Employee Benefits Agreement

EXHIBIT 10.1


EMPLOYEE BENEFITS AGREEMENT


BY AND BETWEEN


U.S. BANCORP


AND


PIPER JAFFRAY COMPANIES


DATED AS OF
DECEMBER 22, 2003


TABLE OF CONTENTS 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


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


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(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


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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).


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.


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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.


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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.


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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.


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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 "Pi ...