each Party shall provide the other with
information reasonably necessary or helpful to either Party in connection with
its efforts to obtain insurance coverage pursuant to and in accordance with the
terms of this Agreement or to purchase new insurance policies, including
information about the relevant portions of prior underwriting submissions, past
and current claims and losses, subject to any confidentiality restrictions
regarding such information, claims and losses;

                           (iii)    each Party shall provide information to the
other about exhaustion of policy limits and amounts applied to the limits of
policies or self-insured retentions or other limits which are discussed in this
Agreement that are potentially applicable to both, and the basis for the
application of such amounts to such limits, so that each Party can monitor the
exhaustion of such limits; and

                           (iv)     subject to Sections 5.2 and 5.3, each Party
shall execute further assignments or allow the other to pursue claims in its
name (subject to appropriate written notice of the fact that it is doing so and
a description of the reasons why it is doing so), including by means of
arbitration or litigation, to the extent necessary or helpful to the other
Party's efforts to obtain insurance coverage to which it is entitled under this
Agreement.

                  5.5.     Parent and Piper Jaffray shall reimburse each other
for out-of-pocket costs, expenses and fees, including but not limited to
attorneys' fees, reasonably incurred in connection with providing cooperation
and assistance to the other pursuant to Section 5.4. Where particular costs,
expense or fees are expected to exceed $10,000, Parent and Piper Jaffray shall
use commercially reasonable efforts to provide estimates of such costs, expenses
or fees to each other prior to the time that they are incurred.
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                                      -7-

                  5.6.     In the event of any arbitration or litigation with
any insurers concerning any Current Parent Policy, Prior Parent Policy or Other
Policy that potentially provides coverage for both Parent Liabilities and Piper
Jaffray Liabilities (as determined in good faith by the Party which is
initiating or the subject to such arbitration or litigation), Parent and Piper
Jaffray shall provide prompt written notice to each other of the initiation of
such arbitration or litigation. In the event that such an arbitration or
litigation is initiated by Parent or Piper Jaffray, each Party shall notify the
other in writing at least 60 days prior to the initiation of such proceeding
(unless it is not reasonably possible to do so without prejudicing the effort of
such Party to obtain coverage). The Party receiving any such notice pursuant to
this Section 5.6 shall preserve the confidentiality of that information and use
it for no purpose other than conferring with the other Party and, subject to
Section 5.2, considering whether or not it should join that proceeding as a
party or an amicus, or institute another proceeding against one or more insurers
in the same or some different forum at some time after the first proceeding has
been initiated.

                  5.7.     With respect to the application of the first
come/first served principles set forth in Sections 3.3 and 4.5, Parent and the
Parent Group, and Piper Jaffray and the Piper Jaffray Group, shall act in good
faith and avoid taking any actions for the purpose or with the intention of
accelerating or delaying claims payments or losses in order to obtain some
advantage with respect to the exhaustion of applicable limits. In addition,
Piper Jaffray and the Piper Jaffray Group shall not enter into any written
settlement agreement with any insurer that has the effect of reducing limits
that would otherwise be potentially available under this Agreement to Parent or
the Parent Group without first giving Parent at least 60 days advance written
notice of its intention to enter into such settlement accompanied by a copy of
the proposed settlement so that the Parent may have an opportunity to consider
the impact of such proposed settlement on its interests. Parent and Piper
Jaffray agree to consult with each other and negotiate in good faith about any
such impact.

                  5.8.     Notwithstanding anything in this Agreement to the
contrary (including Section 5.7), neither Parent nor any member of the Parent
Group shall have any right to provide any release under a Current Parent Policy,
a Prior Parent Policy or any Other Policy with respect to any rights that Piper
Jaffray or any member of the Piper Jaffray Group may have under that policy
under this Agreement, without the prior written consent of Piper Jaffray.

                  5.9.     Notwithstanding anything in this Agreement to the
contrary (including Section 5.7), neither Piper Jaffray nor any member of the
Piper Jaffray Group shall have any right to provide any release under a Current
Parent Policy, a Prior Parent Policy or an Other Policy with respect to any
rights that Parent or any member of the Parent Group may have under that policy
under this Agreement, without the prior written consent of Parent.

                  5.10.    Parent and Piper Jaffray agree to preserve the
confidentiality of any information relating to claims and losses, and efforts to
recover insurance therefore in
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                                      -8-

accordance with the provisions of Section 6.8 of the Separation and Distribution
Agreement.

                   ARTICLE VI -- Certain Specified Liabilities

                  6.1.     Piper Jaffray has entered into a settlement agreement
(the "Global Settlement") with certain federal and state regulators relating to
alleged conflicts of interest or other allegedly wrongful acts involving
relationships between securities analysis and investment banking services. In
the event that the Global Settlement is approved, Piper Jaffray will become
obligated to pay (a) fines and penalties in the amount of $12.5 million; (b) a
restitution payment in the amount of $12.5 million; and (c) $7.5 million for the
cost of independent market research. Piper Jaffray has established a reserve on
its books in the amount of $32.5 million to pay these amounts. In connection
with the Contribution, Parent has contributed capital to Piper Jaffray to enable
it to establish this reserve. In the event that any insurer provides coverage to
Parent, any Parent Subsidiary, Piper Jaffray or any Piper Jaffray Subsidiary for
all or any part of this $32.5 million amount or any defense costs paid in
connection with the investigation conducted by the regulators or the negotiation
of a settlement with the regulators, the amount of such insurance proceeds, net
of the costs, expenses and fees (including attorneys' fees) actually incurred in
connection with the recovery of such proceeds, shall be allocated as specified
in Sections 6.3 and 6.4.

                  6.2.     In addition to the claims described in Section 6.1,
the Parties have agreed that in the event insurance recoveries are received or
paid out in respect of any Specified Liabilities (as defined in the Separation
and Distribution Agreement), the Parties shall allocate such recoveries (net of
the costs, expenses and fees (including attorneys' fees) actually incurred in
connection with the recovery of such proceeds) in accordance with Section 6.3.

                  6.3.     Except as provided in Section 6.4, the insurance
proceeds received with respect to (1) the Global Settlement, (2) any defense
costs paid in connection with the investigation conducted by the regulators or
the negotiation of a settlement with the regulators, or (3) any Specified
Liabilities, in each case, net of any costs, expenses and fees (including
attorneys' fees) actually incurred in connection with the recovery of such
proceeds, shall be allocated as follows:

                  (a)      Parent and Piper Jaffray shall first be reimbursed
for any out-of-pocket defense costs that each actually incurred in connection
with such Specified Liabilities (if the insurance recoveries with respect to
Global Settlement and Specified Liabilities are not sufficient to reimburse each
for the full amount of its out-of-pocket defense costs, the recoveries shall be
shared in proportion to the amount of out-of-pocket defense costs actually paid
by each with respect to the Specified Liabilities);

                  (b)      to the extent that there are any remaining insurance
recoveries after Parent and Piper Jaffray have been reimbursed for their defense
costs pursuant to subsection (a), such amounts shall next be used to reimburse
Piper Jaffray for any settlement or judgment amounts that it has paid in
connection with Specified Liabilities
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                                      -9-

that were not indemnified by Parent as a result of exhaustion of the $17.5
million maximum limit on Parent's indemnification obligation for such
liabilities; and

                  (c)      to the extent that there are any remaining insurance
recoveries after allocations have been made pursuant to subsections (a) and (b)
above, such remainder shall be allocated and belong to Parent. Piper Jaffray
shall, promptly upon the receipt of any payment of all or any portion of such
remainder, pay such amount over to Parent. Until making such payment to Parent,
Piper Jaffray shall hold such amounts in trust for Parent and not for its own
account.

                  6.4.     In the event of a Change in Control of Piper Jaffray,
any net insurance proceeds received with respect to the Global Settlement that
have not already been paid to or on behalf Piper Jaffray pursuant to section 6.3
as of the effective date of such Change in Control shall belong to Parent, and
Piper Jaffray shall have no right to receive or benefit from any portion of such
proceeds, including as an element in the calculations set forth in Section 6.3.
Piper Jaffray shall, promptly upon the receipt of any payment of or receipt of
the benefit of any payment on its behalf of all or any portion of such net
insurance proceeds, pay such amount over to Parent. Until making such payment to
Parent, Piper Jaffray shall hold such amounts in trust for Parent and not for
its own account.

                         ARTICLE VII - Other Provisions

                  7.1.     Notices. All notices, requests and other
communications to any Party hereunder shall be in writing (including facsimile
transmission) and shall be given (i) by personal delivery to the appropriate
address as set forth below (or at such other address for the Party as shall have
been previously specified in writing to the other Party), (ii) by reliable
overnight courier service (with confirmation) to the appropriate address as set
forth below (or at such other address for the Party as shall have been
previously specified in writing to the other Party), or (iii) by facsimile
transmission (with confirmation) to the appropriate facsimile number set forth
below (or at such other facsimile number for the Party as shall have been
previously specified in writing to the other Party) with follow-up copy by
reliable overnight courier service the next Business Day:

                  (a)      if to Piper Jaffray, to:

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

                  (b)      if to Parent, to:
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                                      -10-

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

All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m.
(Minneapolis, Minnesota time) and such day is a Business Day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding Business Day in the place of
receipt.

                  7.2.     Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the Parties. Except as otherwise provided in this Agreement, any failure of any
of the parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the Party entitled to the benefits thereof only by a
written instrument signed by the Party granting such waiver, but such waiver or
the failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. This Agreement shall not be
considered as an attempted assignment of any policy of insurance or as a
contract of insurance and shall not be construed to waive any right or remedy of
any member of the Parent Group in respect of any insurance policy or any other
contract or policy of insurance.

                  7.3.     Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same agreement.

                  7.4.     Entire Agreement. The Separation and Distribution
Agreement, this Agreement, the other Ancillary Agreement and the Schedules
hereto constitute the entire agreement between the parties hereto with respect
to the subject matter hereof, and supersede and cancel all prior agreements,
negotiations, correspondence, undertakings, understandings and communications of
the parties, oral and written, with respect to the subject matter hereof.

                  7.5.     Assignment. This Agreement may not be assigned by
either Party without the written consent of the other Party and any attempted
assignment shall be null and void.

                  7.6.     Binding Nature; Third-Party Beneficiaries. This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person or Persons any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
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                  7.7.     Severability. This Agreement shall be deemed
severable; the invalidity or unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability of this Agreement or
of any other term hereof, which shall remain in full force and effect, for so
long as the economic or legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any Party. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, each Party agrees that such
restriction may be enforced to the maximum extent permitted by applicable law,
and each Party hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such restriction. The
Parties acknowledge that they intend to allocate financial obligations without
violating any laws regarding insurance, self-insurance or other financial
responsibility, or breaching any terms, conditions or provisions of any
insurance policies. If it is determined that any action undertaken pursuant to
the Separation and Distribution Agreement, this Agreement or any other Ancillary
Agreement is violative of any insurance, self-insurance or related financial
responsibility law or regulation or any term, condition or provision of any
insurance policy, the parties agree to work together to do whatever is necessary
to comply with such law or regulation or insurance policy term condition or
provision while trying to accomplish, as much as possible, the allocation of
financial obligations as intended in the Separation and Distribution Agreement,
this Agreement and any other Ancillary Agreement.

                  7.8.     Choice of Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to principles of conflicts or choice of laws, or any other law that would
make the laws of any jurisdiction other than Delaware applicable.

                  7.9.     Reimbursement. In order to obtain reimbursement of
amounts due under this Agreement, Parent or Piper Jaffray, as the case may be,
shall send a written request for such reimbursement in accordance with Section
7.1, together with such information as is reasonably required to support its
request for reimbursement; provided, however, that to the extent this Agreement
contemplates the automatic reimbursement of or payment with respect to certain
matters, no notice shall be required. Payment shall be due 30 days after receipt
of such request and supporting information or promptly if no notice is required.
If there are questions or disputes about certain amounts for which reimbursement
is requested, payment should be made on a timely basis with respect to other
amounts. With respect to all amounts that are ultimately determined to be owed
under this Agreement -- either by agreement or through litigation -- but that
were not paid in full within 30 days after the date of receipt of the original
request for reimbursement and supporting information or promptly if no notice is
required, interest at the prime rate published by Citibank N.A. from time to
time, compounded monthly, shall be owed for the period beginning from 30 days
after the date of receipt of the original request for reimbursement and
supporting information, or [10] days if no notice is required until the date of
payment.

                  7.10.    Right of Setoff. With respect only to amounts that
may become due pursuant to and in accordance with the terms of this Agreement,
Parent and the
<PAGE>

                                      -12-

Parent Subsidiaries may deduct from, set off, hold back or otherwise reduce in
any manner whatsoever against any such amounts Parent or the Parent Subsidiaries
or their Affiliates may owe to or hold for the benefit of Piper Jaffray, the
Piper Jaffray Subsidiaries, or their respective Affiliates any such amounts owed
by Piper Jaffray or the Piper Jaffray Subsidiaries or their respective
Affiliates to Parent or the Parent Subsidiaries or their respective Affiliates.
In no event shall Parent and the Parent Subsidiaries deduct from, set off, hold
back or otherwise reduce any such amounts from accounts of, or funds on deposit,
of Piper Jaffray, the Piper Jaffray Subsidiaries, or their respective Affiliates
with Parent and the Parent Subsidiaries.

                  7.11.    Representations. Parent represents on behalf of
itself and each other member of the Parent Group and Piper Jaffray represents on
behalf of itself and each other member of the Piper Jaffray Group as follows:

                  (a)      each such Person has the requisite corporate or other
         power and authority and has taken all corporate or other action
         necessary in order to execute, deliver and perform this Agreement; and

                  (b)      this Agreement has been duly executed and delivered
         by such Person and constitutes a valid and binding agreement of it
         enforceable in accordance with the terms thereof (assuming the due
         execution and delivery thereof by the other Party).

                  7.12.    No Liability. Piper Jaffray does hereby, for itself
and as agent for each other member of the Piper Jaffray Group, agree that no
member of the Parent Group or any Parent Indemnitee shall have any Liability
whatsoever as a result of the insurance policies and practices of Parent and its
Subsidiaries as in effect at any time prior to the Distribution Time, including
as a result of the level or scope of any such insurance, the creditworthiness of
any insurance carrier, the terms and conditions of any policy, the adequacy or
timeliness of any notice to any insurance carrier with respect to any claim or
potential claim or otherwise.

                  7.13.    Headings. The table of contents, and the article and
other headings contained in this Agreement are inserted for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
<PAGE>


                                      -13-

                  IN WITNESS WHEREOF, the parties have caused this 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

</TEXT>
</DOCUMENT>
