Document:

Execution
Version

      

       

      
        
          

          

        

         

      

       

      AMENDED
AND RESTATED JOINT VENTURE CONTRIBUTION AND FORMATION AGREEMENT

       

      by and
among

       

      CITIGROUP
INC.,

       

      MORGAN
STANLEY

       

      and

       

      MORGAN
STANLEY SMITH BARNEY HOLDINGS LLC

       

      

       

       

      Dated as
of May 29, 2009

       

      

       

      
        

        

      

      

      
        
          
          

        

        
          
          

          
          

        

        
          
          

        

      

       

      TABLE
OF CONTENTS

       

      Page

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              	
                                                                                                      ARTICLE
      1

                                                                                                    	
                                                                                                      DEFINITIONS

                                                                                                    	
                                                                                                      7

                                                                                                    
	
                                                                                                      Section
      1.1

                                                                                                    	
                                                                                                      Defined
      Terms

                                                                                                    	
                                                                                                      7

                                                                                                    
	 	 	 
	
                                                                                                      ARTICLE
      2

                                                                                                    	
                                                                                                      FORMATION
      OF VENTURE; CLOSING; RELATED TRANSACTIONS

                                                                                                    	
                                                                                                      36

                                                                                                    
	
                                                                                                      Section
      2.1

                                                                                                    	
                                                                                                      Formation
      of Company

                                                                                                    	
                                                                                                      36

                                                                                                    
	
                                                                                                      Section
      2.2

                                                                                                    	
                                                                                                      Transactions
      Prior to the Closing

                                                                                                    	
                                                                                                      36

                                                                                                    
	
                                                                                                      Section
      2.3

                                                                                                    	
                                                                                                      Time
      and Place of the Closing

                                                                                                    	
                                                                                                      39

                                                                                                    
	
                                                                                                      Section
      2.4

                                                                                                    	
                                                                                                      Deliveries
      and Other Actions at the Closing

                                                                                                    	
                                                                                                      39

                                                                                                    
	
                                                                                                      Section
      2.5

                                                                                                    	
                                                                                                      Contributions
      on Self-Clearing Dates

                                                                                                    	
                                                                                                      41

                                                                                                    
	
                                                                                                      Section
      2.6

                                                                                                    	
                                                                                                      Delayed
      Contribution Businesses

                                                                                                    	
                                                                                                      43

                                                                                                    
	
                                                                                                      Section
      2.7

                                                                                                    	
                                                                                                      Delayed
      Distribution Businesses

                                                                                                    	
                                                                                                      46

                                                                                                    
	
                                                                                                      Section
      2.8

                                                                                                    	
                                                                                                      Membership
      Interests

                                                                                                    	
                                                                                                      48

                                                                                                    
	
                                                                                                      Section
      2.9

                                                                                                    	
                                                                                                      Exclusions
      from Contributions

                                                                                                    	
                                                                                                      49

                                                                                                    
	
                                                                                                      Section
      2.10

                                                                                                    	
                                                                                                      Post-Closing
      Adjustments

                                                                                                    	
                                                                                                      49

                                                                                                    
	
                                                                                                      Section
      2.11

                                                                                                    	
                                                                                                      Self-Clearing
      Balance Sheets

                                                                                                    	
                                                                                                      52

                                                                                                    
	
                                                                                                      Section
      2.12

                                                                                                    	
                                                                                                      Final
      Post-Closing Purchase Price Adjustment

                                                                                                    	
                                                                                                      54

                                                                                                    
	 	 	 
	
                                                                                                      ARTICLE
      3

                                                                                                    	
                                                                                                      REPRESENTATIONS
      AND WARRANTIES

                                                                                                    	
                                                                                                      55

                                                                                                    
	
                                                                                                      Section
      3.1

                                                                                                    	
                                                                                                      Representations
      and Warranties of Citigroup

                                                                                                    	
                                                                                                      55

                                                                                                    
	
                                                                                                      Section
      3.2

                                                                                                    	
                                                                                                      Representations
      and Warranties of Morgan Stanley

                                                                                                    	
                                                                                                      60

                                                                                                    
	 	 	 
	
                                                                                                      ARTICLE
      4

                                                                                                    	
                                                                                                      CERTAIN
      INTERIM AND OTHER COVENANTS

                                                                                                    	
                                                                                                      66

                                                                                                    
	
                                                                                                      Section
      4.1

                                                                                                    	
                                                                                                      Conduct
      of Business Prior to Closing

                                                                                                    	
                                                                                                      66

                                                                                                    
	
                                                                                                      Section
      4.2

                                                                                                    	
                                                                                                      Access
      to Information

                                                                                                    	
                                                                                                      70

                                                                                                    
	
                                                                                                      Section
      4.3

                                                                                                    	
                                                                                                      Consents;
      Conditions; Further Assurances

                                                                                                    	
                                                                                                      71

                                                                                                    
	
                                                                                                      Section
      4.4

                                                                                                    	
                                                                                                      Sufficiency
      of Assets

                                                                                                    	
                                                                                                      74

                                                                                                    
	
                                                                                                      Section
      4.5

                                                                                                    	
                                                                                                      Tax
      Matters

                                                                                                    	
                                                                                                      76

                                                                                                    
	
                                                                                                      Section
      4.6

                                                                                                    	
                                                                                                      Real
      Estate Matters

                                                                                                    	
                                                                                                      84

                                                                                                    
	
                                                                                                      Section
      4.7

                                                                                                    	
                                                                                                      Transaction
      Documents

                                                                                                    	
                                                                                                      84

                                                                                                    
	
                                                                                                      Section
      4.8

                                                                                                    	
                                                                                                      Actions
      by Subsidiaries

                                                                                                    	
                                                                                                      84

                                                                                                    
	
                                                                                                      Section
      4.9

                                                                                                    	
                                                                                                      Negotiations
      with Others

                                                                                                    	
                                                                                                      84

                                                                                                    
	
                                                                                                      Section
      4.10

                                                                                                    	
                                                                                                      Termination
      of Agreements

                                                                                                    	
                                                                                                      85

                                                                                                    
	
                                                                                                      Section
      4.10

                                                                                                    	
                                                                                                      Contributed
      Real Property

                                                                                                    	
                                                                                                      86

                                                                                                    
	 	 	 
	
                                                                                                      ARTICLE
      5

                                                                                                    	
                                                                                                      CONDITIONS
      TO CLOSING

                                                                                                    	
                                                                                                      86

                                                                                                    
	
                                                                                                      Section
      5.1

                                                                                                    	
                                                                                                      Conditions
      to Citigroup’s Obligations

                                                                                                    	
                                                                                                      86

                                                                                                    
	
                                                                                                      Section
      5.2

                                                                                                    	
                                                                                                      Conditions
      to Morgan Stanley’s Obligations

                                                                                                    	
                                                                                                      87

                                                                                                    
	 	 	 
	
                                                                                                      ARTICLE
      6

                                                                                                    	
                                                                                                      INDEMNIFICATION

                                                                                                    	
                                                                                                      88

                                                                                                    
	
                                                                                                      Section
      6.1

                                                                                                    	
                                                                                                      Survival
      of Representations and Warranties

                                                                                                    	
                                                                                                      88

                                                                                                    
	
                                                                                                      Section
      6.2

                                                                                                    	
                                                                                                      Indemnification

                                                                                                    	
                                                                                                      89

                                                                                                    
	
                                                                                                      Section
      6.3

                                                                                                    	
                                                                                                      Limitations
      on Amounts

                                                                                                    	
                                                                                                      91

                                                                                                    

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

       

      
         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  	
                                                                                                          Section
      6.4

                                                                                                        	
                                                                                                          Other
      Indemnification Provisions

                                                                                                        	
                                                                                                          91

                                                                                                        
	
                                                                                                          Section
      6.5

                                                                                                        	
                                                                                                          Procedures

                                                                                                        	
                                                                                                          93

                                                                                                        
	
                                                                                                          Section
      6.6

                                                                                                        	
                                                                                                          Procedures
      for Non-Party Claims other than Ordinary Course Customer
      Claims

                                                                                                        	
                                                                                                          93

                                                                                                        
	
                                                                                                          Section
      6.7

                                                                                                        	
                                                                                                          Ordinary
      Course Customer Claims

                                                                                                        	
                                                                                                          95

                                                                                                        
	
                                                                                                          Section
      6.8

                                                                                                        	
                                                                                                          Mutual
      Assistance

                                                                                                        	
                                                                                                          96

                                                                                                        
	 	 	 
	
                                                                                                          ARTICLE
      7

                                                                                                        	
                                                                                                          FURTHER
      AGREEMENTS

                                                                                                        	
                                                                                                          96

                                                                                                        
	
                                                                                                          Section
      7.1

                                                                                                        	
                                                                                                          No
      Commitments

                                                                                                        	
                                                                                                          96

                                                                                                        
	
                                                                                                          Section
      7.2

                                                                                                        	
                                                                                                          Further
      Assurances

                                                                                                        	
                                                                                                          96

                                                                                                        
	
                                                                                                          Section
      7.3

                                                                                                        	
                                                                                                          Citigroup
      ARS Loans

                                                                                                        	
                                                                                                          96

                                                                                                        
	
                                                                                                          Section
      7.4

                                                                                                        	
                                                                                                          Replacement
      of Guarantees

                                                                                                        	
                                                                                                          98

                                                                                                        
	
                                                                                                          Section
      7.5

                                                                                                        	
                                                                                                          SEC
      Rule 204T Matters

                                                                                                        	
                                                                                                          98

                                                                                                        
	 	 	 
	
                                                                                                          ARTICLE
      8

                                                                                                        	
                                                                                                          TERM
      AND TERMINATION

                                                                                                        	
                                                                                                          99

                                                                                                        
	
                                                                                                          Section
      8.1

                                                                                                        	
                                                                                                          Termination
      Prior to Closing

                                                                                                        	
                                                                                                          99

                                                                                                        
	
                                                                                                          Section
      8.2

                                                                                                        	
                                                                                                          Termination
      After Closing

                                                                                                        	
                                                                                                          100

                                                                                                        
	
                                                                                                          Section
      8.3

                                                                                                        	
                                                                                                          Effect
      of Termination

                                                                                                        	
                                                                                                          100

                                                                                                        
	 	 	 
	
                                                                                                          ARTICLE
      9

                                                                                                        	
                                                                                                          MISCELLANEOUS

                                                                                                        	
                                                                                                          100

                                                                                                        
	
                                                                                                          Section
      9.1

                                                                                                        	
                                                                                                          Expenses

                                                                                                        	
                                                                                                          100

                                                                                                        
	
                                                                                                          Section
      9.2

                                                                                                        	
                                                                                                          Publicity

                                                                                                        	
                                                                                                          101

                                                                                                        
	
                                                                                                          Section
      9.3

                                                                                                        	
                                                                                                          Amendment
      or Modification

                                                                                                        	
                                                                                                          101

                                                                                                        
	
                                                                                                          Section
      9.4

                                                                                                        	
                                                                                                          Waiver

                                                                                                        	
                                                                                                          101

                                                                                                        
	
                                                                                                          Section
      9.5

                                                                                                        	
                                                                                                          Entire
      Agreement

                                                                                                        	
                                                                                                          101

                                                                                                        
	
                                                                                                          Section
      9.6

                                                                                                        	
                                                                                                          Third-Party
      Beneficiaries

                                                                                                        	
                                                                                                          101

                                                                                                        
	
                                                                                                          Section
      9.7

                                                                                                        	
                                                                                                          Non-Assignability;
      Binding Effect

                                                                                                        	
                                                                                                          101

                                                                                                        
	
                                                                                                          Section
      9.8

                                                                                                        	
                                                                                                          Severability

                                                                                                        	
                                                                                                          102

                                                                                                        
	
                                                                                                          Section
      9.9

                                                                                                        	
                                                                                                          Injunctive
      Relief

                                                                                                        	
                                                                                                          102

                                                                                                        
	
                                                                                                          Section
      9.10

                                                                                                        	
                                                                                                          Governing
      Law

                                                                                                        	
                                                                                                          102

                                                                                                        
	
                                                                                                          Section
      9.11

                                                                                                        	
                                                                                                          Submission
      to Jurisdiction

                                                                                                        	
                                                                                                          102

                                                                                                        
	
                                                                                                          Section
      9.12

                                                                                                        	
                                                                                                          Waiver
      of Jury Trial

                                                                                                        	
                                                                                                          103

                                                                                                        
	
                                                                                                          Section
      9.13

                                                                                                        	
                                                                                                          Notices

                                                                                                        	
                                                                                                          103

                                                                                                        
	
                                                                                                          Section
      9.14

                                                                                                        	
                                                                                                          Counterparts

                                                                                                        	
                                                                                                          104

                                                                                                        
	
                                                                                                          Section
      9.15

                                                                                                        	
                                                                                                          Interpretation

                                                                                                        	
                                                                                                          105

                                                                                                        
	
                                                                                                          Section
      9.16

                                                                                                        	
                                                                                                          Schedules

                                                                                                        	
                                                                                                          105

                                                                                                        

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

        

      

       

      
        
          
          

        

        
          - 2
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      SCHEDULES

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                	
                                                                                        Schedule

                                                                                      	
                                                                                        Description

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(1)

                                                                                      	
                                                                                        Citigroup
      Contributed Assets

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(2)

                                                                                      	
                                                                                        Financial
      Statements of the Citigroup Managed Futures Business

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(3)

                                                                                      	
                                                                                        Citigroup
      Delayed Contribution Businesses

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(4)

                                                                                      	
                                                                                        Citigroup
      Delayed Distribution Businesses

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(5

                                                                                      	
                                                                                        Citigroup
      Self-Clearing Assets and Liabilities

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(6)

                                                                                      	
                                                                                        Morgan
      Stanley Delayed Contribution Businesses

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(7)

                                                                                      	
                                                                                        Morgan
      Stanley Delayed Distribution Businesses

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(8)

                                                                                      	
                                                                                        Morgan
      Stanley Self-Clearing Assets and Liabilities

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(9)

                                                                                      	
                                                                                        Transaction
      Documents

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(a)(10)

                                                                                      	
                                                                                        FID
      Inventory

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(b)(1)

                                                                                      	
                                                                                        Citigroup
      Contributed Subsidiaries

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(b)(2)

                                                                                      	
                                                                                        Morgan
      Stanley Contributed Subsidiaries

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(c)(1)

                                                                                      	
                                                                                        Citigroup
      Excluded Assets

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(c)(2)

                                                                                      	
                                                                                        Morgan
      Stanley Excluded Assets

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(d)(1)

                                                                                      	
                                                                                        Citigroup
      Contributed Leased Real Property

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(d)(2)

                                                                                      	
                                                                                        Morgan
      Stanley Contributed Leased Real Property

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(e)(1)

                                                                                      	
                                                                                        Citigroup
      Contributed Real Property

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(f)(1)

                                                                                      	
                                                                                        Financial
      Statements of the Citigroup Contributed Business

                                                                                      
	 	 
	
                                                                                        Schedule
      1.1(f)(2)

                                                                                      	
                                                                                        Financial
      Statements of the Morgan Stanley Contributed Business

                                                                                      
	 	 
	
                                                                                        Schedule
      2.2(a)

                                                                                      	
                                                                                        Citigroup
      Contributed Subsidiaries that are Domestic Corporations, Former Members of
      a Consolidated Group, or Foreign Corporations with a U.S. Trade or
      Business

                                                                                      
	 	 
	
                                                                                        Schedule
      2.2(b)

                                                                                      	
                                                                                        Morgan
      Stanley Contributed Subsidiaries that are Domestic Corporations, Former
      Members of a Consolidated Group, or

                                                                                      

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      

       

      

      
        
          
          

        

        
          - 3
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        SCHEDULES

         

        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    	 	
                                                                                            Foreign
      Corporations with a U.S. Trade or Business

                                                                                          
	 	 
	
                                                                                            Schedule
      3.1(e)

                                                                                          	
                                                                                            Citigroup
      Governmental Approvals and Third Party Approvals

                                                                                          
	 	 
	
                                                                                            Schedule
      3.1(f)

                                                                                          	
                                                                                            Financial
      Statements, Undisclosed Liabilities, No Material Adverse
      Effect

                                                                                          
	 	 
	
                                                                                            Schedule
      3.1(j)(i)

                                                                                          	
                                                                                            Citigroup
      Contributed Subsidiaries that are Corporations

                                                                                          
	 	 
	
                                                                                            Schedule
      3.2(e)

                                                                                          	
                                                                                            Morgan
      Stanley Governmental Approvals and Third Party
Approvals

                                                                                          
	 	 
	
                                                                                            Schedule
      3.2(j)(i)

                                                                                          	
                                                                                            Morgan
      Stanley Contributed Subsidiaries that are Corporations

                                                                                          
	 	 
	
                                                                                            Schedule
      4.1(1)

                                                                                          	
                                                                                            Citigroup
      Conduct of Business Prior to Closing

                                                                                          
	 	 
	
                                                                                            Schedule
      4.5(h)(1)

                                                                                          	
                                                                                            Certain
      Morgan Stanley Transaction Steps

                                                                                          
	 	 
	
                                                                                            Schedule
      4.5(h)(2)

                                                                                          	
                                                                                            Certain
      Citigroup Transaction Steps

                                                                                          
	 	 
	
                                                                                            Schedule
      4.5(h)(3)

                                                                                          	
                                                                                            Certain
      Transfers to Citi Smith Barney Pty Ltd.

                                                                                          
	 	 
	
                                                                                            Schedule
      4.10(c)(1)

                                                                                          	
                                                                                            Citigroup
      Intercompany Agreements

                                                                                          
	 	 
	
                                                                                            Schedule
      4.10(c)(2)

                                                                                          	
                                                                                            Morgan
      Stanley Intercompany Agreements

                                                                                          
	 	 
	
                                                                                            Schedule
      5.1(d)

                                                                                          	
                                                                                            Governmental
      Approvals Required for Closing

                                                                                          
	 	 
	
                                                                                            Schedule
      7.4

                                                                                          	
                                                                                            Guarantees

                                                                                          

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

        

        
          
            
            

          

          
            - 4
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      EXHIBITS

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            	
                                                    Exhibit

                                                  	
                                                    Description

                                                  
	 	 
	
                                                    Exhibit
      A

                                                  	
                                                    Terms
      with Respect to the IIG/IFG/CCI Business

                                                  
	 	 
	
                                                    Exhibit
      B

                                                  	
                                                    Form
      of Deposit Sweep Agreement

                                                  
	 	 
	
                                                    Exhibit
      C-1

                                                  	
                                                    Form
      of Citigroup Distribution Agreement

                                                  
	 	 
	
                                                    Exhibit
      C-2

                                                  	
                                                    Form
      of Morgan Stanley Distribution Agreement

                                                  
	 	 
	
                                                    Exhibit
      D

                                                  	
                                                    Form
      of Employee Matters Agreement

                                                  
	 	 
	
                                                    Exhibit
      E-1

                                                  	
                                                    Form
      of Citigroup Futures Clearing Agreement

                                                  
	 	 
	
                                                    Exhibit
      E-2

                                                  	
                                                    Form
      of Morgan Stanley Futures Clearing Agreement

                                                  
	 	 
	
                                                    Exhibit
      F-1

                                                  	
                                                    Form
      of Citigroup General Transition Services Agreement

                                                  
	 	 
	
                                                    Exhibit
      F-2

                                                  	
                                                    Form
      of Morgan Stanley General Transition Services Agreement

                                                  
	 	 
	
                                                    Exhibit
      G

                                                  	
                                                    Form
      of Amended and Restated Limited Liability Company
  Agreement

                                                  
	 	 
	
                                                    Exhibit
      H-1

                                                  	
                                                    Form
      of Citigroup Order Flow Agreement

                                                  
	 	 
	
                                                    Exhibit
      H-2

                                                  	
                                                    Form
      of Morgan Stanley Order Flow Agreement

                                                  
	 	 
	
                                                    Exhibit
      I-1

                                                  	
                                                    Form
      of Citigroup Research Agreement

                                                  
	 	 
	
                                                    Exhibit
      I-2

                                                  	
                                                    Form
      of Morgan Stanley Research Agreement

                                                  
	 	 
	
                                                    Exhibit
      J

                                                  	
                                                    Form
      of Tax Matters Agreement

                                                  
	 	 
	
                                                    Exhibit
      K

                                                  	
                                                    Terms
      and Conditions Concerning Contribution of Contributed Real Property and
      Contributed Leased Real
Property

                                                  

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      

       

      
        
          
          

        

        
          - 5
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      AMENDED
AND RESTATED JOINT VENTURE

      CONTRIBUTION
AND FORMATION AGREEMENT

       

      THIS
AMENDED AND RESTATED JOINT VENTURE CONTRIBUTION AND FORMATION AGREEMENT (this
“Agreement”) is
made as of May 29, 2009, by and among Citigroup Inc., a Delaware corporation
(“Citigroup”),
Morgan Stanley, a Delaware corporation (“Morgan Stanley”), and
Morgan Stanley Smith Barney Holdings LLC, a Delaware limited liability company
(the “Company”).

       

      RECITALS

       

      A. Citigroup,
through Subsidiaries (defined terms used in these recitals have the meanings
given to them in Section 1.1) and otherwise, is engaged in the Citigroup
Contributed Business, and Morgan Stanley, through Subsidiaries and otherwise, is
engaged in the Morgan Stanley Contributed Business;

       

      B. The
Parties desire to contribute their respective Contributed Businesses to the
Company;

       

      C. Citigroup
and Morgan Stanley have entered into a Joint Venture Contribution and Formation
Agreement, dated as of January 13, 2009 (the “Original Agreement”);

       

      D. On the
date hereof, Morgan Stanley and Citigroup have entered into an Escrow Agreement
pursuant to which (i) Morgan Stanley has deposited into escrow $2.75 billion and
(ii) each of Morgan Stanley and Citigroup has deposited into escrow an amount
equal to the amount of its debt funding obligation pursuant to Section 2 of
Schedule 3.7 to the LLC Agreement (with respect to each of Morgan Stanley and
Citigroup, its “Closing Date Cash Funding
Amount”), in the case of each of (i) and (ii), pursuant to the terms of
the Escrow Agreement;

       

      E. Pursuant
to Section 9.3 of the Original Agreement, the Original Agreement may be amended
by an instrument in writing signed by each of the parties to the Original
Agreement;

       

      F. Citigroup
and Morgan Stanley desire to amend and restate the Original Agreement as set
forth below in light of, among other things, a modification of the transaction
structure to provide for an “introducing broker” structure for a period of time
after the Closing; and

       

      G. In
consideration of the mutual covenants, agreements and promises herein contained,
the Parties do hereby agree as follows:

       

       

      
        
          
          

        

        
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      ARTICLE
1

       

      DEFINITIONS

       

      Section
1.1 Defined
Terms.  In this Agreement, except where the context otherwise
requires:

       

      “Accounts Payable”
means all accounts and notes payable to the extent related to the Contributed
Businesses, including those of the type reflected on the balance sheet included
in either the Financial Statements of the Citigroup Contributed Business or the
Financial Statements of the Morgan Stanley Contributed Business, as applicable,
as payable to customers, vendors or others.

       

      “Accounts Receivable”
means all accounts and notes receivable to the extent related to the Contributed
Businesses, including those of the type reflected on the balance sheet included
in either the Financial Statements of the Citigroup Contributed Business or the
Financial Statements of the Morgan Stanley Contributed Business, as applicable,
as due from customers, brokers, dealers, clearing organizations or
others.

       

      “Advisers Act” means
the Investment Advisers Act of 1940, as amended, and the rules and regulations
promulgated thereunder.

       

      “Affiliate” means with
respect to any Person, any other Person directly or indirectly controlling,
controlled by, or under common control with such other Person, including but not
limited to such Person’s Subsidiaries; and “control” (including,
with correlative meanings, the terms “controlled by” and
“under common control
with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.  Unless otherwise specifically
stated, the term “Affiliate” does not
include:  (x) the Company Entities when used with respect to any
Party, any Citigroup Entity or any Morgan Stanley Entity, and (y) the Citigroup
Entities or the Morgan Stanley Entities when used with respect to any Company
Entity.  “Affiliated” and
“Affiliation”
shall have correlative meanings.

       

      “Agreement” has the
meaning set forth in the preamble hereto.

       

      “Applicable Service Transfer
Time” has the meaning set forth in the Employee Matters
Agreement.

       

      “Applicable Taxes”
means (i) entity-level Taxes imposed on the Company Entities with respect to a
Contributed Business and (ii) without duplication of amounts described in clause
(i), non-income Taxes (other than Transfer Taxes) imposed with respect to
Contributed Assets transferred to the Company or a Company Entity.

       

      “ARS” has the meaning
set forth in Section 6.2(c)(i).

       

       

      
        
          
          

        

        
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      “Assumption
Agreement” means that certain Assumption Agreement, dated as of May 29, 2009,
among Morgan Stanley & Co. Incorporated, certain other affiliates of Morgan
Stanley, and the Company.

       

      “Benefit Plan” has the
meaning set forth in the Employee Matters Agreement.

       

      “Borrowed Security”
has the meaning set forth in Section 2.9(b).

       

      “Business Day” means a
day ending at 11:59 p.m. (Eastern Time), other than a Saturday, a Sunday or
other day on which commercial banks in New York, New York are authorized or
obligated by Law or executive order to close.

       

      “Certificate of
Formation” means the Certificate of Formation of the Company to be filed
prior to Closing with the Secretary of State of the State of Delaware in order
to create the Company in form and substance reasonably acceptable to each of
Morgan Stanley and Citigroup.

       

      “CGMI” means Citigroup
Global Markets Inc.

       

      “Change of Control”
means, with respect to any Person, (i) any merger, consolidation or business
combination of such Person as a result of which both (x) holders of the voting
securities of such Person immediately prior to the consummation of the
transaction hold, directly or indirectly, immediately following the consummation
of the transaction, securities or other equity interests in the ultimate parent
of the surviving entity in such transaction possessing less than a majority of
the outstanding equity and voting power of the ultimate parent of the surviving
entity and (y) individuals who constituted the board of directors of such Person
immediately prior to the execution and delivery of definitive documentation with
respect to the transaction cease to represent at least a majority of the board
of directors of the ultimate parent entity of the surviving entity of such
transaction; (ii) any other transaction, including the sale by such Person of
new shares of capital stock or new equity interests or a transfer of existing
shares of capital stock or existing equity interests of such Person, the result
of which is that any Person or group of related persons directly or indirectly
acquires (a) beneficial ownership (as defined under Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder) of securities
or other equity interests representing a majority of the outstanding voting
power or (b) a majority of the assets of the relevant entity or (iii) the
bankruptcy, insolvency, dissolution, winding-up, general assignment for the
benefit of creditors or receivership of such Person or other similar proceeding
or event.

       

      “Citigroup” has the
meaning set forth in the preamble hereto.

       

      “Citigroup ARS Loans”
has the meaning set forth in Section 6.2(c)(i).

       

      “Citigroup Clearing
Agreements” means each of the Citigroup Securities Clearing Agreement and
the Futures Clearing Agreement of Citigroup.

       

      “Citigroup Contributed
Assets” means all assets (real, personal, mixed, tangible or intangible)
of Citigroup or any of its Subsidiaries, in each case that are utilized, or held

       

       

      
        
          
          

        

        
          - 8
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      for use,
primarily in the conduct of the Citigroup Contributed Business, other than any
such asset the use of which is expressly being provided after the Closing
pursuant to a Transaction Document (other than the Citigroup Clearing
Agreements), which shall include, in any event, the following:

       

      (i) all
assets (real, personal, mixed, tangible or intangible) reflected on the Final
Balance Sheet of the Citigroup Contributed Business;

       

      (ii) the
Citigroup Contributed Equity Interests;

       

      (iii) Citigroup’s
Contributed Real Property;

       

      (iv) Citigroup’s
Contributed Real Property Leases, including any security deposits paid
thereunder;

       

      (v) Citigroup’s
Contributed IP Licenses and the Citigroup Contributed IP;

       

      (vi) all
furniture, fixtures, equipment (including but not limited to telephones,
telephone numbers, switches, servers, computers, printers, scanners, and data
processing equipment), machinery, automobiles, office supply inventories, and
other tangible personal property utilized primarily in the Citigroup Contributed
Business;

       

      (vii) all
contracts and agreements between Citigroup or one of its Subsidiaries, on the
one hand, and any customer of the Citigroup Contributed Business, on the other,
pursuant to which services of the Citigroup Contributed Business are to be
delivered to such customer, including any assets or rights (including any funds
or securities and any commodity positions) of customers that are held by
Citigroup and its Subsidiaries pursuant to any such contract or agreement,
including for distribution or payment or as collateral;

       

      (viii) all
margin and other customer debit balances of Citigroup and its Subsidiaries
related to the Citigroup Contributed Business to the extent reflected on the
Final Balance Sheet of the Citigroup Contributed Business;

       

      (ix) the
Citigroup Contributed Contracts;

       

      (x) copies of
all of the books and records in any form or medium of Citigroup and its
Subsidiaries to the extent related to the Citigroup Contributed Business
(including personnel records, customer records, transaction histories,
correspondence files and other records relating to dealings with customers of
the Citigroup Contributed Business), other than (A) books and records (or copies
thereof) to the extent they relate to the Citigroup Excluded Businesses (it
being understood that books and records that relate both to the Citigroup
Contributed Business and the Citigroup Excluded Businesses shall be copied and a
copy thereof shall be included within the Citigroup Contributed Assets) and (B)
any income Tax Returns of any Citigroup Entity or any group of entities that
includes a Citigroup Entity;

       

       

      
        
          
          

        

        
          - 9
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      (xi) all
rights, claims, credits, causes of action, rights of recovery and rights of
set-off of any kind to the extent relating to the Citigroup Contributed Assets,
including any unliquidated rights under manufacturers’ and vendors’
warranties;

       

      (xii) all
Accounts Receivable to the extent reflected on the Final Balance Sheet of the
Citigroup Contributed Business, including but not limited to employee
loans;

       

      (xiii) all
customer accounts of the Citigroup Contributed Business and the customer
relationships and goodwill relating thereto;

       

      (xiv) all
federal, state, municipal, foreign and other Permits held or used by Citigroup
and any of its Affiliates primarily in connection with the Citigroup Contributed
Business, to the extent transferable;

       

      (xv) Citigroup
Transferred Plans and the assets set aside in respect thereof (whether in
separate funding vehicles or denominated for the funding of benefits thereof on
the books and records of Citigroup or any of its Subsidiaries), assets related
to Citigroup Contributed Subsidiary Benefit Plans in addition to those held by
Citigroup Contributed Subsidiaries or pursuant to trusts, insurance policies or
other funding vehicles which are transferred to, or assumed by, the Company or
one of the Company Entities by virtue of the contribution to the Company of the
Citigroup Contributed Subsidiaries, and those contracts and agreements of
Citigroup or its Subsidiaries primarily relating to any Citigroup Transferred
Plan (but only if the Company has expressly agreed to administer such Citigroup
Transferred Plan pursuant to the terms of any Transaction
Document);

       

      (xvi) all
securities held for investment or resale in connection with the Citigroup
Contributed Business;

       

      (xvii) all
customer lists and prospective customer lists, customer information, finding
broker lists, databases, trading models, and policies and procedures, in each
case primarily utilized or prepared in connection with the Citigroup Contributed
Business;

       

      (xviii) all
credits, prepaid expenses, deferred charges, advance payments, security deposits
and prepaid items to the extent that the underlying assets related thereto are
Citigroup Contributed Assets;

       

      (xix) all cash,
bank accounts and deposits with clearing organizations, depositories and similar
organizations which primarily relate to the Citigroup Contributed
Business;

       

      (xx) manuals
and marketing materials (in any form or medium), including, without limitation,
advertising matter, brochures, catalogues, price lists, mailing lists,
distribution lists, photographs, production data, and sales and promotional
materials which primarily relate to or were prepared primarily in connection
with the Citigroup Contributed Business;

       

       

      
        
          
          

        

        
          - 10
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      (xxi) all
rights, privileges and claims to the extent relating to any of the other
Citigroup Contributed Assets or the Citigroup Contributed Business;

       

      (xxii) Tax
documentation obtained from customers (such as IRS Forms W-8, W-9 or similar
forms under federal, state, local or foreign Law) or such other forms,
certifications or information (including, electronic records) that a
contributing party, as payor, is permitted to rely on (collectively, “Citigroup Tax
Documentation”), such Citigroup Tax Documentation to be contributed or
made available to the Company in such a manner that, to the extent possible
after the use of commercially reasonable efforts, permits the Company to rely on
such Citigroup Tax Documentation under applicable Law;

       

      (xxiii) those
assets identified on Schedule 1.1(a)(1); and

       

      (xxiv) the
IIG/IFG/CCI Business and the Managed Futures Business;

       

      provided, however, that the
Citigroup Contributed Assets shall in each case exclude all Citigroup Excluded
Assets.

       

      “Citigroup Contributed
Business” means (i) the business reflected in the Financial Statements of
the Citigroup Contributed Business, which includes Citigroup’s retail brokerage
and futures business operated under the name “Smith Barney” in the United States
and Australia and operated under the name “Quilter” in the United Kingdom,
Ireland and the Channel Islands, and (ii) the IIG/IFG/CCI Business and the
Managed Futures Business; provided, however, that the
Citigroup Contributed Business shall exclude all Citigroup Excluded Assets,
Citigroup Excluded Liabilities and the Citigroup Excluded
Businesses.

       

      “Citigroup Contributed
Business Benefit Plan” has the meaning set forth in the Employee Matters
Agreement.

       

      “Citigroup Contributed
Business Individuals” has the meaning set forth in the Employee Matters
Agreement.

       

      “Citigroup Contributed
Contracts” means any contracts or agreements, other than any Benefit
Plan, to which Citigroup or any of its Subsidiaries is a party that relate
primarily to the conduct of the Citigroup Contributed Business.

       

      “Citigroup Contributed Equity
Interests” means the limited liability company interests, stock or other
equity interests of the Citigroup Contributed Subsidiaries.

       

      “Citigroup Contributed
IP” means all Intellectual Property that is (i) owned by Citigroup or a
Subsidiary of Citigroup (including the Citigroup Contributed Subsidiaries) and
(ii) primarily used or held for use with respect to the Citigroup Contributed
Business, including in any event the Trademark “Smith Barney” and “Quilter”, but
shall not include, in any event, the Trademark “Citigroup”.

       

       

      
        
          
          

        

        
          - 11
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      “Citigroup Contributed
Liabilities” means the following:  (i) all free credit and
other customer balances of Citigroup and its Subsidiaries related to the
Citigroup Contributed Business, including but not limited to amounts withheld on
customer transactions and payable to Governmental Authorities, to the extent
such free credit and other customer balances are reflected on the Final Balance
Sheet of the Citigroup Contributed Business; (ii) all obligations of Citigroup
and its Subsidiaries under the Citigroup Contributed Contracts, Citigroup’s
Contributed Real Property Leases, Citigroup’s Contributed IP Licenses and the
other contracts and agreements constituting part of the Citigroup Contributed
Assets, in each case to the extent arising from the operation of the Citigroup
Contributed Business or the ownership of the Citigroup Contributed Assets
following the Closing; (iii) liabilities to the extent relating to the Citigroup
Contributed Business, to the extent they are reflected on the Final Balance
Sheet of the Citigroup Contributed Business; (iv) all liabilities of the
Citigroup Contributed Subsidiaries arising under the Transaction Documents; (v)
those liabilities of Citigroup and/or its Subsidiaries agreed to be assumed or
retained by the Company Entities under the Employee Matters Agreement or in
respect of the Citigroup Contributed Subsidiary Benefit Plans and all
liabilities in respect of other contracts and agreements of Citigroup or its
Subsidiaries primarily relating to any Citigroup Transferred Plan; (vi) all
Accounts Payable of the Citigroup Contributed Business to the extent they are
reflected on the Final Balance Sheet of the Citigroup Contributed Business;
(vii) the obligation to repurchase securities sold under repurchase agreements
and not yet repurchased and attributable to the Citigroup Contributed Business
to the extent they are reflected on the Final Balance Sheet of the Citigroup
Contributed Business; and (viii) liabilities to the extent relating to the
IIG/IFG/CCI Business the Managed Futures Business.

       

      “Citigroup Contributed
Research." means all Intellectual Property or other proprietary rights to
the extent owned by Citigroup or its Subsidiaries and included or otherwise
embodied in Research (as defined in the Citigroup Research Agreement) and Models
(as defined in the Citigroup Research Agreement) created prior to the Closing
Date by the Citigroup Research Employees (as defined in the Employee Matters
Agreement), including but not limited to the following publications: the “PCG
Equity Model Portfolio”, the “PCG Small & Mid-Cap Equity Model Portfolio”,
the “PCG ETF Model Portfolio”, the “PCG International ETF Focus List”, the “PCG
Pan European Model Portfolio”, the “PCG Asia Focus List” and the “Current
Outlook”.

       

      “Citigroup Contributed
Subsidiaries” means the Subsidiaries of Citigroup listed on Schedule
1.1(b)(1).

       

      “Citigroup Contributed
Subsidiary Benefit Plan” has the meaning set forth in the Employee
Matters Agreement.

       

      “Citigroup Delayed
Contribution Assets” means the Citigroup Contributed Assets of the
business described on Schedule
1.1(a)(3).

       

      “Citigroup Delayed
Contribution Business” means Citigroup Delayed Contribution Assets and
the related Citigroup Delayed Contribution Liabilities.

       

       

      
        
          
          

        

        
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      “Citigroup Delayed
Contribution Liabilities” means the Citigroup Contributed Liabilities of
the business described on Schedule
1.1(a)(3).

       

      “Citigroup Delayed
Distribution Assets” means the Citigroup Excluded Assets of the business
described on Schedule
1.1(a)(4).

       

      “Citigroup Delayed
Distribution Business” means Citigroup Delayed Distribution Assets and
the Citigroup Delayed Distribution Liabilities.

       

      “Citigroup Delayed
Distribution Liabilities” means the Citigroup Excluded Liabilities of the
business described on Schedule
1.1(a)(4).

       

      “Citigroup Disclosure
Letter” has the meaning set forth in Section 3.1.

       

      “Citigroup Employment
Agreements” has the meaning set forth in the Employee Matters
Agreement.

       

      “Citigroup Entities”
means Citigroup and its Subsidiaries other than the Citigroup Contributed
Subsidiaries and other than the Company Entities.

       

      “Citigroup Equity
Awards” means the option, restricted stock and other equity grants made
to the Citigroup Transferees prior to the Service Transfer Date.

       

      “Citigroup Excluded
Assets” means (i) any asset listed on Schedule 1.1(c)(1), (ii) any asset
not utilized, or held for use, primarily in the conduct of the Citigroup
Contributed Business that is not otherwise contemplated to be contributed to the
Company pursuant to any Transaction Document, (iii) any asset otherwise
expressly contemplated by any provision of this Agreement or any Transaction
Document not to be contributed to the Company and that is not reflected on the
Final Balance Sheet of the Citigroup Contributed Business, and (iv) all
membership and trading privileges held or used by Citigroup and any of its
Affiliates.

       

      “Citigroup Excluded
Businesses” means the businesses, activities and operations of Citigroup
and its Subsidiaries other than the Citigroup Contributed Business.

       

      “Citigroup Excluded
Employment Liabilities” has the meaning set forth in the Employee Matters
Agreement.

       

      “Citigroup Excluded
Liabilities” means any liability, obligation or duty of Citigroup or any
of its Subsidiaries or Affiliates, whether or not related to the Citigroup
Contributed Business, that is not expressly contemplated by this Agreement or
any other Transaction Document to be a Citigroup Contributed Liability,
including but not limited to Excluded Claims, Citigroup Excluded Employment
Liabilities and Citigroup Excluded Taxes.

       

      “Citigroup Excluded
Taxes” means any liability, obligation or commitment, whether or not
accrued, assessed or currently due and payable: (i) for any Taxes imposed on or
payable by the Citigroup Entities or with respect to the Citigroup Excluded

       

       

      
        
          
          

        

        
          - 13
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      Businesses,
Citigroup Excluded Assets or Citigroup Excluded Liabilities for any taxable
period; provided, however, that in the
case of any Citigroup Delayed Distribution Business this clause (i) shall apply
solely with respect to Pre-Closing Tax Periods; (ii) for any Taxes imposed on or
payable by the Citigroup Contributed Subsidiaries or with respect to the
Citigroup Contributed Business, the Citigroup Contributed Assets or the
Citigroup Contributed Liabilities with respect to any Pre-Closing Tax Period;
(iii) for any Taxes of or imposed on any of the Citigroup Contributed
Subsidiaries as a result of Treasury Regulation Section 1.1502-6(a) (or any
similar provision of state, local or foreign Law) as a result of having been a
member of any consolidated, combined, unitary or affiliated group prior to the
Closing; (iv) for any Taxes resulting from any extraordinary transaction outside
the ordinary course of business undertaken by Citigroup or any of its Affiliates
in anticipation of the Closing, including (x) Taxes with respect to the
Citigroup Reorganization (other than Transfer Taxes required to be borne by
Morgan Stanley pursuant to Section 4.5(h)) and (y) Taxes with respect to the
transactions contemplated by Section 4.10(d); (v) for any obligation or other
liability of a Citigroup Contributed Subsidiary to indemnify any other Person in
respect of or relating to Taxes or to pay an amount pursuant to a Tax sharing or
Tax allocation agreement (other than any obligation or liability arising under
an agreement entered into by a Citigroup Contributed Subsidiary after the
Closing); and (vi) for any Transfer Taxes to the extent required to be borne by
Citigroup pursuant to Section 4.5(h).

       

      “Citigroup Introducing
Assets” means the Citigroup Contributed Assets, but excluding the
Citigroup Self-Clearing Assets and Citigroup Delayed Contribution
Assets.  For the avoidance of doubt, Citigroup Introducing Assets
shall include margin loans relating to the Citigroup Contributed Business
conducted in Australia.

       

      “Citigroup Introducing
Business” means the Citigroup Contributed Business, but excluding the
Citigroup Self-Clearing Business and the Citigroup Delayed Contribution Business
(and, for the avoidance of doubt, excluding the Citigroup Delayed Distribution
Business).

       

      “Citigroup Introducing
Liabilities” means the Citigroup Contributed Liabilities, but excluding
the Citigroup Self-Clearing Liabilities and the Citigroup Delayed Contribution
Liabilities.

       

      “Citigroup Introducing
Tangible Book Value” means, as of the Closing Date, (i) the total assets
minus goodwill and other intangibles (excluding COLI) minus total liabilities of
the Citigroup Introducing Business and Citigroup Delayed Contribution Business
(excluding the IIG/IFG/CCI Business and the Managed Futures Business), in each
case based on the respective amounts shown on the Final Closing Balance Sheet of
the Citigroup Introducing Business and Citigroup Delayed Contribution Business,
as determined in accordance with Section 2.10, minus (ii) the amount of the
Class A Preferred Interests, valued at the Liquidation Preference thereof,
issued on the Closing Date pursuant to Section 2.4(b).

       

      “Citigroup Key Contributed
Business Individual” has the meaning set forth in Section
4.1(b)(v).

       

       

      
        
          
          

        

        
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      “Citigroup
Reorganization” has the meaning set forth in Section
2.2(a).

       

      “Citigroup Securities
Clearing Agreement” means the Fully Disclosed Clearing Agreement by and
between Citigroup Global Markets Inc. and Morgan Stanley Smith Barney LLC, dated
as of May 1, 2009, as amended by Amendment No. 1 dated May 12, 2009, as it may
be further amended from time to time.

       

      “Citigroup Self-Clearing
Assets” means the Citigroup Contributed Assets of the business reflected
in Schedule
1.1(a)(5).

       

      “Citigroup Self-Clearing
Business” means the Citigroup Self-Clearing Assets and the Citigroup
Self-Clearing Liabilities.

       

      “Citigroup Self-Clearing
Date” means each date on which the conversion of Customer Accounts as
determined by Citigroup Global Markets Inc. and the Company pursuant to either
(i) Section 13.03 of the Citigroup Securities Clearing Agreement or (ii) Section
13.03 of the Futures Clearing Agreement of Citigroup is actually effected to
render such accounts fully self-cleared (as such term is used in the definition
of Customer Account in the Citigroup Securities Clearing Agreement and in the
definition of Customer Futures Account in the Futures Clearing Agreement of
Citigroup).

       

      “Citigroup Self-Clearing
Liabilities” means the Citigroup Contributed Liabilities of the business
reflected in Schedule
1.1(a)(5), but excluding the Citigroup Delayed Contribution
Liabilities.

       

      “Citigroup Self-Clearing
Tangible Book Value” means (i) the total assets minus goodwill and other
intangibles (excluding COLI) minus total liabilities of the Citigroup
Self-Clearing Business (excluding the IIG/IFG/CCI Business and the Managed
Futures Business), in each case based on the respective aggregate amounts shown
on all of the Final Self-Clearing Balance Sheet(s) of the Citigroup
Self-Clearing Business, as determined in accordance with Section 2.11, minus
(ii) the aggregate amount of the Class A Preferred Interests, valued at the
Liquidation Preference thereof, issued on the Self-Clearing Dates pursuant to
Section 2.5(a).

       

      “Citigroup
Transferees” has the meaning set forth in the Employee Matters
Agreement.

       

      “Citigroup
Transferors” means Citigroup and each Subsidiary of Citigroup that owns
(or, in the case of Citigroup Contributed Liabilities, is responsible for), as
of January 13, 2009 or as of the Closing Date, any Citigroup Self-Clearing Date,
or any Delayed Contribution Date, as applicable, (i) any equity interest in any
Citigroup Contributed Subsidiary, (ii) any Citigroup Contributed Assets or (iii)
any Citigroup Contributed Liabilities.

       

      “Citigroup Transferred
Plan” has the meaning set forth in the Employee Matters
Agreement.

       

       

      
        
          
          

        

        
          - 15
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      “Claim” means any and
all actions, suits, litigation, complaints, demands, claims or counterclaims or
legal, administrative or arbitral proceedings, information requests or
investigations or Orders.

       

      “Class A Preferred
Interests” has the meaning set forth in the LLC Agreement.

       

      “Clearing Firm” has
the meaning set forth in Section 7.5.

       

      “Closing” has the
meaning and consists of the transactions set forth in Section 2.3.

       

      “Closing Date” means
May 31, 2009.

       

      “Closing Date Cash Funding
Amount” has the meaning set forth in the recitals hereto.

       

      “Code” means the
Internal Revenue Code of 1986, as amended.

       

      “Company” has the
meaning set forth in the preamble hereto.

       

      “Company Entities”
means the Company and, from time to time, its Subsidiaries, giving effect to the
Closing.

       

      “Compliance
Requirements” has the meaning set forth in Section 4.5(k).

       

      “Compliance Ruling”
has the meaning set forth in Section 4.5(k).

       

      “Confidentiality
Agreement” means the letter agreement, dated as of December 3, 2008, by
and between Citigroup and Morgan Stanley, as it may be amended from time to
time.

       

      “Consent” means any
consent (including any “negative consent”), approval, authorization, waiver,
grant, franchise, concession, agreement, license, exemption or other Permit or
Order of, registration, declaration or filing with, or report or notice to, any
Person.

       

      “Contributed Assets”
means the Citigroup Contributed Assets or the Morgan Stanley Contributed Assets,
or both, as the context requires.

       

      “Contributed Business
Individuals” has the meaning set forth in the Employee Matters
Agreement.

       

      “Contributed
Businesses” means the Citigroup Contributed Business and the Morgan
Stanley Contributed Business, or either of them, as the context
requires.

       

      “Contributed IP
Licenses” means, with respect to a Party, any license, consent, royalty
or other agreement concerning any Intellectual Property licensed to such Party
or a Subsidiary of such Party and used or held for use primarily with respect to
such Party’s Contributed Business.

       

       

      
        
          
          

        

        
          - 16
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      “Contributed Leased Real
Property” means, with respect to Citigroup, the real property occupied or
used by Citigroup or one of its Subsidiaries or other Affiliates pursuant to a
Contributed Real Property Lease located at the addresses set forth on Schedule
1.1(d)(1) and, with respect to Morgan Stanley, the real property occupied or
used by Morgan Stanley or one of its Subsidiaries or other Affiliates pursuant
to a Contributed Real Property Lease located at the addresses set forth on
Schedule 1.1(d)(2), in each case to the extent set forth on the applicable
Schedule.

       

      “Contributed
Liabilities” means the Citigroup Contributed Liabilities or the Morgan
Stanley Contributed Liabilities, or both, as the context requires.

       

      “Contributed Real
Property” means, with respect to Citigroup, the real property owned in
fee by Citigroup or one of its Subsidiaries or other Affiliates described on
Schedule 1.1(e)(1).

       

      “Contributed Real Property
Lease” means any lease or sublease (or allocable portion thereof) by or
under which Citigroup or one of its Subsidiaries or other Affiliates or Morgan
Stanley or one of its Subsidiaries or other Affiliates holds a leasehold
interest or uses or occupies or has the right to use or occupy any Contributed
Leased Real Property or any portion thereof or interest therein.

       

      “Contributed
Subsidiary” means a Citigroup Contributed Subsidiary or a Morgan Stanley
Contributed Subsidiary, as the context requires.

       

      “Controlling Party”
has the meaning set forth in Section 6.6(b)(i).

       

      “Controlling Tax
Party” has the meaning set forth in Section 4.5(b)(iv).

       

      “CPA Firm” has the
meaning set forth in Section 2.10(b).

       

      “Customer Accounts”
has the meaning, as applicable, (i) given to such term in the Citigroup
Securities Clearing Agreement or the Morgan Stanley Securities Clearing
Agreement, or (ii) given to “Customer Futures Accounts” in the Futures Clearing
Agreements.

       

      “Deductible” has the
meaning set forth in Section 6.3(a)(ii).

       

      “Delayed Contribution
Business” means a Citigroup Delayed Contribution Business and a Morgan
Stanley Delayed Contribution Business, or either of them, as the context
requires.

       

      “Delayed Contribution
Date” means, with respect to a Citigroup Delayed Contribution Business or
Morgan Stanley Delayed Contribution Business, the third Business Day following
the date on which all of the Delayed Contribution Conditions for such Citigroup
Delayed Contribution Business or Morgan Stanley Delayed Contribution Business
are satisfied, or such other date as may be mutually agreed by Citigroup and
Morgan Stanley; provided that the
Delayed Contribution Date for the Citigroup Contributed Research shall be the
Transfer Date (as such term is defined in the Research 

       

       

      
        
          
          

        

        
          - 17
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      Agreement
of Citigroup) and that the Delayed Contribution Date for the Morgan Stanley
Contributed Research shall be the Transfer Date (as such term is defined in the
Research Agreement of Morgan Stanley).

       

      “Delayed Contribution
Conditions” has the meaning set forth in Section 2.6(a).

       

      “Delayed Distribution
Date” means, with respect to a Citigroup Delayed Distribution Business or
Morgan Stanley Delayed Distribution Business, the third Business Day following
the date on which all of the Delayed Distribution Conditions for such Citigroup
Delayed Distribution Business or Morgan Stanley Delayed Distribution Business,
respectively, are satisfied, or such other date as may be mutually agreed by
Citigroup and Morgan Stanley.

       

      “Delayed Distribution
Conditions” has the meaning set forth in Section 2.7(a).

       

      “Delayed Transfer
Individuals” has the meaning set forth in the Employee Matters
Agreement.

       

      “Delivering Party” has
the meaning set forth in Section 4.2(a).

       

      “De Minimis Loss” has
the meaning set forth in Section 6.3(a)(i).

       

      “Deposit Sweep
Agreement” means the agreement in the form of Exhibit B hereto, to be
entered into pursuant to Section 2.4, as it may be amended
from time to time.

       

      “Designated
Representatives” has the meaning set forth in Section
4.2(a).

       

      “Distribution
Agreements” means agreements in the forms of Exhibits C-1 and C-2 hereto,
to be entered into pursuant to Section 2.4, as they may be amended from time to
time.

       

      “EMEA GSPS and ESOP
Business” means the business of providing stock plan related services to
non-US corporations or the representatives or agents of such corporations and
the current and former employees of the corporation who participate in the stock
plan(s) of the corporation, and certain support services to US corporations or
the representatives or agents of such corporations in respect
of current or former employees of such corporations residing outside the
US.

       

      “Employee Benefit
Plan” has the meaning set forth in the Employee Matters
Agreement.

       

      “Employee Matters
Agreement” means the agreement in the form of Exhibit D hereto, to be
entered into pursuant to Section 2.4, as it may be amended from time to
time.

       

      “Employment Agreement”
has the meaning set forth in the Employee Matters Agreement.

       

       

      
        
          
          

        

        
          - 18
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      “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder.

       

      “Escrow Agreement”
means the Escrow Agreement dated as of the date hereof among Citigroup, Morgan
Stanley and The Bank of New York, as Escrow Agent (the “Escrow Agent”), as it
may be amended from time to time.

       

      “Excess Flow-Through
Income” shall mean the excess, if any, of (i) the amount of income
required to be included by a member with respect to a Contributed Subsidiary
that is treated, for federal income tax purposes, as a partnership or as a
“controlled foreign corporation” (within the meaning of Section 957(a) of the
Code) with respect to a taxable year of such Contributed Subsidiary that
includes (but does not end on) the Closing Date, over (ii) the amount of income
that would have been required to be included by such member with respect to such
Contributed Subsidiary if the taxable year of such Contributed Subsidiary had
ended on the Closing Date and the taxable income of such Contributed Subsidiary
through the end of the Closing Date had been determined based on a “closing of
the books.”

       

      “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

       

      “Excluded Businesses”
means the Citigroup Excluded Businesses or the Morgan Stanley Excluded
Businesses, or both, as the context requires.

       

      “Excluded Claims”
means, with respect to either Party, Losses arising in connection with or
relating to a Claim asserted against the other Party, the Company, any of their
respective Subsidiaries or Affiliates, any Contributed Subsidiary or with
respect to any Contributed Assets or the Contributed Business of that Party, in
any case which arise from or in connection with an action, omission to act,
condition or event (or series of related actions, omissions, conditions or
events) that first occurred at or prior to the Closing, including but not
limited to litigation referred to in Section 6.6(g), unless such action,
omission, condition or event (or series of related actions, omissions,
conditions or events) continues for more than one year after the Closing (in
which case such Claim and any Losses arising therefrom shall be an Excluded
Claim only to the extent relating to any pre-Closing
period).

       

      “Excluded Liabilities”
means, in the case of Citigroup, the Citigroup Excluded Liabilities, and, in the
case of Morgan Stanley, the Morgan Stanley Excluded Liabilities, or both of
them, as the context requires.

       

      “FID Inventory” means
all of, and to the extent of, the right, title and interest of Morgan Stanley
& Co. Incorporated in the securities and other assets and short obligations
referred to on Schedule 1.1(a)(10)
hereto relating to the Morgan Stanley fixed income trading business within
Global Wealth Management.

       

      “Final Balance Sheet”
means the “Final Closing Balance Sheet” in the case of Introducing Assets and
Liabilities, and the “Final Self-Clearing Balance Sheet” in the case of
Self-Clearing Assets and Self Clearing Liabilities.

       

       

      
        
          
          

        

        
          - 19
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      “Final Closing Balance
Sheet” has the meaning set forth in Section 2.10(b).

       

      “Final Self-Clearing Balance
Sheet” has the meaning set forth in Section 2.11(d).

       

      “Financial Statements of the
Citigroup Contributed Business” means the consolidated unaudited balance
sheet of the Citigroup Contributed Business (excluding the IIG/IFG/CCI Business
and the Managed Futures Business) as of November 30, 2008 and the consolidated
unaudited statements of income of the Citigroup Contributed Business for the
twelve-month period ending on December 31, 2008, which are attached to this
Agreement as Schedule 1.1(f)(1).

       

      “Financial Statements of the
Morgan Stanley Contributed Business” means the consolidated unaudited
balance sheet of the Morgan Stanley Contributed Business as of November 30, 2008
and the consolidated unaudited statements of income of the Morgan Stanley
Contributed Business for the twelve-month period ending on December 31, 2008,
which are attached to this Agreement as Schedule 1.1(f)(2).

       

      “FINRA” means the
Financial Industry Regulatory Authority.

       

      “Futures Clearing
Agreements” means agreements in the forms of Exhibits E-1 and E-2 hereto,
to be entered into pursuant to Section 2.4, as they may be amended from time to
time.

       

      “GAAP” means generally
accepted accounting principles as in effect in the United States from time to
time.

       

      “General Transition Services
Agreements” means the agreements in the forms of Exhibits F-1 and F-2
hereto, to be entered into pursuant to Section 2.4, as they may be amended
from time to time.

       

      “Governmental
Approval” means any Consent of, with or to any Governmental Authority,
and includes any applicable waiting periods associated with any Governmental
Approvals.

       

      “Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any entity, authority or body exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, body, commission or instrumentality of the United States or
foreign nation, or any state or other political subdivision thereof, and any
court, tribunal or arbitrator, and any self-regulatory organization (including
FINRA or any national securities exchange).

       

      “Guaranty” has the
meaning set forth in Section 7.4.

       

      “HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder.

       

       

      
        
          
          

        

        
          - 20
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      “IIG/IFG/CCI Business”
means the business conducted by the financial advisors of the Institutional
Fixed Income Group and Institutional Investor Group and the Corporate Cash
Investment Group hired by the Company pursuant to the terms set forth on Exhibit
A.

       

      “Indemnitees” has the
meaning set forth in Section 6.2.

       

      “Indemnitor” has the
meaning set forth in Section 6.2.

       

      “Infringe” means, with
respect to Intellectual Property, to infringe, impair, dilute or otherwise
violate.  “Infringement” shall
have a correlative meaning.

       

      “Initial Citigroup
Member” means any directly or indirectly Wholly-Owned Subsidiary of
Citigroup to become a member of the Company at the Closing.

       

      “Initial Members”
means, in the case of Citigroup, each Initial Citigroup Member, and, in the case
of Morgan Stanley, each Initial Morgan Stanley Member, or both the Initial
Citigroup Members and the Initial Morgan Stanley Members, as the context
requires.

       

      “Initial Morgan Stanley
Member” means any directly or indirectly Wholly-Owned Subsidiary of
Morgan Stanley to become a member of the Company at the Closing.

       

      “Intellectual
Property” means all intellectual property rights under any Law,
including, without limitation: (a) (i) inventions, discoveries, processes,
designs, techniques, and related improvements, whether or not patented or
patentable; (ii) trademarks, trade dress, service marks, service names, trade
names, brand names, logos, Internet domain names, business symbols, or other
source indicators, and all goodwill associated therewith and all common law
rights relating thereto (collectively, “Trademarks”); (iii)
copyrights and works of authorship in any media; (iv) know-how, trade secrets,
customer lists and confidential or proprietary information and data; and (v)
rights of publicity and privacy, “name and likeness” rights and other similar
rights; (b) all applications, registrations, patents, certifications, and
recordings related thereto; (c) all rights to obtain renewals, extensions,
continuations, continuations-in-part, reissues, divisions or similar legal
protections related thereto; and (d) all rights to bring an action at law or in
equity for the Infringement of the foregoing before the Closing Date, including
the right to receive all proceeds and damages therefrom.

       

      “Introducing Assets and
Liabilities” means the Citigroup Introducing Assets and Citigroup
Introducing Liabilities, and the Morgan Stanley Introducing Assets and Morgan
Stanley Introducing Liabilities, as applicable.

       

      “IRS” means the
Internal Revenue Service of the United States Department of
Treasury.

       

       

      
        
          
          

        

        
          - 21
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      “Law” means any law
(including but not limited to common law), constitution, treaty, statute, code,
rule, regulation, ordinance or other pronouncement of a Governmental Authority
having a similar effect and any Order.

       

      “LIBOR” means the rate
per annum appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars having a maturity of one month at 11:00 a.m.
(London time) two Business Days prior to the date of payment.

       

      “Lien” means any lien,
security interest, pledge, charge, encumbrance, claim or similar
right.

       

      “LLC Agreement” means
the agreement in the form of Exhibit G hereto, to be entered into pursuant to
Section 2.4 hereof, as it may be amended from time to time.

       

      “Loss” and “Losses” have the
meanings set forth in Section 6.2.

       

      “Managed Futures Balance
Sheet” has the meaning set forth in Section 2.13.

       

      “Managed Futures
Business” means the managed futures business reflected in the Managed
Futures Financial Statements.

       

      “Managed Futures Contribution
Date” means the date on which the Managed Futures Business is contributed
to the Company in accordance with Section 2.6(h) hereof.

       

      “Managed Futures Financial
Statements” means (i) the Managed Futures Balance Sheet and (ii) the
consolidated unaudited statement of income of the Managed Futures Business for
the twelve-month period ended on December 31, 2008 which is attached to this
Agreement as Schedule 1.1(a)(2).

       

      “Managed Futures SLAs”
means any agreements or understandings relating to the Managed Futures Business
(whether written or unwritten) to which any Citigroup Entity is a party and
which, following the contribution of the Managed Futures Business in accordance
with Section 2.6(h) hereof, would bind or purport to bind any Company
Entity.

       

      “Material Adverse
Effect” means (x) with respect to a Person, a material and adverse effect
on the business, operations, financial condition or results of operations of
such Person and its Subsidiaries, taken as a whole, or (y) with respect to a
Contributed Business, a material adverse effect on such Contributed Business or
the business, operations, financial condition or results of operations of such
Contributed Business, taken as a whole; provided, however, that, in the
case of clause (x) or (y), to the extent such change, event, development,
condition, occurrence or effect results from any of the following, it shall not
in and of itself constitute or be taken into account in determining whether
there has been a Material Adverse Effect:  (i) changes in the general
economy or securities markets of the United States or elsewhere, including but
not limited to market price and trading volume fluctuations and changes in
interest rates and exchange rates, (ii) changes in the financial services
business generally or the portions thereof in which 

       

       

      
        
          
          

        

        
          - 22
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      the
Contributed Businesses operate generally, (iii) any effects or conditions caused
by the announcement or performance of this Agreement, the transactions
contemplated by this Agreement or any other Transaction Document and the
identity of the Parties or their Affiliates, including, without limitation, the
impact thereof on relationships with employees (including financial advisors)
and customers of the Contributed Business, (iv) any changes or developments in
any political conditions in the United States or elsewhere, including any
outbreak of major hostilities in which the United States is involved, any act of
terrorism within the United States or elsewhere or any declaration of war, (v)
any changes that result from natural disasters, except to the extent directly
impacting the assets or properties of the applicable Person or the applicable
Contributed Business, (vi) any changes in (A) any Law (including any
interpretation or enforcement thereof by any Governmental Authority) or
(B) GAAP or regulatory accounting or capital requirements applicable to
U.S. banking, brokerage or financial services organizations generally, (vii) any
failure of the financial or operating performance of either Party’s Contributed
Business to meet any internal projections or budgets or any estimates of
revenues or earnings for any period of time prior to, on or after the date of
this Agreement, provided that the
underlying cause of any failure by such Contributed Business to meet any
internal projections or budgets or any estimates of revenues or earnings and its
impact on the financial condition, businesses or results of operations of such
Contributed Business may be considered in determining whether there has been a
Material Adverse Effect (to the extent not otherwise excluded hereunder), and
(viii) any effects or conditions caused by or resulting from any action taken or
omitted to be taken that (A) is required to be taken or omitted by either Party
or its Subsidiaries under this Agreement or (B) is by or at the written request
or with the written consent of the other Party (provided, however, that such
matters in the case of clauses (i), (ii) and (iv) shall be taken into account in
determining whether there has been a Material Adverse Effect to the extent of
any disproportionate impact on the applicable Person or applicable Contributed
Business, as the case may be, taken as a whole, relative to the other
participants operating in the same industries and geographic markets as such
Person or Contributed Business, as the case may be).  For the
avoidance of doubt, no change or development in the business, operations,
financial condition, results of operations, or credit, financial strength or
other ratings, of a Party or any of its Affiliates (other than the Contributed
Business of such Party) (any such event, a “Parent Event”) shall
be deemed to constitute a Material Adverse Effect on such Party's Contributed
Business, nor shall any such Parent Event be taken into account in determining
whether a Material Adverse Effect on such Party's Contributed Business has
occurred or is reasonably like to occur, except to the extent that such Parent
Event (or the underlying cause of such Parent Event) directly and adversely
affects the business, operations, financial condition or results of operations
of such Party's Contributed Business, taken as a whole, subject to the
limitations set forth above in this definition.

      

      “Material Contracts”
means, with respect to a Party, each of the following to which such Party or any
of its Subsidiaries is a party and that relate primarily to its Contributed
Business, or by which its Contributed Assets or Contributed Subsidiaries are
bound:

       

       

      
        
          
          

        

        
          - 23
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      (i) agreements
with a Third Party (other than distribution, sub-advisory, IT consulting and
other similar arrangements entered into in the ordinary course) for the purchase
of services, materials, supplies, merchandise or equipment (A) in an aggregate
amount for the unexpired term thereof equal to or greater than $10 million or
(B) providing for the payment (or potential liability for payment) of a penalty
(including but not limited to any early termination fee, prepayment penalty or
similar charge), fee or any other amount during or after the unexpired term
thereof equal to or greater than $5 million;

       

      (ii) broker’s
or finder’s agreements as to which the total fees payable thereunder could
reasonably be expected to exceed $1,000,000;

       

      (iii) agreements
under which administrative and other services are provided to or on behalf of a
Third Party (other than advisory agreements entered into in the ordinary course)
and which provide for an aggregate payment for the unexpired term thereof in
excess of $10 million;

       

      (iv) reimbursement
agreements, non-financial repurchase agreements and equipment leases with a
Third Party providing for aggregate payments in excess of
$10,000,000;

       

      (v) Contributed
Real Property Leases having an unexpired lease term of more than five years and
an annual rent in excess of $10,000,000;

       

      (vi) agreements
prohibiting or materially restricting the ability of a Party or any of its
Subsidiaries or key employees to conduct its Contributed Business, operate its
Contributed Business in any geographical area or compete with any Person in its
Contributed Business or containing exclusivity, preferred provider, most favored
nation, take-or-pay or similar restrictions;

       

      (vii) agreements
which require the referral of any business or require such Party’s Contributed
Subsidiaries or such Party’s Contributed Business to make available investment
or other business opportunities or products or services on a priority, equal or
exclusive basis;

       

      (viii) agreements,
any of the benefits of which will be reduced, increased, accelerated, delayed or
otherwise modified by virtue of the consummation of the transactions
contemplated hereby in any respect material to the Company Entities as a whole;
and

       

      (ix) agreements
which (or the violation of which) would reasonably be expected to have a
Material Adverse Effect on the Company.

       

      “Membership Interests”
has the meaning set forth in the LLC Agreement.

       

      “Morgan Stanley” has
the meaning set forth in the preamble hereto.

       

       

      
        
          
          

        

        
          - 24
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      “Morgan Stanley Clearing
Agreements” shall mean each of the Morgan Stanley Securities Clearing
Agreement and the Futures Clearing Agreement of Morgan Stanley.

       

      “Morgan Stanley Contributed
Assets” means all assets (real, personal, mixed, tangible or intangible)
of Morgan Stanley or any of its Subsidiaries, in each case that are utilized, or
held for use, primarily in the conduct of the Morgan Stanley Contributed
Business, other than any such asset the use of which is expressly being provided
after the Closing pursuant to a Transaction Document (other than the Morgan
Stanley Clearing Agreements), which shall include, in any event, the
following:

       

      (i) all
assets (real, personal, mixed, tangible or intangible) reflected on the Final
Balance Sheet of the Morgan Stanley Contributed Business;

       

      (ii) the
Morgan Stanley Contributed Equity Interests;

       

      (iii) Morgan
Stanley’s Contributed Real Property;

       

      (iv) Morgan
Stanley’s Contributed Real Property Leases, including any security deposits paid
thereunder;

       

      (v) Morgan
Stanley’s Contributed IP Licenses and the Morgan Stanley Contributed
IP;

       

      (vi) all
furniture, fixtures, equipment (including but not limited to telephones,
telephone numbers, switches, servers, computers, printers, scanners, and data
processing equipment), machinery, automobiles, office supply inventories, and
other tangible personal property utilized primarily in the Morgan Stanley
Contributed Business;

       

      (vii) all
contracts and agreements between Morgan Stanley or one of its Subsidiaries, on
the one hand, and any customer of the Morgan Stanley Contributed Business, on
the other, pursuant to which services of the Morgan Stanley Contributed Business
are to be delivered to such customer, including any assets or rights (including
any funds or securities and any commodity positions) of customers that are held
by Morgan Stanley and its Subsidiaries pursuant to any such contract or
agreement, including for distribution or payment or as collateral;

       

      (viii) all
margin and other customer debit balances of Morgan Stanley and its Subsidiaries
related to the Morgan Stanley Contributed Business to the extent reflected on
the Final Balance Sheet of the Morgan Stanley Contributed Business;

       

      (ix) the
Morgan Stanley Contributed Contracts;

       

      (x) copies of
all of the books and records in any form or medium of Morgan Stanley and its
Subsidiaries to the extent related to the Morgan Stanley Contributed Business
(including personnel records, customer records, transaction histories,
correspondence files and other records relating to dealings with customers of
the Morgan Stanley Contributed Business), other than (A) books and records (or
copies thereof) to the extent they relate to the Morgan Stanley Excluded
Businesses (it being understood that 

       

       

      
        
          
          

        

        
          - 25
-

          
            

          

        

        
          
          

        

      

       

       

      books and
records that relate both to the Morgan Stanley Contributed Business and the
Morgan Stanley Excluded Businesses shall be copied and a copy thereof shall be
included within the Morgan Stanley Contributed Assets) and (B) any income Tax
Returns of any Morgan Stanley Entity or any group of entities that includes a
Morgan Stanley Entity;

       

      (xi) all
rights, claims, credits, causes of action, rights of recovery and rights of
set-off of any kind to the extent relating to the Morgan Stanley Contributed
Assets, including any unliquidated rights under manufacturers’ and vendors’
warranties;

       

      (xii) all
Accounts Receivable to the extent reflected on the Final Balance Sheet of the
Morgan Stanley Contributed Business, including but not limited to employee
loans;

       

      (xiii) all
customer accounts of the Morgan Stanley Contributed Business and the customer
relationships and goodwill relating thereto;

       

      (xiv) all
federal, state, municipal, foreign and other Permits held or used by Morgan
Stanley and any of its Affiliates primarily in connection with the Morgan
Stanley Contributed Business, to the extent transferable;

       

      (xv) Morgan
Stanley Transferred Plans and the assets set aside in respect thereof (whether
in separate funding vehicles or denominated for the funding of benefits thereof
on the books and records of Morgan Stanley or any of its Subsidiaries), assets
related to Morgan Stanley Contributed Subsidiary Benefit Plans in addition to
those held by Morgan Stanley Contributed Subsidiaries or pursuant to trusts,
insurance policies or other funding vehicles which are transferred to, or
assumed by, the Company or one of the Company Entities by virtue of the
contribution to the Company of the Morgan Stanley Contributed Subsidiaries, and
those contracts and agreements of Morgan Stanley or its Subsidiaries primarily
relating to any Morgan Stanley Transferred Plan (but only if the Company has
expressly agreed to administer such Morgan Stanley Transferred Plan pursuant to
the terms of any Transaction Document);

       

      (xvi) all
securities held for investment or resale in connection with the Morgan Stanley
Contributed Business;

       

      (xvii) all
customer lists and prospective customer lists, customer information, finding
broker lists, databases, trading models, and policies and procedures, in each
case primarily utilized or prepared in connection with the Morgan Stanley
Contributed Business;

       

      (xviii) all
credits, prepaid expenses, deferred charges, advance payments, security deposits
and prepaid items to the extent that the underlying assets related thereto are
Morgan Stanley Contributed Assets;

       

      (xix) all cash,
bank accounts and deposits with clearing organizations, depositories and similar
organizations which primarily relate to the Morgan Stanley Contributed
Business;

       

       

      
        
          
          

        

        
          - 26
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      (xx) manuals
and marketing materials (in any form or medium), including, without limitation,
advertising matter, brochures, catalogues, price lists, mailing lists,
distribution lists, photographs, production data, and sales and promotional
materials which primarily relate to or were prepared primarily in connection
with the Morgan Stanley Contributed Business;

       

      (xxi) all
rights, privileges and claims to the extent relating to any of the other Morgan
Stanley Contributed Assets or the Morgan Stanley Contributed
Business;

       

      (xxii) Tax
documentation obtained from customers (such as IRS Forms W-8, W-9 or similar
forms under federal, state, local or foreign Law) or such other forms,
certifications or information (including, electronic records) that a
contributing party, as payor, is permitted to rely on (collectively, “Morgan Stanley Tax
Documentation”), such Morgan Stanley Tax Documentation to be contributed
or made available to the Company in such a manner that, to the extent possible
after the use of commercially reasonable efforts, permits the Company to rely on
such Morgan Stanley Tax Documentation under applicable Law;

       

      (xxiii) a 100%
participation interest in existing BusinesScape loans and loan commitments,
including all payments received pursuant to any existing referral agreements
with third-party lenders, held by Morgan Stanley Commercial Financial Services,
Inc.; and

       

      (xxiv) the FID
Inventory;

       

      provided, however, that the
Morgan Stanley Contributed Assets shall in each case exclude all Morgan Stanley
Excluded Assets.

       

      “Morgan Stanley Contributed
Business” means the business reflected in the Financial Statements of the
Morgan Stanley Contributed Business, which includes Morgan Stanley’s global
wealth management and private wealth management businesses; provided, however, that the
Morgan Stanley Contributed Business shall exclude all Morgan Stanley Excluded
Assets, Morgan Stanley Excluded Liabilities and the Morgan Stanley Excluded
Businesses.

       

      “Morgan Stanley Contributed
Business Benefit Plan” has the meaning set forth in the Employee Matters
Agreement.

       

      “Morgan Stanley Contributed
Business Individuals” has the meaning set forth in the Employee Matters
Agreement.

       

      “Morgan Stanley Contributed
Contracts” means any contracts or agreements, other than any Benefit
Plan, to which Morgan Stanley or any of its Subsidiaries is a party that relate
primarily to the conduct of the Morgan Stanley Contributed
Business.

       

      “Morgan Stanley Contributed
Equity Interests” means the limited liability company interests, stock or
other equity interests of the Morgan Stanley Contributed
Subsidiaries.

       

       

      
        
          
          

        

        
          - 27
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      “Morgan Stanley Contributed
IP” means all Intellectual Property that is (i) owned by Morgan Stanley
or a Subsidiary of Morgan Stanley (including the Morgan Stanley Contributed
Subsidiaries) and (ii) primarily used or held for use with respect to the Morgan
Stanley Contributed Business including in any event the Trademark “Dean Witter”,
but shall not include, in any event, the Trademark “Morgan
Stanley”.

       

      “Morgan Stanley Contributed
Liabilities” means the following:  (i) all free credit and
other customer balances of Morgan Stanley and its Subsidiaries related to the
Morgan Stanley Contributed Business, including but not limited to amounts
withheld on customer transactions and payable to Governmental Authorities, to
the extent such free credit and other customer balances are reflected on the
Final Balance Sheet of the Morgan Stanley Contributed Business; (ii) all
obligations of Morgan Stanley and its Subsidiaries under the Morgan Stanley
Contributed Contracts, Morgan Stanley’s Contributed Real Property Leases, Morgan
Stanley’s Contributed IP Licenses and the other contracts and agreements
constituting part of the Morgan Stanley Contributed Assets, in each case to the
extent arising from the operation of the Morgan Stanley Contributed Business or
the ownership of the Morgan Stanley Contributed Assets following the Closing;
(iii) liabilities to the extent relating to the Morgan Stanley Contributed
Business, to the extent they are reflected on the Final Balance Sheet of the
Morgan Stanley Contributed Business; (iv) all liabilities of the Morgan Stanley
Contributed Subsidiaries arising under the Transaction Documents; (v) those
liabilities of Morgan Stanley and/or its Subsidiaries agreed to be assumed or
retained by the Company Entities under the Employee Matters Agreement or in
respect of the Morgan Stanley Contributed Subsidiary Benefit Plans and all
liabilities in respect of other contracts and agreements of Morgan Stanley or
its Subsidiaries primarily relating to any Morgan Stanley Transferred Plan; (vi)
all Accounts Payable of the Morgan Stanley Contributed Business to the extent
they are reflected on the Final Balance Sheet of the Morgan Stanley Contributed
Business; (vii) the obligation to repurchase securities sold under repurchase
agreements and not yet repurchased and attributable to the Morgan Stanley
Contributed Business to the extent they are reflected on the Final Balance Sheet
of the Morgan Stanley Contributed Business; and (viii) the Repo-Related
Obligation.

       

      “Morgan Stanley Contributed
Research” means all Intellectual Property or other proprietary rights to
the extent owned by Morgan Stanley or its Subsidiaries and included or otherwise
embodied in Research (as defined in the Research Agreement of Morgan Stanley)
and Models (as defined in the Research Agreement of Morgan Stanley) created
prior to the Closing Date by the Morgan Stanley Research Employees (as defined
in the Employee Matters Agreement).

       

      “Morgan Stanley Contributed
Subsidiaries” means the Subsidiaries of Morgan Stanley listed on Schedule
1.1(b)(2).

       

      “Morgan Stanley Contributed
Subsidiary Benefit Plan” has the meaning set forth in the Employee
Matters Agreement.

       

      “Morgan Stanley Delayed
Contribution Assets” means the Morgan Stanley Contributed Assets of the
business described on Schedule
1.1(a)(6).

       

       

      
        
          
          

        

        
          - 28
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      “Morgan Stanley Delayed
Contribution Business” means Morgan Stanley Delayed Contribution Assets
and the related Morgan Stanley Delayed Contribution Liabilities.

       

      “Morgan Stanley Delayed
Contribution Liabilities” means the Morgan Stanley Contributed
Liabilities of the business described on Schedule
1.1(a)(6).

       

      “Morgan Stanley Delayed
Distribution Assets” means the Morgan Stanley Excluded Assets of the
business described on Schedule
1.1(a)(7).

       

      “Morgan Stanley Delayed
Distribution Business” means Morgan Stanley Delayed Distribution Assets
and the Morgan Stanley Delayed Distribution Liabilities.

       

      “Morgan Stanley Delayed
Distribution Liabilities” means the Morgan Stanley Excluded Liabilities
of the business described on Schedule
1.1(a)(7).

       

      “Morgan Stanley Disclosure
Letter” has the meaning set forth in Section 3.2.

       

      “Morgan Stanley Employment
Agreements” has the meaning set forth in the Employee Matters
Agreement.

       

      “Morgan Stanley
Entities” means Morgan Stanley and its Subsidiaries other than the Morgan
Stanley Contributed Subsidiaries and other than the Company
Entities.

       

      “Morgan Stanley Equity
Awards” means the option, restricted stock and other equity grants made
to the Morgan Stanley Transferees prior to the Service Transfer
Date.

       

      “Morgan Stanley Excluded
Assets” means (i) any asset listed on Schedule 1.1(c)(2), (ii) any asset
not utilized, or held for use, primarily in the conduct of the Morgan Stanley
Contributed Business that is not otherwise contemplated to be contributed to the
Company pursuant to any Transaction Document, (iii) any asset otherwise
expressly contemplated by any provision of this Agreement or any Transaction
Document not to be contributed to the Company and that is not reflected on the
Final Balance Sheet of the Morgan Stanley Contributed Business and (iv) all
membership and trading privileges held or used by Morgan Stanley and any of its
Affiliates.

       

      “Morgan Stanley Excluded
Businesses” means the businesses, activities and operations of Morgan
Stanley and its Subsidiaries other than the Morgan Stanley Contributed
Business.

       

      “Morgan Stanley Excluded
Employment Liabilities” has the meaning set forth in the Employee Matters
Agreement.

       

      “Morgan Stanley Excluded
Liabilities” means any liability, obligation or duty of Morgan Stanley or
any of its Subsidiaries or Affiliates, whether or not related to the Morgan
Stanley Contributed Business, that is not expressly contemplated by this
Agreement or any other Transaction Document to be a Morgan Stanley Contributed

       

       

      
        
          
          

        

        
          - 29
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      Liability,
including but not limited to Excluded Claims, Morgan Stanley Excluded Employment
Liabilities and Morgan Stanley Excluded Taxes.

       

      “Morgan Stanley Excluded
Taxes” means any liability, obligation or commitment, whether or not
accrued, assessed or currently due and payable: (i) for any Taxes imposed on or
payable by the Morgan Stanley Entities or with respect to the Morgan Stanley
Excluded Businesses, Morgan Stanley Excluded Assets or Morgan Stanley Excluded
Liabilities for any taxable period; provided, however, in the case
of any Morgan Stanley Delayed Distribution Business this clause (i) shall apply
solely with respect to Pre-Closing Tax Periods; (ii) for any Taxes imposed on or
payable by the Morgan Stanley Contributed Subsidiaries or with respect to the
Morgan Stanley Contributed Business, the Morgan Stanley Contributed Assets or
the Morgan Stanley Contributed Liabilities with respect to any Pre-Closing Tax
Period; (iii) for any Taxes of or imposed on any of the Morgan Stanley
Contributed Subsidiaries as a result of Treasury Regulation Section 1.1502-6(a)
(or any similar provision of state, local or foreign Law) as a result of having
been a member of any consolidated, combined, unitary or affiliated group prior
to the Closing; (iv) for any Taxes resulting from any extraordinary transaction
outside the ordinary course of business undertaken by Morgan Stanley or any of
its Affiliates in anticipation of the Closing, including (x) Taxes with respect
to the Morgan Stanley Reorganization (other than Transfer Taxes required to be
borne by Citigroup pursuant to Section 4.5(h)) and (y) Taxes with respect to the
transactions contemplated by Section 4.10(d); (v) for any obligation or other
liability of a Morgan Stanley Contributed Subsidiary to indemnify any other
Person in respect of or relating to Taxes or to pay an amount pursuant to a Tax
sharing or Tax allocation agreement (other than any obligation or liability
arising under an agreement entered into by a Morgan Stanley Contributed
Subsidiary after the Closing); and (vi) for any Transfer Taxes to the extent
required to be borne by Morgan Stanley pursuant to Section 4.5(h).

       

      “Morgan Stanley Introducing
Assets” means the Morgan Stanley Contributed Assets, but excluding the
Morgan Stanley Self-Clearing Assets and the Morgan Stanley Delayed Contribution
Assets.  For the avoidance of doubt, Morgan Stanley Introducing Assets
shall include Morgan Stanley Contributed Assets relating to the fixed income
trading business within Global Wealth Management, as referenced on Schedule
4.10(c)(2)(i).

       

      “Morgan Stanley Introducing
Business” means the Morgan Stanley Contributed Business, but excluding
the Morgan Stanley Self-Clearing Business and the Morgan Stanley Delayed
Contribution Business (and, for the avoidance of doubt, excluding the Morgan
Stanley Delayed Distribution Business).

       

      “Morgan Stanley Introducing
Liabilities” means the Morgan Stanley Contributed Liabilities, but
excluding the Morgan Stanley Self-Clearing Liabilities and Morgan Stanley
Delayed Contribution Liabilities.  For the avoidance of doubt, Morgan
Stanley Introducing Liabilities shall include Morgan Stanley Contributed
Liabilities relating to the fixed income trading business within Global Wealth
Management, as referenced on Schedule 4.10(c)(2)(i).

       

       

      
        
          
          

        

        
          - 30
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      “Morgan Stanley Introducing
Tangible Book Value” means, as of the Closing Date, (i) the total assets
(including $60 million in cash funded by the Morgan Stanley Entities to the
Company Entities prior to the Closing) minus goodwill and other intangibles
minus total liabilities of the Morgan Stanley Introducing Business and Morgan
Stanley Delayed Contribution Business, in each case based on the respective
amounts shown on the Final Closing Balance Sheet of the Morgan Stanley
Introducing Business and Morgan Stanley Delayed Contribution Business, as
determined in accordance with Section 2.10, minus (ii) the amount of the Class A
Preferred Interests, valued at the Liquidation Preference thereof, issued on the
Closing Date pursuant to Section 2.4(c).

       

      “Morgan Stanley Key
Contributed Business Individual” has the meaning set forth in Section
4.1(b)(v).

       

      “Morgan Stanley
Reorganization” has the meaning set forth in Section
2.2(b).

       

      “Morgan Stanley Securities
Clearing Agreement” means the Fully Disclosed Clearing Agreement by and
between Morgan Stanley & Co. Incorporated and Morgan Stanley Smith Barney
LLC, dated as of May 1, 2009, as amended by Amendment No. 1 dated May 12, 2009,
as it may be further amended from time to time.

       

      “Morgan Stanley Self-Clearing
Assets” means the Morgan Stanley Contributed Assets of the business
reflected in Schedule
1.1(a)(8).

       

      “Morgan Stanley Self-Clearing
Business” means the Morgan Stanley Self-Clearing Assets and the Morgan
Stanley Self-Clearing Liabilities.

       

      “Morgan Stanley Self-Clearing
Date” means each date on which the conversion of Customer Accounts as
determined by Morgan Stanley & Co. Incorporated and the Company pursuant to
either (i) Section 13.03 of the Morgan Stanley Securities Clearing Agreement or
(ii) Section 13.03 of the Futures Clearing Agreement of Morgan Stanley is
actually effected to render such accounts fully self-cleared (as such term is
used in the definition of Customer Account in the Morgan Stanley Securities
Clearing Agreement and in the definition of Customer Futures Account in the
Futures Clearing Agreement of Morgan Stanley).

       

      “Morgan Stanley Self-Clearing
Liabilities” means the Morgan Stanley Contributed Liabilities of the
business reflected in Schedule 1.1(a)(8),
but excluding the Morgan Stanley Delayed Contribution Liabilities.

       

      “Morgan Stanley Self-Clearing
Tangible Book Value” means (i) the total assets minus goodwill and other
intangibles minus total liabilities of the Morgan Stanley Self-Clearing
Business, in each case based on the respective aggregate amounts shown on all of
the Final Self-Clearing Balance Sheet(s) of the Morgan Stanley Self-Clearing
Business, as determined in accordance with Section 2.11, minus (ii) the
aggregate amount of the Class A Preferred Interests, valued at the Liquidation
Preference thereof, issued on the Self-Clearing Dates pursuant to Section
2.5(b).

       

       

      
        
          
          

        

        
          - 31
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      “Morgan Stanley
Transferees” has the meaning set forth in the Employee Matters
Agreement.

       

      “Morgan Stanley
Transferors” means Morgan Stanley and each Subsidiary of Morgan Stanley
that owns (or, in the case of Morgan Stanley Contributed Liabilities, is
responsible for), as of January 13, 2009 or as of the Closing Date, any Morgan
Stanley Self-Clearing Date, or any Delayed Contribution Date with respect to a
Morgan Stanley Delayed Contribution Business, as applicable, (i) any equity
interest in any Morgan Stanley Contributed Subsidiary, (ii) any Morgan Stanley
Contributed Assets or (iii) any Morgan Stanley Contributed
Liabilities.

       

      “Morgan Stanley Transferred
Plan” has the meaning set forth in the Employee Matters
Agreement.

       

      “Morgan Stanley VAT
Group” means the VAT group under VAT reference GB 524 2526 68 of which
Morgan Stanley UK Group is the representative member.

       

      “Non-Controlling Tax
Party” has the meaning set forth in Section 4.5(b)(iv).

       

      “Non-Party Claim” and
“Non-Party
Claims” have the meanings set forth in Section 6.6.

       

      “NYSE” means the New
York Stock Exchange.

       

      “Objection” has the
meaning set forth in Section 2.10(b).

       

      “Order” means any
order, writ, judgment, stipulation, decree, injunction, award or decision of, or
Consent agreement or similar arrangement with, any Governmental
Authority.

       

      “Order Flow
Agreements” means the agreements in the forms of Exhibits H-1 and H-2
hereto, to be entered into pursuant to Section 2.4.

       

      “Ordinary Course Customer
Claim” has the meaning set forth in Section 6.7.

       

      “Original Agreement”
has the meaning set forth in the recitals hereto.

       

      “Parent” means each of
Citigroup and Morgan Stanley.

       

      “Party” means
Citigroup, Morgan Stanley and, other than for purposes of Section 2.4(a), 2.5,
6.2(a) and 7.1, the Company; and “Parties” means each
such Party.

       

      “Permits” means all
(x) licenses, permits, orders, consents, approvals, registrations,
authorizations, qualifications and filings issued by, and other Governmental
Approvals of, any Governmental Authority and (y) memberships in securities
exchanges, commodities exchanges, boards of trade, clearing organizations, trade
associations and similar organizations offering membership or trading
privileges.

       

       

      
        
          
          

        

        
          - 32
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      “Permitted Liens”
means (i) Liens for Taxes or other governmental charges which are not yet due
and payable or the amount or validity of which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been made on the
Financial Statements or the Final Balance Sheet of the Citigroup Contributed
Business or the Financial Statements or the Final Balance Sheet of the Morgan
Stanley Contributed Business, as the case may be, (ii) Liens of carriers,
warehousemen, mechanics, materialmen or other similar Persons or otherwise
imposed by Law arising or incurred in the ordinary course of business for sums
not yet delinquent or being contested in good faith by appropriate proceedings
and for which adequate reserves have been made on the Financial Statements or
the Final Balance Sheet of the Citigroup Contributed Business or the Financial
Statements or the Final Balance Sheet of the Morgan Stanley Contributed
Business, as the case may be, (iii) zoning, entitlement, building, land use and
similar governmental restrictions, (iv) covenants, conditions, restrictions,
easements, rights-of-way and other matters shown in public records and (v) Liens
that, individually and in the aggregate with all other Permitted Liens, do not
and will not materially detract from the value of any of the Contributed Assets
or materially interfere with the use of any of the Contributed Assets as
currently used or contemplated to be used.

       

      “Person” means an
individual, corporation, partnership, limited liability company, trust, joint
venture, association, unincorporated organization or other entity or a
Governmental Authority.

       

      “Pre-Closing
Litigation” has the meaning set forth in Section 6.6(g).

       

      “Pre-Closing Tax
Period” means any taxable period (or portion thereof) ending on or before
the Closing Date.

       

      “Preliminary Citigroup
Closing Balance Sheet” has the meaning set forth in Section
2.10(a)(i).

       

      “Preliminary Citigroup
Self-Clearing Balance Sheet” has the meaning set forth in Section
2.11(a).

       

      “Preliminary Closing Balance
Sheets” has the meaning set forth in Section 2.10(a)(ii).

       

      “Preliminary Morgan Stanley
Closing Balance Sheet” has the meaning set forth in Section
2.10(a)(ii).

       

      “Preliminary Morgan Stanley
Self-Clearing Balance Sheet” has the meaning set forth in Section
2.11(b).

       

      “Preliminary Self-Clearing
Balance Sheets” has the meaning set forth in Section
2.11(b).

       

      “Preparing Party” has
the meaning set forth in Section 2.10(b).

       

      “Property Taxes” has
the meaning set forth in Section 4.5(a)(v).

       

       

      
        
          
          

        

        
          - 33
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      “Real Property Transfer
Documents” means the conveyance deeds and assignments, leases and
subleases to be entered into pursuant to Section 4.6, as the same may be
amended, supplemented or otherwise modified from time to time.

       

      “Receiving Party” has
the meaning set forth in Section 2.10(b).

       

      “Relevant MS VAT Group
Members” has the meaning set forth in Section 4.5(m)(ii)(A).

       

      “Relevant Transaction”
has the meaning set forth in Section 4.5(m)(iii).

       

      “Repo-Related
Obligation” means the liabilities and obligations, not to exceed $500
million, of Morgan Stanley & Co. Incorporated with respect to certain
repurchase agreement transactions assumed by Morgan Stanley Smith Barney LLC
pursuant to the Assumption Agreement.

       

      “Repo-Related Secured
Note” means a promissory note of Morgan Stanley Smith Barney LLC secured
by all or a portion of the FID Inventory or other assets of the
Company.

       

      “Requesting Party” has
the meaning set forth in Section 4.2(a).

       

      “Research Agreements”
means the agreements in the forms of Exhibits I-1 and I-2 hereto, to be entered
into pursuant to Section 2.4, as they may be amended
from time to time.

       

      “SEC” means the United
States Securities and Exchange Commission.

       

      “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

       

      “Self-Clearing Assets”
means the Citigroup Self-Clearing Assets and the Morgan Stanley Self-Clearing
Assets.

       

      “Self-Clearing Date”
means a Citigroup Self-Clearing Date or a Morgan Stanley Self-Clearing Date, as
applicable.

       

      “Self-Clearing
Liabilities” means the Citigroup Self-Clearing Liabilities and the Morgan
Stanley Self-Clearing Liabilities.

       

      “Service Transfer
Date” means 12:01 a.m., New York time, as of the date immediately
following the Closing Date.

       

      “Settlements” has the
meaning set forth in Section 7.3(a).

       

      “Straddle Period”
means any taxable period ending after the Closing Date that includes the Closing
Date.

       

      “Subsequently Acquired
Security” has the meaning set forth in Section 2.9(b).

       

       

      
        
          
          

        

        
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      “Subsidiary” means,
with respect to any Person, any corporation fifty percent (50%) or more of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation is at the time owned by
such Person, directly or indirectly through one or more Subsidiaries, and any
other Person, including but not limited to a joint venture, a general or limited
partnership or a limited liability company, in which such Person, directly or
indirectly through one or more Subsidiaries, at the time owns at least fifty
percent (50%) or more of the ownership interests entitled to vote in the
election of managing partners, managers or trustees thereof (or other Persons
performing such functions) or acts as the general partner, managing member,
trustee (or Persons performing similar functions) of such other Person; provided that,
notwithstanding the foregoing, the Company Entities shall not be deemed a
Subsidiary of any Morgan Stanley Entity or Citigroup Entity on or after the
Closing.

       

      “Tax Contest” has the
meaning set forth in Section 4.5(b)(i).

       

      “Tax Documentation”
means the Citigroup Tax Documentation or the Morgan Stanley Tax Documentation,
or both, as the context requires.

       

      “Tax Equivalent
Amount” means the product of (i) 35% and (ii) the amount of Excess
Flow-Through Income, provided that, if Excess Flow-Through Income is
attributable to a Contributed Subsidiary that is a “controlled foreign
corporation” (within the meaning of Section 957(a) of the Code) and, with
respect to a member, such Excess Flow-Through Income includes the amount
determined under Section 78 of the Code, the Tax Equivalent Amount with respect
to such member shall be reduced by the foreign income Taxes deemed paid by such
member with respect to such Excess Flow-Through Income (determined in accordance
with Sections 960(a) and 902(a) of the Code).

       

      “Tax Matters
Agreement” means the agreement in the form of Exhibit J, to be entered
into pursuant to Section 2.4, as it may be amended from time to
time.

       

      “Tax Return” means any
return, declaration, report, claim for refund, or information return or
statement relating to Taxes filed or required to be filed with a Governmental
Authority, including any schedule or attachment thereto, and including any
amendment thereof.

       

      “Taxes” means any
taxes, assessments, duties, imposts, fees, levies or other governmental charges,
including, without limitation, all federal, state, local and foreign and other
income, franchise, profits, capital gains, capital stock, transfer, sales, use,
ad valorem, value added, goods and services, occupation, property, excise, gross
receipts, stamp, license, employment, unemployment, withholding, alternative or
minimum tax and other taxes of any kind whatsoever, together with any interest,
penalties, and additions to tax imposed with respect thereto.

       

      “Terms and Conditions
Concerning Contribution of Contributed Real Property and Contributed Leased Real
Property” means the agreement in the form of Exhibit K, as it may be
amended from time to time.

       

       

      
        
          
          

        

        
          - 35
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      “Third Party” means
any Person that is neither a Party or a Company Entity nor an Affiliate of
either a Party or a Company Entity.

       

      “Third Party Approval”
means any Consent of, with or to any Person other than any Governmental
Authority.

       

      “Transaction
Documents” means this Agreement, the LLC Agreement, the Distribution
Agreements, the Deposit Sweep Agreement, the General Transition Services
Agreements, the Order Flow Agreements, the Futures Clearing Agreements, the
Employee Matters Agreement, the Real Property Transfer Documents, the Research
Agreements, the Tax Matters Agreement and each of the other agreements set forth
on Schedule
1.1(a)(9) and any other agreements entered into from time to time
pursuant to or in connection with the foregoing, in each case as may be amended
from time to time.

       

      “Transfer Pricing
Adjustment” has the meaning set forth in Section
4.5(m)(iii).

       

      “Transfer Taxes” has
the meaning set forth in Section 4.5(h).

       

      “2006/2007 Quilter
Agreement” has the meaning set forth in Section
4.5(m)(i)(A).

       

      “VAT” means within the
European Union such Taxes as may be levied in accordance with (but subject to
derogations from) Council Directive 2006/112/EC and outside the European Union
any Taxes levied by reference to added values or sales.

       

      “Wholly-Owned
Subsidiary” of a Person means a Subsidiary of such Person, all of the
issued and outstanding shares (other than directors’ qualifying shares) of the
capital stock or other ownership interests, including but not limited to limited
liability company interests, of which shall at the time be owned by such Person
and/or one or more of such Person’s Wholly-Owned Subsidiaries.

       

      ARTICLE
2

       

      FORMATION
OF VENTURE; CLOSING; RELATED TRANSACTIONS

       

      Section
2.1 
Formation of
Company.  The Company has been formed as a direct or indirect
Wholly-Owned Subsidiary by filing the Certificate of Formation with the
Secretary of State of the State of Delaware and any other required documents
with such other applicable Governmental Authorities as Morgan Stanley has
determined after consultation with Citigroup.  Prior to the Closing,
Morgan Stanley will cause the Company to take, and following the Closing the
Company will take, all actions reasonably requested by a Party to the extent
necessary in order to permit such Party to comply with any applicable regulatory
or legal requirements, subject to reimbursement by the requesting Party of any
costs imposed on the Company (or, prior to the Closing, Morgan Stanley) by such
actions.

       

      Section
2.2 
Transactions Prior to the
Closing.  Subject to the terms and conditions hereof, prior to
Closing, the Self-Clearing Date(s) or the Delayed Contribution Date(s), as
applicable:

       

       

      
        
          
          

        

        
          - 36
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      (a)  Subject
to the receipt of all necessary Governmental Approvals the failure of which to
obtain would reasonably be expected to have a Material Adverse Effect on
Citigroup or, after the Closing, the Company, Citigroup shall or shall cause its
Affiliates to carry out a reorganization (the “Citigroup
Reorganization”) such that pursuant thereto and upon completion thereof,
subject to Section 4.3(f), the Citigroup Introducing Assets (including the
Citigroup Contributed Equity Interests, if any, that are Citigroup Introducing
Assets) and the Citigroup Introducing Liabilities shall be transferred to and
acquired by the Company or a Company Entity at the Closing, the Citigroup
Self-Clearing Assets (including the Citigroup Contributed Equity Interests, if
any, that are Citigroup Self-Clearing Assets) and the Citigroup Self-Clearing
Liabilities shall be transferred to and acquired by the Company or a Company
Entity at the Self-Clearing Date(s), and the Citigroup Delayed Contribution
Assets (including the Citigroup Contributed Equity Interests, if any, that are
Citigroup Delayed Contribution Assets) and the Citigroup Delayed Contribution
Liabilities shall be transferred to and acquired by the Company or a Company
Entity at the Delayed Contribution Date(s); provided that, (i)
except for assets or liabilities that may not be extracted, assigned or removed
as a matter of Law, and for which, in the case of liabilities, Citigroup would
have an obligation to fully indemnify Morgan Stanley, the Company Entities and
the other indemnified parties hereunder, the Citigroup Contributed Subsidiaries
shall not own or be obligated in respect of any assets or liabilities other than
the Citigroup Contributed Assets and the Citigroup Contributed Liabilities and
such as may arise pursuant to, or as may be permitted by, this Agreement and the
transactions contemplated hereby (including the Citigroup Delayed Distribution
Assets and Citigroup Delayed Distribution Liabilities), (ii) without the prior
written consent of Morgan Stanley (not to be unreasonably withheld or delayed),
except for the entities set forth on Schedule 2.2(a),
neither Citigroup nor any of its Affiliates shall transfer to the Company,
directly or indirectly, (A) any Citigroup Contributed Subsidiary that is
characterized, for federal income tax purposes, as a domestic corporation, (B)
any entity that, at any time prior to its transfer to the Company, was a member
of a consolidated federal income tax return group (or any successor to such
entity by reason of a conversion or merger of such entity), provided that no
consent shall be required with respect to any transfer described in this clause
(B) if the aggregate fair market value of all entities described in this clause
(B) does not exceed $50 million, or (C) any entity that is characterized, for
federal income tax purposes, as a foreign corporation and conducts a trade or
business within the United States.

       

      (b)  Subject
to the receipt of all necessary Governmental Approvals the failure of which to
obtain would reasonably be expected to have a Material Adverse Effect on Morgan
Stanley or, after the Closing, the Company, Morgan Stanley shall or shall cause
its Affiliates to carry out a reorganization (the “Morgan Stanley
Reorganization”) such that pursuant thereto and upon completion thereof,
subject to Section 4.3(f), the Morgan Stanley Introducing Assets (including the
Morgan Stanley Contributed Equity Interests, if any, that are Morgan Stanley
Introducing Assets) and the Morgan Stanley Introducing Liabilities shall be

       

       

      
        
          
          

        

        
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      transferred
to and acquired by the Company or a Company Entity at the Closing, the Morgan
Stanley Self-Clearing Assets (including the Morgan Stanley Contributed Equity
Interests, if any, that are Morgan Stanley Self-Clearing Assets) and the Morgan
Stanley Self-Clearing Liabilities shall be transferred to and acquired by the
Company or a Company Entity at the Self-Clearing Date(s), and the Morgan Stanley
Delayed Contribution Assets (including the Morgan Stanley Contributed Equity
Interests, if any, that are Morgan Stanley Delayed Contribution Assets) and the
Morgan Stanley Delayed Contribution Liabilities shall be transferred to and
acquired by the Company or a Company Entity at the Delayed Contribution Date(s);
provided that, (i) except for assets or liabilities that may not be extracted,
assigned or removed as a matter of Law, and for which, in the case of
liabilities, Morgan Stanley would have an obligation to fully indemnify
Citigroup, the Company Entities and the other indemnified parties hereunder, the
Morgan Stanley Contributed Subsidiaries shall not own or be obligated in respect
of any assets or liabilities other than the Morgan Stanley Contributed Assets
and the Morgan Stanley Contributed Liabilities and such as may arise pursuant
to, or as may be permitted by, this Agreement and the transactions contemplated
hereby (including the Morgan Stanley Delayed Distribution Assets and Morgan
Stanley Delayed Distribution Liabilities), (ii) without the prior written
consent of Citigroup (not to be unreasonably withheld), except for the entities
set forth on Schedule
2.2(b), neither Morgan Stanley nor any of its Affiliates shall transfer
to the Company, directly or indirectly, (A) any Morgan Stanley Contributed
Subsidiary that is characterized, for federal income tax purposes, as a domestic
corporation, (B) any entity that, at any time prior to its transfer to the
Company, was a member of a consolidated federal income tax return group (or any
successor to such entity by reason of a conversion or merger of such entity),
provided that no consent shall be required with respect to any transfer
described in this clause (B) if the aggregate fair market value of all entities
described in this clause (B) does not exceed $50 million, and (C) any entity
that is characterized, for federal income tax purposes, as a foreign corporation
and conducts a trade or business within the United States.

       

      (c)  Morgan
Stanley shall not take any action that would cause the Company to be treated as
a corporation for federal income tax purposes.

       

      (d)  Between
the date hereof and the Closing, the Parties shall cooperate to evaluate whether
it would be beneficial to transfer certain or all of the Contributed
Subsidiaries that are organized under the Laws of a jurisdiction other than the
United States, any state thereof or the District of Columbia, to a jointly-owned
holding company that is treated as a foreign partnership or foreign corporation
for federal income tax purposes; provided that, for
the avoidance of doubt, this Section 2.2(d) shall not obligate either Party to
make any such transfer unless such Party expressly agrees to such a
transfer.

       

      (e)  Except
with respect to Bank Morgan Stanley AG or as otherwise agreed in connection with
a structure to be implemented pursuant to Section 2.2(d), the Parties shall use
commercially reasonable efforts to effect the transfer of each Contributed
Subsidiary that is organized under the Laws of a jurisdiction other than the
United States, any state thereof or the District of Columbia, such that,
immediately after the transfer of such Contributed Subsidiary to the Company,
such Contributed Subsidiary is treated as a “disregarded entity” for federal
income tax purposes.

       

       

      
        
          
          

        

        
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      Section
2.3 Time and Place of the
Closing.  Subject to the provisions of Article 5, the closing
(the “Closing”)
of the transactions contemplated hereby shall take place at the offices of Davis
Polk & Wardwell on the Closing Date.  The date on which the
Closing occurs is herein called the “Closing
Date.”  The Closing shall commence at 11:56 p.m., New York
time, on the Closing Date.  Notwithstanding the foregoing, the closing
of the Contributed Business conducted in Australia shall take place and be
effective at 11:58 p.m. Sydney time on Sunday, May 31, 2009.

       

      Section
2.4 Deliveries and Other Actions
at the Closing.

       

      (a)  At the
Closing, each Party shall execute and deliver, and cause its Initial Members to
execute and deliver, the LLC Agreement;

       

      (b)  At 11:56
p.m. New York time on the Closing Date, Citigroup shall, and shall cause each of
the Citigroup Transferors to, transfer, assign and deliver to the Company, as a
capital contribution to the Company, all of their respective right, title and
interest in and to the Citigroup Introducing Assets (other than the EMEA GSPS
and ESOP Business, which will be transferred to the Company at 11:58 p.m. New
York time on such date), free and clear of all Liens, other than Permitted Liens
and Liens created pursuant to the Transaction Documents, and in consideration
therefor, the Company shall issue Membership Interests and Class A Preferred
Interests, in accordance with Sections 1 and 2 of Schedule 3.7 to the LLC
Agreement, to the Initial Citigroup Member(s);

       

      (c)  At 11:56
p.m. New York time on the Closing Date, Morgan Stanley shall, and shall cause
each of the Morgan Stanley Transferors to, transfer, assign and deliver to the
Company, as a capital contribution to the Company, all of their respective
right, title and interest in and to the Morgan Stanley Introducing Assets (other
than the shares of  Morgan Stanley Private Wealth Management Ltd. and
Morgan Stanley’s PWM Germany business, which will be transferred to the Company
at 11:57 p.m. New York time and 11:58 p.m. New York time, respectively, on such
date), free and clear of all Liens, other than Permitted Liens and Liens created
pursuant to the Transaction Documents, and in consideration therefor, the
Company shall issue Membership Interests and Class A Preferred Interests, in
accordance with Sections 1 and 2 of Schedule 3.7 to the LLC Agreement, to the
Initial Morgan Stanley Member(s);

       

      (d)  At the
Closing, Citigroup, Morgan Stanley and the Company and each of their
Subsidiaries that are a party thereto, if any, shall execute and deliver each of
the Transaction Documents (it being agreed that if the full terms and conditions
of any Transaction Documents cannot be agreed prior to Closing, the terms set
forth in the applicable Exhibit associated with any such Transaction Document
shall be deemed to be the full terms and conditions of such Transaction Document
and shall be binding from and after the Closing unless and until superseded by a
full agreement mutually agreed by the Parties with respect to such Transaction
Document);

       

      (e)  At the
Closing, the Parties and the Company shall, and shall cause their respective
applicable Subsidiaries to, execute and deliver such additional instruments of

       

       

      
        
          
          

        

        
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      assignment
and conveyance as are necessary and appropriate to convey the Citigroup
Introducing Assets and the Morgan Stanley Introducing Assets;

       

      (f)  Effective
at the Closing, each of Morgan Stanley and Citigroup for and on behalf of
themselves and their respective Affiliates, hereby irrevocably waives and
releases any and all rights and Claims (whether absolute or contingent,
liquidated or unliquidated, known or unknown, determined or determinable or
otherwise) that any of the foregoing may have against any other Party, any of
its respective Affiliates or any of their respective officers, directors,
partners, employees and other representatives, whether in law or in equity, to
the extent relating to the Citigroup Contributed Business or Morgan Stanley
Contributed Business, except (i) as may arise under the terms of or in
connection with this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby and (ii) for Claims for fraud or
bad faith on the part of any party hereto or thereto.  The rights and
Claims waived hereby include Claims for contribution or other rights of recovery
arising out of or relating to Claims for breach of contract, breach of
representation or warranty, negligent misrepresentation and all other Claims for
breach of duty.

       

      (g)  At the
Closing, the Parties and the Company shall execute and deliver such additional
assignments and instruments of assumption as may be appropriate for the
assumption by the Company of all of the Citigroup Introducing Liabilities and
all of the Morgan Stanley Introducing Liabilities;

       

      (h)  At the
Closing, Citigroup shall deliver to both the Company and Morgan Stanley a duly
executed certificate of non-foreign status of CGMI, substantially in the form of
the sample certification contained in Treasury Regulation Section
1.1445-2(b)(2)(iv)(B);

       

      (i)  The
Parties shall execute and deliver any other agreement mutually agreed by the
Parties to be executed on the Closing Date;

       

      (j)  At 11:56
p.m. New York time on the Closing Date, Citigroup and Morgan Stanley shall cause
the Escrow Agent to release from escrow for the account of the Company an amount
equal to the Closing Date Cash Funding Amounts of Citigroup and Morgan Stanley
pursuant to the terms of the Escrow Agreement;

       

      (k)  At 11:56
p.m. New York time on the Closing Date, Citigroup and Morgan Stanley shall cause
the Escrow Agent to release from escrow for the account of each of Citigroup and
Morgan Stanley an amount equal to the interest earned on the Closing Date Cash
Funding Amounts of Citigroup and Morgan Stanley, respectively, pursuant to the
terms of the Escrow Agreement.

       

      (l) (i) 
At 12:01 a.m. New York time on the day following the Closing Date, Citigroup
shall transfer, or cause to be transferred, in exchange for the payment provided
by Section 2.4(l)(ii), a number of Membership Interests held by CGMI, as an
Initial Citigroup Member such that following such transfer Morgan Stanley shall
own, directly or indirectly, fifty one percent (51%) of all Membership

       

       

      
        
          
          

        

        
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      Interests
issued and outstanding and Citigroup shall own, directly or indirectly,
forty-nine percent (49%) of all Membership Interests issued and
outstanding;

       

      (ii) At
4:00 p.m. New York time on the day following the Closing Date, Citigroup and
Morgan Stanley shall cause the Escrow Agent, (x) on behalf of the Initial Morgan
Stanley Member(s) that are purchasers of the Membership Interests transferred
pursuant to this Section 2.4(l)(ii), to release from escrow for the account of
CGMI, as an Initial Citigroup Member that are sellers of the Membership
Interests transferred pursuant to this Section 2.4(l), the amount of $2.7
billion pursuant to the terms of the Escrow Agreement and (y) release from
escrow for the account of CGMI an additional amount of $50 million pursuant to
the terms of the Escrow Agreement ; and

       

      (iii) At
4:00 p.m. New York time on the day following the Closing Date, Citigroup and
Morgan Stanley shall cause the Escrow Agent to release from escrow for the
account of Morgan Stanley an amount equal to the interest earned on $2.75
billion of the funds deposited in escrow pursuant to the terms of the Escrow
Agreement.

       

      (m) (i)
At or before 3:55 p.m. New York time on the day following the Closing
Date,  (x) Morgan Stanley & Co. Incorporated shall wire transfer
to Morgan Stanley Smith Barney LLC in immediately available funds an amount (not
to exceed the maximum permitted borrowing amount under the Repo-Related Secured
Note) in cash equal to or greater than the aggregate amount of the Repo-Related
Obligations and (y) in respect thereof Morgan Stanley Smith Barney LLC shall
issue to Morgan Stanley & Co. Incorporated the Repo-Related Secured Note and
shall execute the related pledge agreement.

       

      (ii) At or before 4:00 p.m. New York
time on the day following the Closing, subject to the occurrence of the events
referred to in clause (i) above, Morgan Stanley Smith Barney LLC shall wire
transfer to Morgan Stanley & Co. Incorporated in immediately available funds
an amount in cash equal to the amount of the Repo-Related Obligations in full
satisfaction and discharge of the Company’s obligations under the Assumption
Agreement.

       

      Notwithstanding
the foregoing, for purposes of this Section 2.4, with respect to Citigroup
Contributed Assets, Morgan Stanley Contributed Assets, Citigroup Contributed
Liabilities and Morgan Stanley Contributed Liabilities relating to any Citigroup
Transferred Plan, Morgan Stanley Transferred Plan, Citigroup Contributed
Subsidiary Benefit Plan or Morgan Stanley Contributed Subsidiary Benefit Plan,
as the case may be, “Closing” shall mean “Applicable Service Transfer
Time.”

       

      Section
2.5 Contributions on
Self-Clearing Dates.

       

      (a) On each
Citigroup Self-Clearing Date, Citigroup shall, and shall cause each of the
Citigroup Transferors to, consistent with the provisions of the Citigroup
Clearing Agreements, transfer, assign and deliver to the Company all of their
respective right, title and 

       

       

      
        
          
          

        

        
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      interest
in and to the Citigroup Self-Clearing Assets, whether relating to the Customer
Accounts and other Citigroup Self-Clearing Assets that may be migrated to the
Company’s self-clearing platform on such Self-Clearing Date, or otherwise
migrating to the Company in accordance with the Citigroup Clearing Agreements on
such date, free and clear of all Liens, other than Permitted Liens and Liens
created pursuant to the Transaction Documents.  In addition, on each
such Self-Clearing Date, (i) Citigroup and the Company shall, and shall cause
their respective applicable Subsidiaries to, execute and deliver such additional
instruments of assignment and conveyance as are necessary and appropriate to
convey the Citigroup Self-Clearing Assets that are to be transferred pursuant to
the foregoing sentence, and (ii) Citigroup and the Company shall execute and
deliver such additional assignments and instruments of assumption as may be
appropriate for the assumption by the Company of the Citigroup Self-Clearing
Liabilities which relate to the Citigroup Self-Clearing Assets and Customer
Accounts that are transferred by Citigroup (or its Subsidiaries) to the Company
on such Self-Clearing Date.  To the extent that less than all of the
Citigroup Self-Clearing Assets or related Customer Accounts are being
transferred on a Self Clearing Date, only the Citigroup Self-Clearing
Liabilities related to such transferred Self-Clearing Assets or Customer
Accounts will be assumed on such date.  A portion of the foregoing
transfers on each Citigroup Self-Clearing Date shall be in respect of the
Membership Interests issued to the Initial Citigroup Members on the Closing Date
(and no new Membership Interests will be issued) and a portion shall be in
exchange for an additional issuance of Class A Preferred Interests, in each case
as provided by Sections 3 and 4 of Schedule 3.7 to the LLC
Agreement.

       

      (b)  On each
Morgan Stanley Self-Clearing Date, Morgan Stanley shall, and shall cause each of
the Morgan Stanley Transferors to, consistent with the provisions of the Morgan
Stanley Clearing Agreements, transfer, assign and deliver to the Company all of
their respective right, title and interest in and to the Morgan Stanley
Self-Clearing Assets, whether relating to the Customer Accounts and other Morgan
Stanley Self-Clearing Assets that may be migrated to the Company’s self-clearing
platform on such Self-Clearing Date, or otherwise migrating to the Company in
accordance with the Morgan Stanley Clearing Agreements on such date, free and
clear of all Liens, other than Permitted Liens and Liens created pursuant to the
Transaction Documents.  In addition, on each such Self-Clearing Date,
(i) Morgan Stanley and the Company shall, and shall cause their respective
applicable Subsidiaries to, execute and deliver such additional instruments of
assignment and conveyance as are necessary and appropriate to convey the Morgan
Stanley Self-Clearing Assets that are to be transferred pursuant to the
foregoing sentence, and (ii) Morgan Stanley and the Company shall execute and
deliver such additional assignments and instruments of assumption as may be
appropriate for the assumption by the Company of the Morgan Stanley
Self-Clearing Liabilities which relate to the Morgan Stanley Self-Clearing
Assets and Customer Accounts that are transferred by Morgan Stanley (or its
Subsidiaries) to the Company on such Self-Clearing Date.  To the
extent less than all the Morgan Stanley Self-Clearing Assets or related Customer
Accounts are being transferred on a Self Clearing Date, only the Morgan Stanley
Self-Clearing Liabilities related to such transferred Self-Clearing Assets or
Customer Accounts will be assumed on such date.  A portion of the
foregoing transfers on each Morgan Stanley Self-Clearing Date shall be in
respect of the Membership Interests issued to the Initial Morgan Stanley Members
on the Closing Date (and no new Membership Interests will be issued) and a
portion shall be in exchange for an additional issuance of Class A Preferred
Interests, in each case as provided by Sections 3 and 4 of Schedule 3.7 to the
LLC Agreement

       

       

      
        
          
          

        

        
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      Section
2.6 
Delayed Contribution
Businesses.

       

      (a)  Schedule 1.1(a)(3)
hereto lists the Citigroup Delayed Contribution Businesses as well as the
condition(s) that must be satisfied for such businesses to be transferred to the
Company or a Company Entity, and Schedule 1.1(a)(6)
hereto lists the Morgan Stanley Delayed Contribution Businesses as well
as the condition(s) that must be satisfied for such businesses to be transferred
to the Company or a Company Entity (in each case, “Delayed Contribution
Conditions”).

       

      (b)  On each
Delayed Contribution Date with respect to a Citigroup Delayed Contribution
Business, Citigroup shall, and shall cause each of the Citigroup Transferors to,
transfer, assign and deliver to the Company or a Company Entity all of their
respective right, title and interest in and to such Citigroup Delayed
Contribution Business, free and clear of all Liens, other than Permitted Liens
and Liens created pursuant to the Transaction Documents.  In addition,
on such Delayed Contribution Date, (i) Citigroup and the Company shall, and
shall cause their respective applicable Subsidiaries to, execute and deliver
such additional instruments of assignment and conveyance as are necessary and
appropriate to convey the Citigroup Delayed Contribution Assets that are to be
transferred pursuant to the foregoing sentence, and (ii) Citigroup and the
Company shall execute and deliver such additional assignments and instruments of
assumption as may be appropriate for the assumption by the Company or a Company
Entity of the Citigroup Delayed Contribution Liabilities which relate to the
Citigroup Delayed Contribution Assets that are transferred by Citigroup (or its
Subsidiaries) to the Company or a Company Entity on such Delayed Contribution
Date.  To the extent that less than all of the Citigroup Delayed
Contribution Assets are being transferred on a Delayed Contribution Date, only
the Citigroup Delayed Contribution Liabilities related to such transferred
Citigroup Delayed Contribution Assets will be assumed on such date.

       

      (c)  On each
Delayed Contribution Date with respect to a Morgan Stanley Delayed Contribution
Business, Morgan Stanley shall, and shall cause each of the Morgan Stanley
Transferors to, transfer, assign and deliver to the Company or a Company Entity
all of their respective right, title and interest in and to such Morgan Stanley
Delayed Contribution Business, free and clear of all Liens, other than Permitted
Liens and Liens created pursuant to the Transaction Documents.  In
addition, on such Delayed Contribution Date, (i) Morgan Stanley and the Company
shall, and shall cause their respective applicable Subsidiaries to, execute and
deliver such additional instruments of assignment and conveyance as are
necessary and appropriate to convey the Morgan Stanley Delayed Contribution
Assets that are to be transferred pursuant to the foregoing sentence, and (ii)
Morgan Stanley and the Company shall execute and deliver such additional
assignments and instruments of assumption as may be appropriate for the
assumption by the Company or a Company Entity of the Morgan Stanley Delayed
Contribution Liabilities which relate to the Morgan Stanley Delayed Contribution
Assets that are transferred by Morgan Stanley (or its Subsidiaries) to the
Company or a Company Entity on such Delayed Contribution Date.  To the
extent that less than all of the Morgan Stanley Delayed Contribution Assets are
being transferred on a Delayed Contribution Date, only the Morgan Stanley
Delayed Contribution Liabilities related to such transferred Morgan Stanley
Delayed Contribution Assets will be assumed on such date.

       

       

      
        
          
          

        

        
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      (d)  Until a
Delayed Contribution Business is transferred to the Company or a Company Entity,
(i) the transferring party (or its relevant Subsidiaries) will continue to own
and operate such business, (ii) income earned and losses incurred with respect
to such business shall be earned or incurred by the transferring party and, for
the avoidance of doubt, such income and losses will not be transferred to, or
assumed by, the Company, and (iii) except with respect to the Managed Futures
Business, Section 7.3 of the LLC Agreement (as amended by the Tax Matters
Agreement) shall govern the special allocation of Company profits to offset
income earned and losses incurred with respect to such business by its owner
until it is transferred to the Company or a Company Entity.

       

      (e)  The
specific transaction steps necessary to transfer ownership of a Delayed
Contribution Business to the Company or a Company Entity shall be determined by
the transferring Parent on a case-by-case basis, subject to the consent (which
shall not be unreasonably withheld, delayed or conditioned) of the Company and
the non-transferring Parent and the terms and conditions set forth in this
Agreement and the LLC Agreement.  For example, subject to the
foregoing consent, a Delayed Contribution Business may be transferred to the
Company by way of a contribution of assets and liabilities or the relevant
Parent (or one of its Subsidiaries) may contribute cash to the Company at or
after the Closing to enable the Company or a Company Entity to acquire a Delayed
Contribution Business by way of purchase; provided that (i) no
Membership Interests shall be issued in respect of such cash contributions and
(ii) such cash contributions shall not be deemed to satisfy any funding
obligation of the contributing Parent pursuant to Section 3.7 of the LLC
Agreement.

       

      (f)  In the
event that any Citigroup Delayed Contribution Business or Morgan Stanley Delayed
Contribution Business has not been transferred to the Company or a Company
Entity prior to the earliest to occur of (i) the date that is three years (or in
the case of the Morgan Stanley Delayed Contribution Business in India and Saudi
Arabia, six years) from the Closing Date, (ii) an IPO, (iii) the sale of all of
the Membership Interests held by the Morgan Stanley Members to a Person or group
of Persons that is not a Morgan Stanley Entity and (iv) any sale of the Company
or merger of the Company with a third party, then Citigroup or Morgan Stanley,
as applicable, shall make a cash payment to the Company, equal to the Sale Value
(as defined in the LLC Agreement); provided that such
Sale Value shall be determined in accordance with the process set forth in
Section 8.6(b) of the LLC Agreement (with references therein to “FMV” being
replaced with references to “Sale Value”)), determined as of the earliest to
occur of the events described in the foregoing clauses (i), (ii), (iii) and
(iv), of such Citigroup Delayed Contributed Business or Morgan Stanley Delayed
Contribution Business, respectively, and Citigroup and Morgan Stanley shall
thereafter have no obligations to transfer such Citigroup Delayed Contribution
Business or Morgan Stanley Delayed Contribution Business to the
Company.

       

      (g)  Each of
Citigroup and Morgan Stanley shall use its reasonable best efforts to effect the
transfer of its Delayed Contribution Businesses to the Company as provided
herein as soon as possible after the Closing Date.  Notwithstanding
anything in this Agreement to the contrary, the provisions of Sections 4.1, 4.2,
4.3, 4.4(c) and 4.4(d) of this Agreement shall continue to apply to each Delayed
Contribution Business after the Closing until such time as such Delayed
Contribution Business has been transferred to the Company (with each reference
therein to the Citigroup Contributed Business or the Morgan Stanley Contributed
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      deemed to
be a reference to the applicable Delayed Contribution Business and with each
reference therein to the Closing Date being deemed to be a reference to Delayed
Closing Date).  In addition, prior to such time as any Morgan Stanley
Delayed Contribution Business or Citigroup Delayed Contribution Business has
been transferred to the Company, Citigroup and Morgan Stanley shall have the
rights set forth in Section 4.12(a) of the LLC Agreement with respect to such
Delayed Contribution Business (with (x) the reference to the Company in the
lead-in paragraph of such Section 4.12(a) being deemed to be a reference to
Morgan Stanley in the case of a Morgan Stanley Delayed Contribution Business and
Citigroup in the case of the Citigroup Delayed Contribution Business and (y)
references to the Company in clause (i) through clause (ix) of such Section
4.12(a) being deemed to be references to such Delayed Contribution
Business).

       

      (h) (i)
Subject to the receipt of necessary Governmental Approvals and Third Party
Approvals, (A) Citigroup shall transfer its Managed Futures Business to the
Company in exchange for Membership Interests, and (B) on the following day,
Morgan Stanley shall, or shall cause one of its Affiliates to purchase for a net
cash payment of $214,200,000 such number of Membership Interests from Citigroup
or one of its Affiliates such that following such transfer, Morgan Stanley shall
own, directly or indirectly, the same percentage of Membership Interests issued
and outstanding as it did prior to the transfer of the Managed Futures Business
to the Company.  In the event the structure contemplated by this
Section 2.6(h) cannot be implemented without adversely impacting the Parties,
the Parties shall cooperate to achieve another tax-efficient mechanism for
transferring the Managed Futures Business to the Company.

       

      (ii)  Notwithstanding
anything to the contrary set forth in any of the Transaction Documents, any
Managed Futures SLAs shall be subject to the terms of the Master SLA Assignment
Agreement to be entered into as of May 31, 2009 by and between the Company and
Citigroup, including but not limited to the 60-day review period of Section 2.04
thereof (which 60-day period, for the avoidance of doubt, will commence on the
Managed Futures Contribution Date).

      

      (iii)  On the Managed Futures
Contribution Date, Citigroup will fund the Managed Futures Business with the
amount of common equity capital that satisfies the SEC Broker Dealer regulatory
capital guidelines as they apply to the standalone Assets and Liabilities of the
Managed Futures Business to be contributed to the U.S. Broker-Dealer subsidiary
of the Company, calculated based on the Managed Futures Business contributed to
the Company on the Managed Futures Contribution Date.  For purposes of
the preceding sentence, the net assets of the Managed Futures Business shall be
credited against the amount of the common equity funding obligation of Citigroup
under this Section 2.6(h)(iii) and Citigroup shall not be obligated to
contribute cash to the Company in respect of its funding obligation under this
Section 2.6(h)(iii) if such net assets are at least equal to the amount of such
funding obligation (it being understood that this shall not limit any payment
obligation of Citigroup pursuant to Section 2.13(e) of this
Agreement).  In addition to the foregoing requirement, in the event
there are any Assets or Liabilities of the Managed Futures Business, or any
proprietary trading position or fund equity stake acquired pursuant to clause
(iv) below, which are not contributed to the U.S. Broker-Dealer subsidiary of
the Company (any such Assets or Liabilities, proprietary trading position or
fund equity stake, the “Non-B/D Managed Futures Contributions”), the BHC Basel 1
regulatory capital guidelines shall be applied to the Standalone Balance Sheet
(as defined in 

       

       

      
        
          
          

        

        
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      Schedule
3.7 to the LLC Agreement) immediately after giving effect to the contribution of
all Non-B/D Managed Futures Contributions, and Citigroup will fund any such
amount of additional common equity capital as may be necessary to satisfy such
guidelines.  For the avoidance of doubt, any funding of common equity
capital required by this clause (iii) shall be additional equity in respect of
Membership Interests already issued, and no Membership Interests or other equity
interests in the Company shall be issued in respect thereof.

      

      (iv)  The Company shall have
the option to purchase, no later than the Managed Futures Contribution Date, at
book value, proprietary trading positions associated with the Managed Futures
Business.  In order to exercise such option (which may be exercised in
whole or in part with respect to such positions), the Company must provide
reasonable prior notice to Citigroup.

      

      Section
2.7 
Delayed Distribution
Businesses.

       

      (a)  Schedule 1.1(a)(4)
hereto lists the Citigroup Delayed Distribution Businesses as well as the
condition(s) that must be satisfied for such businesses to be transferred by the
Company or a Company Entity to Citigroup or a Citigroup Entity, and Schedule 1.1(a)(7)
hereto lists the Morgan Stanley Delayed Distribution Businesses as well as the
condition(s) that must be satisfied for such businesses to be transferred by the
Company or a Company Entity to Morgan Stanley or a Morgan Stanley Entity (in
each case, “Delayed
Distribution Conditions”).

       

      (b)  On each
Delayed Distribution Date with respect to a Citigroup Delayed Distribution
Business, the Company shall, and shall cause each of the Company Entities to,
transfer, assign and deliver to Citigroup or a Citigroup Entity all of their
respective right, title and interest in and to such Citigroup Delayed
Distribution Business, free and clear of all Liens, other than Liens that
existed as of the Closing Date and Liens primarily attributable to the Citigroup
Delayed Distribution Business.  In addition, on such Delayed
Distribution Date, (i) Citigroup and the Company shall, and shall cause their
respective applicable Subsidiaries to, execute and deliver such additional
instruments of assignment and conveyance as are necessary and appropriate to
convey the Citigroup Delayed Distribution Assets that are to be transferred
pursuant to the foregoing sentence, and (ii) Citigroup and the Company shall
execute and deliver such additional assignments and instruments of assumption as
may be appropriate for the assumption by Citigroup or a Citigroup Entity of the
Citigroup Delayed Distribution Liabilities which relate to the Citigroup Delayed
Distribution Assets that are transferred by the Company (or its Subsidiaries) to
Citigroup or a Citigroup Entity on such Delayed Distribution Date.  To
the extent that less than all of the Citigroup Delayed Distribution Assets are
being transferred on a Delayed Distribution Date, only the Citigroup Delayed
Distribution Liabilities related to such transferred Citigroup Delayed
Distribution Assets shall be required to be assumed on such date.

       

      (c)  On each
Delayed Distribution Date with respect to a Morgan Stanley Delayed Distribution
Business, the Company shall, and shall cause each of the Company Entities to,
transfer, assign and deliver to Morgan Stanley or a Morgan Stanley Entity all of
their respective right, title and interest in and to such Morgan Stanley Delayed
Distribution Business, free and clear of all Liens, other Liens that existed as
of the Closing Date and Liens primarily attributable to the Morgan Stanley
Delayed Distribution Business.  In addition, on such Delayed
Distribution Date, (i) Morgan Stanley and the Company shall, and shall cause
their respective 

       

       

      
        
          
          

        

        
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      applicable
Subsidiaries to, execute and deliver such additional instruments of assignment
and conveyance as are necessary and appropriate to convey the Morgan Stanley
Delayed Distribution Assets that are to be transferred pursuant to the foregoing
sentence, and (ii) Morgan Stanley and the Company shall execute and deliver such
additional assignments and instruments of assumption as may be appropriate for
the assumption by Morgan Stanley or a Morgan Stanley Entity of the Morgan
Stanley Delayed Distribution Liabilities which relate to the Morgan Stanley
Delayed Distribution Assets that are transferred by the Company (or its
Subsidiaries) to Morgan Stanley or a Morgan Stanley Entity on such Delayed
Distribution Date.  To the extent that less than all of the Morgan
Stanley Delayed Distribution Assets are being transferred on a Delayed
Distribution Date, only the Morgan Stanley Delayed Distribution Liabilities
related to such transferred Morgan Stanley Delayed Distribution Assets shall be
required to be assumed on such date.

       

      (d)  Until a
Delayed Distribution Business is transferred by the Company or a Company Entity
to Morgan Stanley, a Morgan Stanley Entity, Citigroup or a Citigroup Entity, as
the case may be, (i) the Company (or its relevant Subsidiaries) will continue to
own and operate such business, (ii) income earned and losses incurred with
respect to such business shall be earned or incurred by the Company or a Company
Entity, as the case may be, and, for the avoidance of doubt, such income and
losses will not be transferred to, or assumed by, either Parent or any of their
respective Subsidiaries, and (iii) Section 7.3 of the LLC Agreement (as amended
by the Tax Matters Agreement) shall govern the special allocation of Company
profits to offset income earned and losses incurred with respect to such
business by the Company or a Company Entity until it is transferred to Morgan
Stanley, a Morgan Stanley Entity, Citigroup or a Citigroup Entity, as the case
may be.

       

      (e)  The
specific transaction steps necessary to transfer ownership of a Delayed
Distribution Business from the Company or a Company Entity to Morgan Stanley, a
Morgan Stanley Entity, Citigroup or a Citigroup Entity, as the case may be,
shall be determined by the transferee Parent on a case-by-case basis, subject to
the consent (which shall not be unreasonably withheld, delayed or conditioned)
of the non-transferring Parent and the terms and conditions set forth in this
Agreement and the LLC Agreement.

       

      (f)  Morgan
Stanley shall indemnify, defend and hold harmless Citigroup, Citigroup’s
Affiliates and the Company Entities and their respective Affiliates from and
against, without duplication, any Losses (other than Taxes, which shall be
governed by Section 4.5(a)(i) of this Agreement) that arise out of (i) the
ownership and operation by a Company Entity of a Morgan Stanley Delayed
Distribution Business or (ii) a transfer by a Company Entity of a Morgan Stanley
Delayed Distribution Business to Morgan Stanley or a Morgan Stanley Entity;
provided that
no such indemnification shall be required to the extent such Losses were taken
into account in determining special allocations and distributions pursuant to
Section 7.3 of the LLC Agreement (as amended by the Tax Matters
Agreement).

       

      (g)  Citigroup
shall indemnify, defend and hold harmless Morgan Stanley, Morgan Stanley’s
Affiliates and the Company Entities and their respective Affiliates from and
against,  without duplication, any Losses (other than Taxes, which
shall be governed by Section 4.5(a)(ii) of this Agreement) that arise out of (i)
the ownership and operation by a Company Entity of a Citigroup Delayed
Distribution Business or (ii) a transfer by a Company Entity of a 

       

       

      
        
          
          

        

        
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      Citigroup
Delayed Distribution Business to Citigroup or a Citigroup Entity; provided that no such
indemnification shall be required to the extent such Losses were taken into
account in determining special allocations and distributions pursuant to Section
7.3 of the LLC Agreement (as amended by the Tax Matters Agreement).

       

      (h)  The
Company shall use its reasonable best efforts to effect the transfer of its
Delayed Distribution Businesses to Citigroup or Morgan Stanley, as applicable,
as provided herein as soon as possible after the Closing Date.  In the
event that any Citigroup Delayed Distribution Business or Morgan Stanley Delayed
Distribution Business have not been transferred by the Company or a Company
Entity to Citigroup or Morgan Stanley, respectively, prior to the earliest to
occur of (i) the date that is three years from the Closing Date, (ii) an IPO,
(iii) the sale of all of the Membership Interests held by the Morgan Stanley
Members to a Person or group of Persons that is not a Morgan Stanley Entity and
(iv) any sale of the Company or merger of the Company with a third party, then
the Parent other than the Parent to whom such Delayed Distribution Business was
to have been transferred may cause the Company to sell such Delayed Distribution
Business to a Third Party (or, if such sale cannot be effected within a six
month period, to be liquidated) in each case as soon as practicable thereafter
on terms acceptable to the Parent other than the Parent to whom such Delayed
Distribution Business was to have been transferred.  The net proceeds
of any such sale, net of tax distributions required to be made pursuant to
Section 7.2(a)(i) of the LLC Agreement in respect of such sale, shall be
distributed to the Parent to whom such Delayed Distribution Business was to have
been transferred.

       

      (i)  The
Parties hereby agree that any determination of FMV pursuant to Section 8.6 of
the LLC Agreement shall assume that all Citigroup Delayed Distribution
Businesses and all Morgan Stanley Delayed Distribution Businesses were never
contributed to nor owned by the Company.

       

      Section
2.8 
Membership
Interests.  The Parties agree that at the Closing, the Company
shall issue Membership Interests to each of the Initial Citigroup Member(s) and
the Initial Morgan Stanley Member(s) based on the aggregate value of Citigroup
Contributed Assets and Citigroup Contributed Liabilities, and Morgan Stanley
Contributed Assets and Morgan Stanley Contributed Liabilities (excluding, for
the avoidance of doubt, any Citigroup Delayed Distribution Business and any
Morgan Stanley Delayed Distribution Business), as applicable, notwithstanding
the fact that some portion of these assets and liabilities will not be
contributed to the Company until one or more Self-Clearing Dates and Delayed
Contribution Dates, and such Membership Interests shall have the respective
rights set forth in the LLC Agreement.  Accordingly, the Parties agree
that following the Closing, (i) except with respect to the transfer of the
Managed Futures Business, the Company shall not issue any additional Membership
Interests to any Initial Citigroup Member(s) or Initial Morgan Stanley Member(s)
in respect of the transfers contemplated by this Agreement, regardless of the
timing of such transfers, and (ii) the Company shall not redeem any Membership
Interests in respect of the distribution of any Citigroup Delayed Distribution
Business or Morgan Stanley Delayed Distribution Business.

       

      

      
        
          
          

        

        
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      Section
2.9 
Exclusions from
Contributions.

       

      (a)  Notwithstanding
anything to the contrary contained in Article 2, the Parties agree that “fails
to deliver” and “fails to receive” which are open as of the Closing Date or as
of any Self-Clearing Date shall not be Citigroup Contributed Assets or Citigroup
Contributed Liabilities, shall not be contributed by Citigroup or any Citigroup
Entity to the Company on any Self Clearing Date, and shall remain as assets and
liabilities of Citigroup (or its relevant Subsidiaries), as
applicable.  Notwithstanding the foregoing, to the extent that any
securities and/or cash are reflected as owned by or owed to a Customer Account,
but are not held by Citigroup and not transferred to the Company when such
Customer Account is transferred to the Company, then Citigroup shall have a new
open “fail to deliver” and/or “fail to receive” with the Company.  For
the avoidance of doubt, such receivables shall cover amounts due from open
trades or asset servicing events.

       

      (b)  Open
securities borrows in which Citigroup or Morgan Stanley or their respective
Subsidiaries, as applicable, have used securities from a third party or from
internal sources to settle transactions in Customer Accounts will not be
transferred to the Company and will not be Self-Clearing Assets; provided, that
if the Company needs to borrow any hard to borrow securities in order to
maintain existing short positions in transferred Customer Accounts, then at the
Company’s request, Citigroup or Morgan Stanley, as applicable (the “Lending
Source”), shall use reasonable best efforts to lend such hard to borrow
securities to the Company on market terms if the Lending Source had covered such
short positions in transferred Customer Accounts as of the date of such transfer
using securities borrowed from a third party or rehypothecated from customer
accounts not transferred to the Company by the Lending Source; provided further, that the
Company shall return to Citigroup or Morgan Stanley, as the case may be, any
such hard to borrow security made available to it through a conduit loan
described above (any such security, a “Borrowed Security”)
immediately following the subsequent acquisition into Inventory by the Company
of the same security (any such security, a “Subsequently Acquired
Security”) and in any event, the Company shall return any Borrowed
Security prior to entering into a securities lending transaction with any other
Person involving a Subsequently Acquired Security.  For purposes of
this Section 2.09(b), “Inventory” shall mean securities which the Company has
re-hypothecated or borrowed.

       

      (c)     
For the avoidance of doubt, the foregoing provisions of Article 2 shall not
supersede or limit the effectiveness of Sections 4.3(f) and 4.4 of this
Agreement, which remain in full force and effect; provided, however, that the
Parties’ rights and obligations with respect to profits or losses attributable
to (i) Delayed Contribution Businesses prior to their transfer to the Company or
a Company Entity, or (ii) Delayed Distribution Businesses prior to their
transfer to Morgan Stanley, Citigroup or their respective Subsidiaries shall, in
each case, be governed exclusively by Section 7.3 of the LLC Agreement (as
amended by the Tax Matters Agreement).

       

      Section
2.10 
Post-Closing
Adjustments.

       

      (a)  Within 90
days after the Closing Date:  (i) Citigroup shall prepare and deliver
(or cause to be prepared and delivered) to Morgan Stanley and the Company an
audited balance sheet for the Citigroup Introducing Business and Citigroup
Delayed Contribution Business as of immediately prior to the Closing (without
giving effect to the Closing) (the 

       

       

      
        
          
          

        

        
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      “Preliminary Citigroup
Closing Balance Sheet”), which shall be prepared in accordance with GAAP
applied on a basis consistent in all respects (except that the Preliminary
Citigroup Closing Balance Sheet shall exclude income tax assets and liabilities
(including deferred income tax assets and liabilities) and shall exclude assets
and liabilities of the Managed Futures Business and the IIG/IFG/CCI Business)
with the preparation of the Financial Statements of the Citigroup Contributed
Business, and shall be accompanied by the auditors’ report thereon from
Citigroup’s accountants, and (ii) Morgan Stanley shall prepare and deliver (or
cause to be prepared and delivered) to Citigroup and the Company an audited
balance sheet for the Morgan Stanley Introducing Business and Morgan Stanley
Delayed Contribution Business as of immediately prior to the Closing (without
giving effect to the Closing) (the “Preliminary Morgan Stanley
Closing Balance Sheet” and collectively with the Preliminary Citigroup
Closing Balance Sheet, the “Preliminary Closing Balance
Sheets”), which shall be prepared in accordance with GAAP applied on a
basis consistent in all respects (except that the Preliminary Morgan Stanley
Closing Balance Sheet shall exclude income tax assets and liabilities (including
deferred income tax assets and liabilities)) with the preparation of the
Financial Statements of the Morgan Stanley Contributed Business, and shall be
accompanied by the auditors’ report thereon from Morgan Stanley’s
accountants.  For the avoidance of doubt, except as otherwise provided
above (i) the Preliminary Closing Balance Sheets and the Final Closing Balance
Sheets shall reflect only the Citigroup Introducing Business and Citigroup
Delayed Contribution Business, or Morgan Stanley Introducing Business and Morgan
Stanley Delayed Contribution Business, as applicable and shall not reflect any
businesses or any categories of assets or liabilities that were excluded from
the Financial Statements of the Citigroup Contributed Business or the Financial
Statements of the Morgan Stanley Contributed Business, as applicable, and (ii)
the Financial Statements of the Citigroup Contributed Business and the Financial
Statements of the Morgan Stanley Contributed Business shall be deemed to have
been prepared in accordance with GAAP, and neither Party (nor any representative
thereof) shall make any claim to the contrary, nor shall the CPA Firm be
entitled to make any finding to the contrary, for any purpose of this Section
2.10(a).  Each of the Parties shall pay the fees and disbursements of
its accountants.  The Company and the Parties shall make reasonably
available to each other and to their respective accountants all relevant books
and records, any work papers (including accountants’ work papers) and other
supporting documentation relating to the Preliminary Closing Balance
Sheets.

       

      (b)  In the
event that, within 60 days after delivery by one Party (the “Preparing Party”) to
the other Party (the “Receiving Party”) and
the Company of the Preparing Party’s Preliminary Closing Balance Sheet, such
Receiving Party determines that the Preliminary Closing Balance Sheet so
received has not been prepared on a basis consistent with the requirements of
Section 2.10(a), the Receiving Party shall have the right (but not the
obligation) to, on or before the last day of such 60-day period, deliver a
written objection (an “Objection”) to the
Company and the Preparing Party, setting forth, in reasonable detail, the basis
of the Objection and the adjustments to such Preliminary Closing Balance Sheet
which the Receiving Party believes should be made, and the Receiving Party shall
be deemed to have accepted any items not specifically disputed in the Objection;
provided that,
for a period of 15 days following a Receiving Party’s receipt of an Objection to
such Receiving Party’s Preliminary Closing Balance Sheet, the Receiving Party
shall have the right (but not the obligation) to deliver to the Company and the
Preparing Party additional objections to the Preparing Party’s Preliminary
Closing Balance Sheet that are based on similar arguments and are of the same
type as the objections that were made by the Preparing Party to the Receiving
Party’s Preliminary Closing 

       

       

      
        
          
          

        

        
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      Balance
Sheet.  Failure to notify the Company and the Preparing Party of an
Objection shall constitute acceptance and approval of such Preliminary Closing
Balance Sheet.  The Parties shall then have 30 days following the date
the Preparing Party receives any Objection (including, if later, any additional
objection made pursuant to the proviso of the second preceding sentence) to
review and respond to such Objection.  If the Parties do not resolve
all of their disagreements with respect to the foregoing by the 30th day
following the Preparing Party’s receipt of an Objection (including, if later,
any additional objection made pursuant to the proviso of the third preceding
sentence), they shall refer their remaining differences to a nationally
recognized firm of independent public accountants as to which the Parties shall
mutually agree (the “CPA Firm”), who
shall, acting as experts in accounting and not as arbitrators, determine on a
basis consistent with the requirements of Section 2.10(a), and only with respect
to the specific remaining accounting-related differences set forth in the
applicable Objection and so submitted to the CPA Firm, whether and to what
extent, if any, the relevant Preliminary Closing Balance Sheet(s) require(s)
adjustment in order to comply with the provisions of Section
2.10(a).  In the event that Objections are pending with respect to
both Preliminary Closing Balance Sheets, the Parties shall submit all such
Objections to the same CPA Firm to be considered and resolved at the same
time.  The Parties shall request the CPA Firm to use its best efforts
to render its determination within 45 days of its engagement.  The CPA
Firm’s determination shall be conclusive and binding upon the Company and the
Parties.  The Company and the Parties shall make reasonably available
to the CPA Firm and to each other all relevant books and records, any work
papers (including those of the Parties’ respective accountants) and supporting
documentation relating to the Preliminary Closing Balance Sheets and all other
items reasonably requested by the CPA Firm or the other Party in connection
herewith.  The “Final Closing Balance
Sheet” of the Citigroup Introducing Business and Citigroup Delayed
Contribution Business or the Morgan Stanley Introducing Business and Morgan
Stanley Delayed Contribution Business, as the case may be, shall be (i) the
applicable Preliminary Closing Balance Sheet if (x) no Objection is delivered
during the initial 60-day period (or, if applicable, the subsequent 15 day
period) specified above or (y) the Parties so agree, (ii) the applicable
Preliminary Closing Balance Sheet, adjusted in accordance with the Objection, in
the event that (x) the Preparing Party does not respond to the Objection during
the 30-day period specified above following receipt of the Objection or (y) the
Parties so agree, or (iii) the applicable Preliminary Closing Balance Sheet, as
adjusted pursuant to the agreement of the Parties or as adjusted by the CPA Firm
as provided above.  All fees and disbursements of the CPA Firm shall
be shared equally by the Parties. 

       

      (c)  If the
Citigroup Introducing Tangible Book Value is less than $490 million, then
Citigroup shall pay such deficiency, plus interest thereon at a rate equal to
LIBOR plus 60 basis points during the period from the Closing Date to the date
of such payment, to the Company in immediately available funds within three
Business Days after the ultimate determination of such Final Closing Balance
Sheet.  If the Citigroup Introducing Tangible Book Value is more than
$490 million, the Company shall pay (without any contribution from Morgan
Stanley or Citigroup) an amount equal to such excess, plus interest thereon at a
rate equal to LIBOR plus 60 basis points during the period from the Closing Date
to the date of such payment, to Citigroup in immediately available funds within
three Business Days after the ultimate determination of such Final Closing
Balance Sheet.  If the Morgan Stanley Introducing Tangible Book Value
is less than $600 million, then Morgan Stanley shall pay such deficiency, plus
interest thereon at a rate equal to LIBOR plus 60 basis points during the period
from the Closing Date to the date of such payment, to the Company in immediately
available funds within three 

       

       

      
        
          
          

        

        
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      Business
Days after the ultimate determination of such Final Closing Balance
Sheet.  If the Morgan Stanley Introducing Tangible Book Value is more
than $600 million, the Company shall pay (without any contribution from Morgan
Stanley or Citigroup) an amount equal to such excess, plus interest thereon at a
rate equal to LIBOR plus 60 basis points during the period from the Closing Date
to the date of such payment, to Morgan Stanley in immediately available funds
within three Business Days after the ultimate determination of such Final
Closing Balance Sheet.  Any such payments shall be treated as capital
contributions or adjustments necessary for consistency with the agreed-upon
allocation of the Parties’ initial ownership percentages of the Company set
forth in Sections 2.4(b) and (c) and shall not change such allocation in any
way, and no Membership Interests shall be issued by the Company in respect of
such payments.  Any payment required to be made to a Party pursuant to
this Section 2.10(c) shall, to the extent possible, be effected or settled in a
manner that does not result in the recognition of income or gain to that Party
or its Subsidiaries for federal income tax purposes.

       

      (d)  If the
Parties are unable to agree on a nationally recognized firm of independent
public accountants to act as the CPA Firm within five Business Days following
the 30th day following the Preparing Party’s response to the Objection, the
Parties shall select a nationally recognized firm of independent public
accountants to act as the CPA Firm as follows:  on such fifth Business
Day, each Party shall deliver to the other Party a list with three such
accounting firms that currently audit NYSE-listed companies for purposes of
their annual reports filed on Form 10-K with the SEC, none of which shall have
been retained by such Party within the prior two-year period.  Each
Party shall cross off two of such accounting firms from the list it receives
from the other Party.  The CPA Firm shall be selected from the
remaining two firms by lot.

       

      Section
2.11 
Self-Clearing Balance
Sheets.

       

      (a)  Within 90
days after each Citigroup Self-Clearing Date, Citigroup shall prepare and
deliver (or cause to be prepared and delivered) to Morgan Stanley and the
Company an audited balance sheet for the Citigroup Self-Clearing Business that
was contributed to the Company on such Self-Clearing Date, dated as of such
Self-Clearing Date (immediately prior to giving effect to the contribution of
such Citigroup Self-Clearing Business) (a “Preliminary Citigroup
Self-Clearing Balance Sheet”), which shall be prepared in accordance with
GAAP applied on a basis consistent in all respects (except that the Preliminary
Citigroup Self-Clearing Balance Sheet shall exclude income tax assets and
liabilities (including deferred income tax assets and liabilities) and, if
applicable, shall exclude assets and liabilities of the Managed Futures Business
and the IIG/IFG/CCI Business) with the preparation of the Financial Statements
of the Citigroup Contributed Business, and shall be accompanied by the auditors’
report thereon from Citigroup’s accountants.

       

      (b)  Within 90
days after each Morgan Stanley Self-Clearing Date, Morgan Stanley shall prepare
and deliver (or cause to be prepared and delivered) to Citigroup and the Company
an audited balance sheet for the Morgan Stanley Self-Clearing Business that was
contributed to the Company on such Self-Clearing Date, dated as of such
Self-Clearing Date (immediately prior to giving effect to the contribution of
such Morgan Stanley Self-Clearing Business) (a “Preliminary Morgan Stanley
Self-Clearing

       

       

      
        
          
          

        

        
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      Balance Sheet” and
collectively with the Preliminary Citigroup Self-Clearing Balance Sheet(s), the
“Preliminary
Self-Clearing Balance Sheets”), which shall be prepared in accordance
with GAAP applied on a basis consistent in all respects (except that the
Preliminary Morgan Stanley Self-Clearing Balance Sheet shall exclude income tax
assets and liabilities (including deferred income tax assets and liabilities))
with the preparation of the Financial Statements of the Morgan Stanley
Contributed Business, and shall be accompanied by the auditors’ report thereon
from Morgan Stanley’s accountants.

       

      (c)  For the
avoidance of doubt, (i) each Preliminary Self-Clearing Balance Sheet and the
Final Self-Clearing Balance Sheet shall reflect only the respective Citigroup
Self-Clearing Business or Morgan Stanley Self-Clearing Business to the extent
contributed on the relevant Self-Clearing Date, and in each case shall not
reflect any businesses or any categories of assets or liabilities that were
reflected in the Preliminary Closing Balance Sheets or Final Closing Balance
Sheets or that were excluded from the Financial Statements of the Citigroup
Contributed Business or the Financial Statements of the Morgan Stanley
Contributed Business, as applicable, and (ii) the Financial Statements of the
Citigroup Contributed Business and the Financial Statements of the Morgan
Stanley Contributed Business shall be deemed to have been prepared in accordance
with GAAP, and neither Party (nor any representative thereof) shall make any
claim to the contrary, nor shall the CPA Firm be entitled to make any finding to
the contrary, for any purpose of this Section 2.11(c).  Each of the
Parties shall pay the fees and disbursements of its accountants.  The
Parties shall make reasonably available to each other and to their respective
accountants all relevant books and records, any work papers (including
accountants’ work papers) and other supporting documentation relating to the
Preliminary Self-Clearing Balance Sheets.

       

      (d)  The
provisions of Section 2.10(b) and 2.10(d) of this Agreement shall apply mutatis
mutandis with respect to each of the Preliminary Self-Clearing Balance Sheets
and Final Self-Clearing Balance Sheets; provided that, for
purposes of this Section 2.11(d): (i) references in those provisions to
“Preliminary Closing Balance Sheet” shall refer instead to “Preliminary
Self-Clearing Balance Sheet”; (ii) references in those provisions to Section
2.10(a) shall refer instead to references to Section 2.11(a); and (iii) the
penultimate sentence of Section 2.10(b) of this Agreement shall be deleted in
its entirety and replaced with the following:

       

      “The
“Final Self-Clearing
Balance Sheet” of the Citigroup Self-Clearing Business contributed on a
Self-Clearing Date, or the Morgan Stanley Self-Clearing Business contributed on
a Self-Clearing Date, as the case may be, shall be (i) the applicable
Preliminary Self-Clearing Balance Sheet if (x) no Objection is delivered during
the initial 60-day period (or, if applicable, the subsequent 15-day period)
specified above or (y) the Parties so agree, (ii) the applicable Preliminary
Self-Clearing Balance Sheet, adjusted in accordance with the Objection, in the
event that (x) the Preparing Party does not respond to the Objection during the
30-day period specified above following receipt of the Objections or (y) the
Parties so agree, or (iii) the applicable Preliminary Self-Clearing Balance
Sheet, as 

       

       

      
        
          
          

        

        
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      adjusted
pursuant to the agreement of the Parties or as adjusted by the CPA Firm as
provided pursuant to the foregoing provisions of this Section.”

       

      Section
2.12 
Final Post-Closing Purchase
Price Adjustment.

       

      (a)  Following
the determination of the Final Self-Clearing Balance Sheet with respect to the
final contribution of Citigroup Self-Clearing Business or Morgan Stanley
Self-Clearing Business, as applicable, the Parties shall calculate the amount of
the Citigroup Self-Clearing Tangible Book Value and Morgan Stanley Self-Clearing
Tangible Book Value, as applicable.

       

      (b)  If the
Citigroup Self-Clearing Tangible Book Value is less than $1.13 billion, then
Citigroup shall pay such deficiency, plus interest thereon at a rate equal to
LIBOR plus 60 basis points during the period from the last Citigroup
Self-Clearing Date to the date of such payment, to the Company in immediately
available funds within three Business Days after the ultimate determination of
the last-dated Final Self-Clearing Balance Sheet.  If the Citigroup
Self-Clearing Tangible Book Value is more than $1.13 billion, the Company shall
pay (without any contribution from Morgan Stanley or Citigroup) an amount equal
to such excess, plus interest thereon at a rate equal to LIBOR plus 60 basis
points during the period from the last Citigroup Self-Clearing Date to the date
of such payment, to Citigroup in immediately available funds within three
Business Days after the ultimate determination of the last-dated Final
Self-Clearing Balance Sheet.

       

      (c)  If the
Morgan Stanley Self-Clearing Tangible Book Value is less than $540 million, then
Morgan Stanley shall pay such deficiency, plus interest thereon at a rate equal
to LIBOR plus 60 basis points during the period from the last Morgan Stanley
Self-Clearing Date to the date of such payment, to the Company in immediately
available funds within three Business Days after the ultimate determination of
the last-dated Final Self-Clearing Balance Sheet.  If the Morgan
Stanley Self-Clearing Tangible Book Value is more than $540 million, the Company
shall pay (without any contribution from Morgan Stanley or Citigroup) an amount
equal to such excess, plus interest thereon at a rate equal to LIBOR plus 60
basis points during the period from the last Morgan Stanley Self-Clearing Date
to the date of such payment, to Morgan Stanley in immediately available funds
within three Business Days after the ultimate determination of the last-dated
Final Self-Clearing Balance Sheet.

       

      (d)  Any
payments made pursuant to this Section 2.12 shall be treated as capital
contributions or adjustments necessary for consistency with the agreed-upon
allocation of the Parties’ initial ownership percentages of the Company set
forth in Sections 2.4(b) and (c) of this Agreement (as amended) and shall not
change such allocation in any way, and no Membership Interests shall be issued
by the Company in respect of such payments.  Any payment required to
be made to a Party pursuant to this Section 2.12 shall, to the extent possible,
be effected or settled in a manner that does not result in the recognition of
income or gain to that Party or its Subsidiaries for federal income tax
purposes.

       

       

      
        
          
          

        

        
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      Section
2.13  Managed Futures Balance
Sheet.  Within 90 days after the Managed Futures Contribution
Date, Citigroup shall prepare and deliver (or cause to be prepared and
delivered) to Morgan Stanley and the Company an audited balance sheet for the
Managed Futures Business, dated as of the Managed Futures Contribution Date
(immediately prior to giving effect to the contribution of such Managed Futures
Business) (the “Managed Futures Balance
Sheet”), which shall be prepared in accordance with GAAP consistently
applied, and shall be accompanied by the auditors’ report thereon from
Citigroup’s accountants.  Each of the Parties shall pay the fees and
disbursements of its accountants.  The Parties shall make reasonably
available to each other and to their respective accountants all relevant books
and records, any work papers (including accountants’ work papers) and other
supporting documentation relating to the Managed Futures Balance
Sheet.

       

      

       

      ARTICLE
3

       

      REPRESENTATIONS
AND WARRANTIES

       

      Section
3.1  Representations and
Warranties of Citigroup.  Citigroup, on behalf of itself and
the other Citigroup Transferors, represents and warrants to Morgan Stanley and
the Company that, except (i) as set forth in the Amended and Restated Disclosure
Letter delivered as of the date hereof by Citigroup to Morgan Stanley (the
“Citigroup Disclosure
Letter”) or in the most recent Form ADV Part I, Form ADV Part II (or
brochure in lieu thereof) or Form BD filed (or in the case of Form ADV Part II,
prepared) by Citigroup Subsidiaries and provided to Morgan Stanley prior to
January 13, 2009, (ii) to the extent that any of the representations and
warranties set forth below relate to or apply to the Citigroup Excluded Assets,
the Citigroup Excluded Liabilities or the Citigroup Excluded Businesses and do
not impact the Citigroup Contributed Assets, Citigroup Contributed Business,
Citigroup Contributed Subsidiaries or Citigroup Contributed Liabilities and
(iii) to the extent that any of the representations and warranties set forth
below relate to the IIG/IFG/CCI Business:

       

      (a)  Organization, Standing and
Power of Citigroup and Subsidiaries.  Citigroup is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware.  Citigroup has all requisite corporate power
and authority to execute and deliver this Agreement and any other Transaction
Document to which it will be a party, to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and
thereby.  Each other Citigroup Transferor is duly organized, validly
existing and (except to the extent inapplicable to foreign Subsidiaries) in good
standing under the Laws of its jurisdiction of organization and will at the
Closing have all requisite corporate or comparable power and authority to
perform the obligations applicable to such Citigroup Transferor hereunder and
under the other Transaction Documents and to consummate the transactions
contemplated hereby and thereby.  Each Subsidiary of Citigroup to
become a party to a Transaction Document will have at the Closing all requisite
corporate or comparable power and authority to execute and deliver each
Transaction Document to be executed and delivered by it, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby.  Each Citigroup Transferor has all

       

       

      
        
          
          

        

        
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      requisite
corporate or comparable power and authority to own and operate the Citigroup
Contributed Assets and the Citigroup Contributed Liabilities and to operate the
Citigroup Contributed Business as currently conducted and is duly qualified to
do business and in good standing as a foreign entity authorized to transact
business in each jurisdiction where the ownership of such assets and liabilities
or the operation of such business requires such qualification or license, except
where failure to obtain such qualification or license would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Citigroup Contributed Business.

       

      (b)  Citigroup Contributed
Subsidiaries.  Each Citigroup Contributed Subsidiary is (or in
the case of Citigroup Contributed Subsidiaries formed after January 13, 2009,
will be by Closing) an entity duly organized, validly existing and in good
standing under the Laws of its jurisdiction of organization.  Each
Citigroup Contributed Subsidiary has (or in the case of Citigroup Contributed
Subsidiaries formed after January 13, 2009, will have by Closing) all requisite
corporate or comparable power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted or as
proposed to be conducted from and after the Closing.  Each Citigroup
Contributed Subsidiary will have at the Closing all requisite limited liability
company or comparable power and authority to own, lease and operate the
Citigroup Contributed Assets and to carry on the Citigroup Contributed
Business.  Each Citigroup Contributed Subsidiary is (or in the case of
Citigroup Contributed Subsidiaries formed after January 13, 2009, will be) duly
qualified and (except to the extent not applicable to foreign Subsidiaries) in
good standing as a foreign entity authorized to transact business in each
jurisdiction where the conduct of its business or the ownership of its
properties requires such qualification, other than in jurisdictions where the
failure to be so qualified, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect on the Citigroup
Contributed Business.

       

      (c)  Authority and
Validity.  The execution and delivery of this Agreement and
each other Transaction Document to be executed and delivered by Citigroup or any
of its Subsidiaries, the performance of their respective obligations hereunder
and thereunder and the consummation of the transactions contemplated hereby and
thereby have been, or in the case of Transaction Documents not yet executed and
delivered on January 13, 2009, will be by the Closing, duly and validly
authorized by all necessary corporate or comparable action on the part of such
Person.  This Agreement and each other Transaction Document to be
executed and delivered by Citigroup or any of its Subsidiaries have been, or in
the case of Transaction Documents not yet executed on January 13, 2009 will be
by the Closing, duly executed and delivered and are (or will be by Closing)
valid and binding obligations of Citigroup or such Subsidiary, as applicable,
that is a party thereto, enforceable against it in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting
creditors’ rights generally and general equitable principles (whether considered
in a proceeding in equity or at law).

       

      (d)  No
Conflicts.  Subject to obtaining the Governmental Approvals and
Third Party Approvals contemplated in Section 3.1(e)(i), the execution
and delivery of this Agreement and each other Transaction Document intended to
be executed by 

       

       

      
        
          
          

        

        
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      Citigroup
and its Subsidiaries, and the performance of their respective obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby (including the contribution of the Citigroup Contributed
Assets and the Citigroup Contributed Business to the Company Entities) do not
(i) conflict with or result in a breach of any provision of any of their
respective articles of incorporation or bylaws or comparable organizational
documents, (ii) conflict with, result in a breach of any provision of,
constitute a default (or an event which with notice or lapse of time or both
would become a default) or give to any Third Party any right of termination,
cancellation, amendment or acceleration under, or result in the creation of a
Lien on any of their respective properties under, or the loss or deferral of any
right or the creation or acceleration of any obligation under, any of the terms,
conditions or provisions of any note, bond, debenture, mortgage, indenture,
license, lease, contract, agreement or other instrument or obligation to which
any of them is a party, or by which any of them or any of their respective
properties may be bound or subject, or (iii) violate or conflict with any Law
applicable to such Person or any of its properties, except, in the cases of
clauses (ii) and (iii), as would not, individually or in the aggregate, be
reasonably expected to result in a Material Adverse Effect on the Citigroup
Contributed Business.

       

      (e)  Governmental and Third Party
Approvals.  No Governmental Approval or Third Party Approval is
required in connection with the execution and delivery by Citigroup and its
Subsidiaries of this Agreement and the other Transaction Documents or the
performance of their respective obligations hereunder and thereunder or the
consummation by Citigroup and its Subsidiaries of the transactions contemplated
hereby and thereby, except for (i) the Governmental Approvals and Third Party
Approvals identified on Schedule 3.1(e), (ii)
approvals from clients with respect to the transfer of their brokerage and
advisory accounts in connection with the Closing and (iii) any other
Governmental Approval or Third Party Approval the failure of which to be
obtained would not, individually or in the aggregate, be reasonably expected to
result in a Material Adverse Effect on the Citigroup Contributed
Business.  As of January 13, 2009, no Governmental Authority or Third
Party, with respect to which a Governmental Approval or Third Party Approval is
required to be obtained or made in connection with the transactions contemplated
by this Agreement, has indicated to Citigroup or any of its Affiliates an intent
to (x) take any action or fail to take any action that is reasonably likely to
prohibit, materially delay or materially impair the consummation of the
transactions contemplated by this Agreement, or (y) impose any obligation or
condition in connection with such Governmental Approval or Third Party Approval
that is reasonably likely to result in, individually or in the aggregate, a
material liability (other than ordinary course liabilities, obligations and
conditions incurred in connection with obtaining any such Governmental
Approvals) of the Company or any of its Subsidiaries after the
Closing.

       

      (f)  Financial Statements;
Undisclosed Liabilities; No Material Adverse Effect.

       

      (i)  The
Financial Statements of the Citigroup Contributed Business present fairly, in
all material respects, the financial position and results of operations of the
Citigroup Contributed Business, in accordance with GAAP applied on a consistent

       

       

      
        
          
          

        

        
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      basis, as
of the dates or for the periods presented.  The Financial Statements
of the Citigroup Contributed Business have been derived from the accounting
books and records of Citigroup and its Subsidiaries.  The Managed
Futures Business Financial Statements present fairly, in all material respects,
the financial position and results of operations of the Managed Futures
Business, in accordance with GAAP applied on a consistent basis, as of the dates
or for the periods presented.

       

      (ii)  The
balance sheet as of November 30, 2008 included in the Financial Statements of
the Citigroup Contributed Business does not include any assets or liabilities
not constituting a part of the Citigroup Contributed Business.  The
statements of income included in the Financial Statements of the Citigroup
Contributed Business do not reflect the operations of any Person or business not
constituting a part of the Citigroup Contributed Business.  The
Managed Futures Balance Sheet does not include any assets or liabilities of the
Citigroup Contributed Business described in clause (i) of the definition thereof
or of the IIG/IFG/CCI Business.

       

      (iii)  Except
for the Citigroup Excluded Liabilities, the Citigroup Contributed Business has
no liabilities or obligations, whether known, absolute, accrued, contingent or
otherwise and whether due or to become due, except for liabilities or
obligations (x) reflected on, accrued or reserved against in the balance sheet
contained in the Financial Statements of the Citigroup Contributed Business (in
each case, to the extent so reflected, accrued or reserved), (y) incurred after
the date of such balance sheet in the ordinary course of business consistent
with past practice, or (z) which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Citigroup
Contributed Business.

       

      (iv)  Since
January 1, 2008, there has occurred no Material Adverse Effect on the Citigroup
Contributed Business and no event or occurrence which would reasonably be
expected to result in a Material Adverse Effect on the Citigroup Contributed
Business.  From January 1, 2008 to January 13, 2009, the Citigroup
Contributed Business has been conducted in all material respects in the ordinary
course of business consistent with past practices.

       

      (v)  Notwithstanding
anything herein to the contrary, references in Section 3.1(f)(i), (ii) and (iii)
to the Citigroup Contributed Business shall be deemed not to include the Managed
Futures Business.

       

      (g)  Capitalization.  All
outstanding shares of capital stock of the Citigroup Contributed Subsidiaries
(other than Citigroup Contributed Subsidiaries to be formed after January 13,
2009) are duly authorized, validly issued, fully paid and nonassessable, are
subject to no preemptive or similar rights, and were not issued in violation of
any preemptive or similar rights.  As of the Closing, all outstanding
equity interests of the Citigroup Contributed Subsidiaries will be duly
authorized and validly issued limited liability company interests or comparable
equity interests of the Citigroup Contributed Subsidiaries, will be fully paid
and nonassessable, will not have been issued in violation of any preemptive or
similar rights and, except as contemplated by the Transaction Documents, will be
subject to no preemptive or similar rights.  Upon contribution by

       

       

      
        
          
          

        

        
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      Citigroup
(or any of its Subsidiaries) to the Company, the Company will acquire one
hundred percent (100%) of the equity interests of the Citigroup Contributed
Subsidiaries free and clear of any Liens, except for Permitted Liens and Liens
created pursuant to the Transaction Documents.  Except as contemplated
by this Agreement or the other Transaction Documents, (A) no capital stock,
limited liability company interests or other equity securities (including but
not limited to any options, warrants or rights or other security convertible
into or exercisable or exchangeable for any capital stock, limited liability
company interest or other equity security) of any Citigroup Contributed
Subsidiary are or may become required to be issued (other than to a Company
Entity) by reason of any security, contract or other obligation, (B) there are
no contracts, commitments or other obligations by which any Citigroup
Contributed Subsidiary or other Person is or may be bound to sell or otherwise
transfer or repurchase, redeem or otherwise acquire or register any capital
stock, limited liability company interests or other equity securities of such
Citigroup Contributed Subsidiary (other than to or from a Company Entity), and
(C) there are no contracts, commitments or other obligations relating to the
right to vote or dispose of any capital stock, limited liability company
interest or other equity security of any Citigroup Contributed
Subsidiary.

       

      (h)  Assets; Services;
Title.  The assets (real, personal, mixed, tangible or
intangible) constituting the Citigroup Contributed Assets, and the benefits,
services and intercompany arrangements to be provided under the other
Transaction Documents, constitute all of the assets, benefits, services and
intercompany arrangements used in, necessary in any material respect for the
conduct of, or otherwise material (individually or in the aggregate) to, the
Citigroup Contributed Business as presently conducted and as conducted in
generating the Financial Statements of the Citigroup Contributed
Business.  Immediately after the Closing, taking into account the
benefits, services and intercompany arrangements to be provided under the other
Transaction Documents, the Company Entities will have good and marketable title
to, or have good title pursuant to a valid leasehold interest in or have a valid
right to use or occupy, all of the assets (real, personal, mixed, tangible or
intangible), and will have valid rights to demand and receive all benefits,
services and intercompany arrangements (on substantially the same terms), used
in, necessary for the conduct of, or otherwise material to, the Citigroup
Introducing Business as presently conducted and as conducted in generating the
Financial Statements of the Citigroup Contributed Business (taking into account
that such business as presently conducted is not a stand-alone introducing
brokerage business), including the Citigroup Introducing Assets shown on the
Financial Statements of the Citigroup Contributed Business and all of the
Contributed Real Property of Citigroup, free and clear of any Liens, except for
Permitted Liens or as would not reasonably be expected to result in a Material
Adverse Effect on the Citigroup Introducing Business.

       

      (i)  Compliance with
Laws.  Each Citigroup Contributed Subsidiary and each Citigroup
Transferor is conducting and has since January 1, 2008 conducted the Citigroup
Contributed Business and is using and operating and has since January 1, 2008
used and operated the Citigroup Contributed Assets in compliance with all Laws
applicable to it, in each case except as would not reasonably be expected to
have a Material Adverse Effect on the Citigroup Contributed
Business.

       

       

      
        
          
          

        

        
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      (j)  Tax.  During
the past three years, none of the Citigroup Contributed Subsidiaries has been a
“distributing corporation” or a “controlled corporation” in a distribution
intended to qualify under Section 355(a) of the Code.  None of the
Citigroup Contributed Subsidiaries has participated in, or acted as a material
advisor with respect to, any “listed transaction” within the meaning of Treasury
Regulation Section 1.6011-4.  Except for the entities set forth on
Schedule
3.1(j)(i), each Citigroup Contributed Subsidiary will be, promptly after
transfer of such Contributed Subsidiary to the Company, a “disregarded entity”
for federal income tax purposes.  There are no regulatory, contractual
or other limitations of any kind (other than generally applicable requirements
of state corporate or limited liability company law) on the Company’s ability to
effect the conversion of AST StockPlan, Inc. into a limited liability company
that is disregarded as an entity separate from its owner for federal income tax
purposes following the transfer of AST StockPlan, Inc. to the
Company.

       

      (k)  No
Broker.  Except for Citigroup Global Markets Inc.
(whose fees and expenses shall be paid by Citigroup), Citigroup is not,
and no Citigroup Contributed Subsidiary or Company Entity at the Closing will
be, committed to any liability for any brokers’ or finders’ fees or any similar
fees, including but not limited to any bonus payable to any director, officer,
employee, agent or representative of or consultant to any Citigroup Contributed
Subsidiary, Company Entity or Citigroup Transferor, in connection with the
transactions contemplated by this Agreement.

       

      (l)  Title to Self-Clearing
Assets. Following the transfer of Citigroup Self-Clearing Assets to the
Company on a Citigroup Self-Clearing Date, the Company Entities will have good
and marketable title to, or have good title pursuant to a valid leasehold
interest in or have a valid right to use or occupy, all of such Citigroup
Self-Clearing Assets, free and clear of any Liens, except for Permitted Liens or
as would not reasonably be expected to result in a Material Adverse Effect on
the Citigroup Self-Clearing Business.

       

      (m)  Title to Citigroup Delayed
Contribution Assets.  Following the transfer of the Citigroup
Delayed Contribution Businesses to the Company, taking into account the
benefits, services and intercompany arrangements to be provided under the other
Transaction Documents, the Company Entities will have good and marketable title
to, or have good title pursuant to a valid leasehold interest in or have a valid
right to use or occupy, all of the assets (real, personal, mixed, tangible or
intangible), and will have valid rights to demand and receive all benefits,
services and intercompany arrangements (on substantially the same terms), used
in, necessary for the conduct of, or otherwise material to, the Citigroup
Delayed Contribution Businesses as presently conducted and as conducted in
generating the Financial Statements of the Citigroup Contributed Business,
including the Citigroup Delayed Contribution Assets shown on the Financial
Statements of the Citigroup Contributed Business, free and clear of any Liens,
except for Permitted Liens or as would not reasonably be expected to result in a
Material Adverse Effect on the Citigroup Delayed Contribution
Businesses.

       

      Section
3.2 
Representations and
Warranties of Morgan Stanley.  Morgan Stanley, on behalf of
itself and the other Morgan Stanley Transferors, represents and warrants to

       

       

      
        
          
          

        

        
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      Citigroup
and the Company that, except as set forth in the Amended and Restated Disclosure
Letter delivered as of the date hereof by Morgan Stanley to Citigroup (the
“Morgan Stanley
Disclosure Letter”) or in the most recent Form ADV Part I, Form ADV Part
II (or brochure in lieu thereof) or Form BD filed (or in the case of Form ADV
Part II, prepared) by Morgan Stanley Subsidiaries and provided to Citigroup
prior to January 13, 2009, and except to the extent that any of the
representations and warranties set forth below relate to or apply to the Morgan
Stanley Excluded Assets, the Morgan Stanley Excluded Liabilities or the Morgan
Stanley Excluded Businesses and do not impact the Morgan Stanley Contributed
Assets, Morgan Stanley Contributed Business, Morgan Stanley Contributed
Subsidiaries or Morgan Stanley Contributed Liabilities:

       

      (a)  Organization, Standing and
Power of Morgan Stanley and Subsidiaries.  Morgan Stanley is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware.  Morgan Stanley has all requisite corporate
power and authority to execute and deliver this Agreement and any other
Transaction Document to which it will be a party, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby.  Each other Morgan Stanley Transferor is duly organized,
validly existing and (except to the extent inapplicable to foreign Subsidiaries)
in good standing under the Laws of its jurisdiction of organization and will at
the Closing have all requisite corporate or comparable power and authority to
perform the obligations applicable to such Morgan Stanley Transferor hereunder
and under the other Transaction Documents and to consummate the transactions
contemplated hereby and thereby.  Each Subsidiary of Morgan Stanley to
become a party to a Transaction Document will have at the Closing all requisite
corporate or comparable power and authority to execute and deliver each
Transaction Document to be executed and delivered by it, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby.  Each Morgan Stanley Transferor has
all requisite corporate or comparable power and authority to own and operate the
Morgan Stanley Contributed Assets and the Morgan Stanley Contributed Liabilities
and to operate the Morgan Stanley Contributed Business as currently conducted
and is duly qualified to do business and in good standing as a foreign entity
authorized to transact business in each jurisdiction where the ownership of such
assets and liabilities or the operation of such business requires such
qualification or license, except where failure to obtain such qualification or
license would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Morgan Stanley Contributed
Business.

       

      (b)  Morgan Stanley Contributed
Subsidiaries.  Each Morgan Stanley Contributed Subsidiary is
(or in the case of Morgan Stanley Contributed Subsidiaries formed after January
13, 2009, will be by Closing) and the Company will be by Closing an entity duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization.  Each Morgan Stanley Contributed
Subsidiary has (or in the case of Morgan Stanley Contributed Subsidiaries formed
after January 13, 2009 and the Company, will have by Closing) all requisite
corporate or comparable power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted or as
proposed to be conducted from and after the Closing.  Each Morgan
Stanley Contributed Subsidiary and the Company will have at the Closing all

       

       

      
        
          
          

        

        
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      requisite
limited liability company or comparable power and authority to own, lease and
operate the Morgan Stanley Contributed Assets and to carry on the Morgan Stanley
Contributed Business.  Each Morgan Stanley Contributed Subsidiary is
(or in the case of Morgan Stanley Contributed Subsidiaries formed after January
13, 2009 and the Company, will be) duly qualified and (except to the extent not
applicable to foreign Subsidiaries) in good standing as a foreign entity
authorized to transact business in each jurisdiction where the conduct of its
business or the ownership of its properties requires such qualification, other
than in jurisdictions where the failure to be so qualified, individually or in
the aggregate, would not reasonably be expected to result in a Material Adverse
Effect on the Morgan Stanley Contributed Business.  The Company has
not engaged in any activities or incurred any liabilities other than in
connection with the transactions contemplated by this Agreement.

       

      (c)  Authority and
Validity.  The execution and delivery of this Agreement and
each other Transaction Document to be executed and delivered by Morgan Stanley
or any of its Subsidiaries, the performance of their respective obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been, or in the case of Transaction Documents not yet
executed and delivered on January 13, 2009, will be by the Closing, duly and
validly authorized by all necessary corporate or comparable action on the part
of such Person.  This Agreement and each other Transaction Document to
be executed and delivered by Morgan Stanley or any of its Subsidiaries have
been, or in the case of Transaction Documents not yet executed on January 13,
2009 will be by the Closing, duly executed and delivered and are (or will be by
Closing) valid and binding obligations of Morgan Stanley or such Subsidiary, as
applicable, that is a party thereto, enforceable against it in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar Laws relating to or
affecting creditors’ rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).

       

      (d)  No
Conflicts.  Subject to obtaining the Governmental Approvals and
Third Party Approvals contemplated in Section 3.2(e)(i), the execution
and delivery of this Agreement and each other Transaction Document intended to
be executed by Morgan Stanley and its Subsidiaries, and the performance of their
respective obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby (including the contribution of the
Morgan Stanley Contributed Assets and the Morgan Stanley Contributed Business to
the Company Entities) do not (i) conflict with or result in a breach of any
provision of any of their respective articles of incorporation or bylaws or
comparable organizational documents, or (ii) conflict with, result in a breach
of any provision of, constitute a default (or an event which with notice or
lapse of time or both would become a default) or give to any Third Party any
right of termination, cancellation, amendment or acceleration under, or result
in the creation of a Lien on any of their respective properties under, or the
loss or deferral of any right or the creation or acceleration of any obligation
under, any of the terms, conditions or provisions of any note, bond, debenture,
mortgage, indenture, license, lease, contract, agreement or other instrument or
obligation to which any of them is a party, or by which any of them or any of
their respective properties may be bound or 

       

       

      
        
          
          

        

        
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      subject,
or (iii) violate or conflict with any Law applicable to such Person or any of
its properties, except, in the cases of clauses (ii) and (iii), as would not,
individually or in the aggregate, be reasonably expected to result in a Material
Adverse Effect on the Morgan Stanley Contributed Business.

       

      (e)  Governmental and Third Party
Approvals.  No Governmental Approval or Third Party Approval is
required in connection with the execution and delivery by Morgan Stanley and its
Subsidiaries of this Agreement and the other Transaction Documents or the
performance of their respective obligations hereunder and thereunder or the
consummation by Morgan Stanley and its Subsidiaries of the transactions
contemplated hereby and thereby, except for (i) the Governmental Approvals and
Third Party Approvals identified on Schedule 3.2(e), (ii)
approvals from clients with respect to the transfer of their brokerage and
advisory accounts in connection with the Closing and (iii) any other
Governmental Approval or Third Party Approval the failure of which to be
obtained would not, individually or in the aggregate, be reasonably expected to
result in a Material Adverse Effect on the Morgan Stanley Contributed
Business.  As of January 13, 2009, no Governmental Authority or Third
Party, with respect to which a Governmental Approval or Third Party Approval is
required to be obtained or made in connection with the transactions contemplated
by this Agreement, has indicated to Morgan Stanley or any of its Affiliates an
intent to (x) take any action or fail to take any action that is reasonably
likely to prohibit, materially delay or materially impair the consummation of
the transactions contemplated by this Agreement, or (y) impose any obligation or
condition in connection with such Governmental Approval or Third Party Approval
that is reasonably likely to result in, individually or in the aggregate, a
material liability (other than ordinary course liabilities, obligations and
conditions incurred in connection with obtaining any such Governmental
Approvals) of the Company or any of its Subsidiaries after the
Closing.

       

      (f)  Financial Statements;
Undisclosed Liabilities; No Material Adverse Effect.

       

      (i)  The
Financial Statements of the Morgan Stanley Contributed Business present fairly,
in all material respects, the financial position and results of operations of
the Morgan Stanley Contributed Business, in accordance with GAAP applied on a
consistent basis, as of the dates or for the periods presented.  The
Financial Statements of the Morgan Stanley Contributed Business have been
derived from the accounting books and records of Morgan Stanley and its
Subsidiaries.

       

      (ii)  The
balance sheet as of November 30, 2008 included in the Financial Statements of
the Morgan Stanley Contributed Business does not include any assets or
liabilities not constituting a part of the Morgan Stanley Contributed
Business.  The statements of income included in the Financial
Statements of the Morgan Stanley Contributed Business do not reflect the
operations of any Person or business not constituting a part of the Morgan
Stanley Contributed Business.

       

      (iii)  Except
for the Morgan Stanley Excluded Liabilities, the Morgan Stanley Contributed
Business has no liabilities or obligations, whether known, absolute,

       

       

      
        
          
          

        

        
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      accrued,
contingent or otherwise and whether due or to become due, except for liabilities
or obligations (x) reflected on, accrued or reserved against in the balance
sheet contained in the Financial Statements of the Morgan Stanley Contributed
Business (in each case, to the extent so reflected, accrued or reserved), (y)
incurred after the date of such balance sheet in the ordinary course of business
consistent with past practice, or (z) which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Morgan Stanley Contributed Business.

       

      (iv)  Since
January 1, 2008, there has occurred no Material Adverse Effect on the Morgan
Stanley Contributed Business and no event or occurrence which would reasonably
be expected to result in a Material Adverse Effect on the Morgan Stanley
Contributed Business.  From January 1, 2008 to January 13, 2009, the
Morgan Stanley Contributed Business has been conducted in all material respects
in the ordinary course of business consistent with past practices.

       

      (g)  Capitalization.  All
outstanding shares of capital stock of the Morgan Stanley Contributed
Subsidiaries (other than Morgan Stanley Contributed Subsidiaries to be formed
after January 13, 2009) are duly authorized, validly issued, fully paid and
nonassessable, are subject to no preemptive or similar rights, and were not
issued in violation of any preemptive or similar rights.  As of the
Closing, all outstanding equity interests of the Morgan Stanley Contributed
Subsidiaries will be duly authorized and validly issued limited liability
company interests or comparable equity interests of the Morgan Stanley
Contributed Subsidiaries, will be fully paid and nonassessable, will not have
been issued in violation of any preemptive or similar rights and, except as
contemplated by the Transaction Documents, will be subject to no preemptive or
similar rights.  Upon contribution by Morgan Stanley (or any of its
Subsidiaries) to the Company, the Company will acquire one hundred percent
(100%) of the equity interests of the Morgan Stanley Contributed Subsidiaries
free and clear of any Liens, except for Permitted Liens and Liens created
pursuant to the Transaction Documents.  Except as contemplated by this
Agreement or the other Transaction Documents, (A) no capital stock, limited
liability company interests or other equity securities (including but not
limited to any options, warrants or rights or other security convertible into or
exercisable or exchangeable for any capital stock, limited liability company
interest or other equity security) of any Morgan Stanley Contributed Subsidiary
are or may become required to be issued (other than to a Company Entity) by
reason of any security, contract or other obligation, (B) there are no
contracts, commitments or other obligations by which any Morgan Stanley
Contributed Subsidiary or other Person is or may be bound to sell or otherwise
transfer or repurchase, redeem or otherwise acquire or register any capital
stock, limited liability company interests or other equity securities of such
Morgan Stanley Contributed Subsidiary (other than to or from a Company Entity),
and (C) there are no contracts, commitments or other obligations relating to the
right to vote or dispose of any capital stock, limited liability company
interest or other equity security of any Morgan Stanley Contributed
Subsidiary.

       

      (h)  Assets; Services;
Title.  The assets (real, personal, mixed, tangible or
intangible) constituting the Morgan Stanley Contributed Assets, and the
benefits, services and intercompany arrangements to be provided under the other
Transaction 

       

       

      
        
          
          

        

        
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      Documents,
constitute all of the assets, benefits, services and intercompany arrangements
used in, necessary in any material respect for the conduct of, or otherwise
material (individually or in the aggregate) to, the Morgan Stanley Contributed
Business as presently conducted and as conducted in generating the Financial
Statements of the Morgan Stanley Contributed Business.  Immediately
after the Closing, taking into account the benefits, services and intercompany
arrangements to be provided under the other Transaction Documents, the Company
Entities will have good and marketable title to, or have good title pursuant to
a valid leasehold interest in or have a valid right to use or occupy, all of the
assets (real, personal, mixed, tangible or intangible), and will have valid
rights to demand and receive all benefits, services and intercompany
arrangements (on substantially the same terms), used in, necessary for the
conduct of, or otherwise material to, the Morgan Stanley Introducing Business as
presently conducted and as conducted in generating the Financial Statements of
the Morgan Stanley Contributed Business (taking into account that such business
as presently conducted is not a stand-alone introducing brokerage business),
including the Morgan Stanley Introducing Assets shown on the Financial
Statements of the Morgan Stanley Contributed Business, free and clear of any
Liens, except for Permitted Liens or as would not reasonably be expected to
result in a Material Adverse Effect on the Morgan Stanley Introducing
Business.

       

      (i)  Compliance with
Laws.  Each Morgan Stanley Contributed Subsidiary and each
Morgan Stanley Transferor is conducting and has since January 1, 2008 conducted
the Morgan Stanley Contributed Business and is using and operating and has since
January 1, 2008 used and operated the Morgan Stanley Contributed Assets in
compliance with all Laws applicable to it, in each case except as would not
reasonably be expected to have a Material Adverse Effect on the Morgan Stanley
Contributed Business.

       

      (j)  Tax.  During
the past three years, none of the Morgan Stanley Contributed Subsidiaries has
been a “distributing corporation” or a “controlled corporation” in a
distribution intended to qualify under Section 355(a) of the
Code.  None of the Morgan Stanley Contributed Subsidiaries has
participated in, or acted as a material advisor with respect to, any “listed
transaction” within the meaning of Treasury Regulation Section
1.6011-4.  Except for the entities set forth on Schedule 3.2(j)(i),
each Morgan Stanley Contributed Subsidiary will be, immediately after transfer
of such Contributed Subsidiary to the Company, a “disregarded entity” for
federal income tax purposes.

       

      (k)  No
Broker.  Except for Morgan Stanley & Co. Incorporated
(whose fees and expenses shall be paid by Morgan Stanley), Morgan Stanley is
not, and no Morgan Stanley Contributed Subsidiary or Company Entity at the
Closing will be, committed to any liability for any brokers’ or finders’ fees or
any similar fees, including but not limited to any bonus payable to any
director, officer, employee, agent or representative of or consultant to any
Morgan Stanley Contributed Subsidiary, Company Entity or Morgan Stanley
Transferor, in connection with the transactions contemplated by this
Agreement.

       

       

      
        
          
          

        

        
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      (l)  Title to Self-Clearing
Assets.  Following the transfer of Morgan Stanley Self-Clearing
Assets to the Company on a Morgan Stanley Self-Clearing Date, the Company
Entities will have good and marketable title to, or have good title pursuant to
a valid leasehold interest in or have a valid right to use or occupy, all of
such Morgan Stanley Self-Clearing Assets, free and clear of any Liens, except
for Permitted Liens or as would not reasonably be expected to result in a
Material Adverse Effect on the Morgan Stanley Self-Clearing
Business.

       

      (m)  Title to Morgan Stanley
Delayed Contribution Assets.  Following the transfer of the
Morgan Stanley Delayed Contribution Businesses to the Company, taking into
account the benefits, services and intercompany arrangements to be provided
under the other Transaction Documents, the Company Entities will have good and
marketable title to, or have good title pursuant to a valid leasehold interest
in or have a valid right to use or occupy, all of the assets (real, personal,
mixed, tangible or intangible), and will have valid rights to demand and receive
all benefits, services and intercompany arrangements (on substantially the same
terms), used in, necessary for the conduct of, or otherwise material to, the
Morgan Stanley Delayed Contribution Businesses as presently conducted and as
conducted in generating the Financial Statements of the Morgan Stanley
Contributed Business, including the Morgan Stanley Delayed Contribution Assets
shown on the Financial Statements of the Morgan Stanley Contributed Business,
free and clear of any Liens, except for Permitted Liens or as would not
reasonably be expected to result in a Material Adverse Effect on the Morgan
Stanley Delayed Contribution Businesses.

       

       

      ARTICLE
4

       

      CERTAIN
INTERIM AND OTHER COVENANTS

       

      Section
4.1 
Conduct of Business Prior to
Closing.

       

      (a)  Except
(i) as expressly contemplated or permitted hereby, including as reasonably
necessary to effect the Citigroup Reorganization or Morgan Stanley
Reorganization, (ii) as set forth on Schedule 4.1, (iii)
to the extent required by applicable Law, or (iv) with the prior written consent
of the other Party (which consent shall not be unreasonably withheld,
conditioned or delayed), and in each case subject to the other provisions hereof
(including Section 4.1(b)), between January 13, 2009 and the Closing (or with
respect to the employment or other service of Citigroup Contributed Business
Individuals or Morgan Stanley Contributed Business Individuals, as the case may
be, or any individual who is intended to be a Contributed Business Individual
(including, without limitation, the compensation and benefits thereof), the
Service Transfer Date), each Party will, and will cause each of its respective
Subsidiaries to, use their respective reasonable best efforts to conduct, in all
material respects, their respective Contributed Businesses in the ordinary and
usual course of business consistent with past practice, to preserve intact the
business, business organization, properties, employees and goodwill with respect
to such Contributed Businesses and to preserve for the Company the existing
business relations which are utilized in the conduct of such Contributed
Businesses consistent with past practice.  For the avoidance of doubt,
it is understood and agreed that voluntary customer or employee attrition at a
Party’s Contributed Business following the execution and delivery and

       

       

      
        
          
          

        

        
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      public
announcement of this Agreement and the transactions contemplated hereby shall
not, by itself, constitute a breach of such Party’s obligations under this
Section 4.1(a).

       

      (b)  Except
(i) as expressly contemplated or permitted hereby, including as reasonably
necessary to effect the Citigroup Reorganization or Morgan Stanley
Reorganization, (ii) as set forth on Schedule
4.1, (iii) to the extent required by applicable Law or (iv) with the
prior written consent of the other Party (which consent will not be unreasonably
withheld, conditioned or delayed), between January 13, 2009 and the Closing (or,
in the case of clauses (v) and (vi) below, the Service Transfer Date), each of
the Parties shall not:

       

      (i)  permit
any of its Contributed Subsidiaries to (A) issue, grant, deliver, sell or pledge
any capital stock or other equity securities, or securities convertible into or
exchangeable for any equity securities, (B) make, declare, pay or set aside any
dividend or other distribution in respect of its capital stock or other equity
securities, (C) adjust, split, combine, reclassify, redeem, purchase or
otherwise acquire or transfer, or amend the terms of, any of its capital stock
or other equity securities, or securities convertible into or exchangeable for
any equity securities, or (D) grant any person or entity any right to acquire,
or otherwise encumber, any of its capital stock or other equity interests,
except for dividends and distributions to other Contributed Subsidiaries or to
Citigroup or Morgan Stanley and to their other respective Wholly-Owned
Subsidiaries, as applicable;

       

      (ii)  permit
any of its Contributed Subsidiaries to amend any provision of their articles of
incorporation or bylaws or other equivalent organizational documents or enter
into any agreement with any of their shareholders in their capacity as
such;

       

      (iii)  take, or
permit any of its Subsidiaries to take, any action that is intended or would
reasonably be expected to, individually or in the aggregate, either (x) prevent
or materially delay the satisfaction of any conditions specified in Section 5.2
if such Party is Citigroup or (y) prevent or materially delay the satisfaction
of any conditions specified in Section 5.1 if such Party is Morgan
Stanley;

       

      (iv)  (A) dispose
of, or permit any Subsidiary to dispose of, any Contributed Subsidiary or any
equity interests therein, or any securities convertible into or exchangeable for
equity interests therein; (B) except in the ordinary course of business
consistent with past practice, dispose of, assign or otherwise transfer, or
permit any Subsidiary to dispose of, assign or otherwise transfer, any
Contributed Assets; or (C) except for hedging arrangements or pledges of
securities held in inventory (or in trading positions) in the ordinary course of
business consistent with past practice, mortgage, pledge or subject to any Lien
other than a Permitted Lien, or permit any Subsidiary to mortgage, pledge or
subject to any Lien other than a Permitted Lien, any Contributed
Assets;

       

       

      
        
          
          

        

        
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      (v)  materially
increase, or make any binding commitment to materially increase, the benefits
provided by any Benefit Plan or the compensation levels of any Citigroup Key
Contributed Business Individuals or Morgan Stanley Key Contributed Business
Individuals, as the case may be (including any across-the-board increases for
any groups of such employees), grant any rights to severance or termination pay
to, or enter into any employment, consulting or severance agreement with, any
Citigroup Key Contributed Business Individuals or Morgan Stanley Key Contributed
Business Individuals, as the case may be (provided that this
shall not prohibit the making of any severance payments in connection with
terminations of employment occurring following January 13, 2009 and prior to the
Closing in accordance with the terms of severance plans or agreements in effect
on the date hereof) or grant any bonus to, or increase the level of any bonus
opportunity for, or adopt, amend or terminate any Benefit Plan, except (A) for
amendments to any Benefit Plan intended to be qualified under Section 401(a) of
the Code that are required to maintain such qualification that will not
materially increase the cost of maintaining the Benefit Plan to any Company
Entity; (B) for grants of or increases in compensation (including severance)
required pursuant to the terms of any Benefit Plan or applicable Law or in the
ordinary course of business consistent with past practice; (C) for grants or
increases of compensation necessary or advisable to retain an individual
Contributed Business Individual deemed essential to the Contributed Business;
(D) Morgan Stanley may make the Morgan Stanley Equity Awards and may pay, or may
cause to be paid, annual incentive payments to the Morgan Stanley Contributed
Business Individuals as required or as previously declared in the ordinary
course of business consistent with past practice; (E) Citigroup may make the
Citigroup Equity Awards and may pay, or may cause to be paid, annual incentive
payments to the Citigroup Contributed Business Individuals as required or as
previously declared in the ordinary course of business consistent with past
practice; and (F) for the implementation by Morgan Stanley or Citigroup or their
respective Subsidiaries of any Benefit Plan that has been communicated or
announced to Citigroup Key Contributed Business Individuals or Morgan Stanley
Key Contributed Business Individuals, as the case may be, and has been made
available to the other Party as of January 13, 2009 (for purposes of this
Section 4.1(b)(v), a Citigroup Key Contributed Business Individual or Morgan
Stanley Key Contributed Business Individual, as the case may be, is (1) a
Citigroup Contributed Business Individual or Morgan Stanley Contributed Business
Individual, as the case may be, or any individual who is intended to be a
Contributed Business Individual, whose annual total compensation, in each case,
is in excess of $500,000 or (2) in the case of a financial advisor or similar
professional, a Citigroup Contributed Business Individual or Morgan Stanley
Contributed Business Individual, as the case may be, or any individual who is
intended to be a Contributed Business Individual, in each case, who generated
$1,000,000 or more in annual gross production in the most recently completed
twelve-month fiscal year);

       

      (vi)  (A) hire,
or transfer from its Contributed Business the employment of, any Contributed
Business Individual or any individual who is intended to be a Contributed
Business Individual (including any employees hired as replacements 

       

       

      
        
          
          

        

        
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      for
terminating employees), or terminate any such individual in a manner entitling
such individual to severance payments, in each case, except in the ordinary
course of business consistent with past practice; (B) establish, adopt, enter
into or amend any collective bargaining agreement (or other agreement or
understanding with any trade union, works council or other employee
representative body); (C) take any affirmative action to amend or waive any
performance or vesting criteria or accelerate vesting, exercisability or
settlement under any Benefit Plan; (D) transfer the sponsorship of any Benefit
Plan to or from any Citigroup Contributed Subsidiary or Morgan Stanley
Contributed Subsidiary, as the case may be; or (E) in the case of any Citigroup
Key Contributed Business Individual or Morgan Stanley Key Contributed Business
Individual, as the case may be, or any individual who is intended to be a
Citigroup Key Contributed Business Individual or Morgan Stanley Key Contributed
Business Individual, in each case who is described in subclause (1) of the
definition of Citigroup Contributed Business Individual and Morgan Stanley
Contributed Business Individual in clause (v) above, enter into any Employment
Agreement that provides for a multi-year compensation guarantee;

       

      (vii)  other
than pursuant to its existing business plan or budget, expend, or commit to
expend, funds for capital expenditures (including loans) with respect to its
Contributed Business, or for which any Contributed Subsidiaries would be liable,
in excess of $10 million in the aggregate;

       

      (viii)  (A)
permit any Contributed Subsidiary to make any acquisition (including by merger,
consolidation or other business combination) of another Person or business in
excess of $50 million individually or $75 million in the aggregate, or (B) make
any acquisition or permit any Subsidiary to make any acquisition (including by
merger, consolidation or other business combination) of another Person or
business in excess of $50 million individually or $75 million in the aggregate,
if such Person or business would primarily constitute Contributed Assets, in
each of the foregoing clauses (A) and (B) whether by purchase of stock or
securities or contributions to capital, except for contributions of capital to
other Contributed Subsidiaries;

       

      (ix)      
waive,
release, assign, settle or compromise any Claim of, against or affecting its
Contributed Business (whether or not existing on the date of this Agreement) if
such Claim, or the waiver, release, assignment, settlement or compromise
thereof, would result in (A) the issuance of an Order that would affect Company
Entities in any material respect after the Closing, (B) would involve an
admission of wrongdoing with respect to a material matter by any of the Company
Entities or with respect to the Contributed Businesses or (C) would involve the
payment of monetary damages in excess of $25 million or otherwise involve a
Claim with an amount in excess of $25 million;

       

      (x)  except as
may be required as a result of a change in GAAP, change any of the financial
accounting methods, practices or material policies used by such Party with
respect to its Contributed Business, in each case as set forth in, or

       

       

      
        
          
          

        

        
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      used in
the preparation of, the Financial Statements of the Citigroup Contributed
Business or the Financial Statements of the Morgan Stanley Contributed Business,
as applicable;

       

      (xi)  except as
may be required by a change in Law, settle or compromise any liability for
Taxes, make, change or revoke any Tax election, agree to any adjustment of any
Tax attribute, surrender any claim for a refund of Taxes, file any amended Tax
Return or obtain any Tax ruling, in each case with respect to the Contributed
Business or any Contributed Subsidiary, if such action would be reasonably
likely to have an adverse effect on the Company or any of its Subsidiaries after
the Closing that, individually or in the aggregate, is material;

       

      (xii)  (A) enter
into any Material Contract that would constitute a Contributed Asset or a
Contributed Liability, or to which any Contributed Subsidiary would be a party
or otherwise obligated thereunder, or amend, extend, renew, terminate or waive
any rights under any such Material Contract, or (B) permit any Subsidiary to do
any of the foregoing;

       

      (xiii)  enter
into any “non-compete,” “non-solicit,” exclusivity, preferred provider, most
favored nations, take or pay or similar agreement that would materially restrict
the business and operations of the Company or the Contributed Subsidiaries
following the Closing, including but not limited to their ability to solicit
customers or employees;

       

      (xiv)  adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of any Contributed
Subsidiary; or

       

      (xv)  enter
into, or cause any Subsidiary of such Party with respect to its Contributed
Business to enter into, any contract, commitment or understanding with respect
to any of the foregoing;

       

      provided, however, that the
foregoing provisions of Section 4.1(a) and (b) shall not be construed or
interpreted to prevent either Party or their respective Subsidiaries from
engaging in any activity with respect to their businesses which do not pertain
to or impact their respective Contributed Subsidiaries or Contributed
Businesses.

       

      Section
4.2 
Access to
Information.

       

      (a)  Between
January 13, 2009 and the Closing, each Party (the “Delivering Party”)
shall, and shall cause its Subsidiaries to, give the other Party (the “Requesting Party”)
and its representatives reasonable access during normal business hours to the
properties, books and records of the Delivering Party’s Contributed Business and
furnish them with such information and documents in its possession relating to
such Contributed Business as the Requesting Party may from time to time
reasonably request in connection with the consummation of the transactions
contemplated hereby and the performance of the Requesting Party’s obligations
hereunder; provided that the
Requesting Party shall not unreasonably interfere with the conduct of business
of the Delivering Party or any of its Subsidiaries; provided,

       

       

      
        
          
          

        

        
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      further, that the
furnishing of such documents or information shall not violate confidentiality
obligations to a client or other third party or jeopardize the attorney-client
privilege of the Delivering Party or any of its Subsidiaries (in which case the
Parties will use their reasonable best efforts to institute appropriate
substitute disclosure arrangements, to the extent practical in the
circumstances); provided, further, that no
Party shall be required to disclose information that is, in its reasonable
judgment, competitively sensitive; and provided, further, that neither
Party shall be required to disclose information in violation of applicable Law,
including information as to Contributed Business Individuals in violation of the
Health Insurance Portability and Accountability Act.  All such
requests for access to properties, books and records shall be made to such
representatives of Citigroup or Morgan Stanley, as appropriate, as are
designated in writing by such party from time to time (the “Designated
Representatives”), which Designated Representatives shall be solely
responsible for coordinating all such requests and all access permitted
hereunder.

       

      (b)  All such
information and other documents obtained or provided pursuant to this Section
4.2 shall be subject to the Confidentiality Agreement and, after the Closing,
Section 6.6 of the LLC Agreement and the Letter Agreement Regarding
Implementation of Morgan Stanley Smith Barney Information Sharing Guidelines
between Morgan Stanley and Citigroup, dated as of May 31, 2009.

       

      (c)  Each of
Citigroup and Morgan Stanley agrees (i) to hold all of the books and records
related to the Citigroup and Morgan Stanley Contributed Businesses,
respectively, that are not transferred to the Company hereunder, and not to
destroy or dispose of any thereof, for a period of seven years (unless a longer
period is required by applicable Law) from the Closing Date and
(ii) following the Closing Date, to provide the other Party, its
accountants and legal counsel, during normal business hours, upon reasonable
request, reasonable access to such books and records, to the extent that such
access may be requested as required to respond to any inquiry or investigation
by any Governmental Authority.  Each of Citigroup and Morgan Stanley
shall have the same rights, and the Company and its Subsidiaries shall have the
same obligations, as are set forth above in this Section 4.2(c) with
respect to any non-privileged records pertaining to the Citigroup Contributed
Business or the Morgan Stanley Contributed Business that are transferred to
the Company.

       

      Section
4.3 
Consents; Conditions;
Further Assurances.

       

      (a)  Between
January 13, 2009 and the Closing, each of the Parties hereby agrees to use its
reasonable best efforts to do or cause to be done all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with the other in
connection with the foregoing, including using their reasonable best efforts (i)
to obtain, and to cause the Parties’ respective Subsidiaries and other
controlled Affiliates to use their respective reasonable best efforts to obtain,
any and all Governmental Approvals and Third Party Approvals required in
connection with the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents (including, but not limited to,
any and all Governmental Approvals and Third Party Approvals to separate the
Excluded Businesses), (ii) to comply, and cause their respective Subsidiaries
and other controlled Affiliates to use their respective reasonable best efforts
to comply, with all conditions and covenants applicable or related to them as

       

       

      
        
          
          

        

        
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      contemplated
by this Agreement and the other Transaction Documents, (iii) to defend against
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby or by the other Transaction Documents and (iv) to do, and cause their
respective Subsidiaries and other controlled Affiliates to use their respective
reasonable best efforts to do, all such other acts as are necessary or advisable
in order to cause the consummation of the transactions contemplated hereby and
by the other Transaction Documents.  Notwithstanding the foregoing, in
the case of any Third Party Approval, in no event shall Citigroup or Morgan
Stanley be obligated to pay any money to any Person or to offer or grant other
financial or other accommodations to any Person in connection with its
obligations under this Section 4.3(a) (it being agreed that any such payments
shall be borne by the Company).

       

      (b)  Without
limiting the foregoing, between January 13, 2009 and the Closing, each Party
shall file, or cause to be filed, as promptly as practicable, in each case in
form and content in compliance with applicable Laws, each registration, report,
statement, notice, form or other filing requested or required to be filed by any
such Party or its Subsidiaries with the applicable Governmental Authority under
the HSR Act, the Exchange Act, the Securities Act, the Advisers Act or any other
similar Law in connection with the transactions contemplated by the Transaction
Documents.

       

      (c)  Subject
to applicable legal limitations and the instructions of any Governmental Entity,
each Party shall use reasonable best efforts to keep the other apprised of the
status of matters relating to the completion of the transactions contemplated
hereby and by the Transaction Documents, and each Party shall coordinate and
cooperate prior to the Closing with the other Party in exchanging such
information and supplying such reasonable assistance as may be reasonably
requested by the other Party in connection with any of the actions contemplated
by this Section 4.3, including, without limitation, (i) cooperating with the
other Party in connection with any filings required to be made under the HSR Act
or other antitrust, competition, trade regulatory, securities, or other Laws of
any Governmental Authority or any regulations issued thereunder, including, with
respect to the Party making a filing, (ii) furnishing to the other Party all
information required for any such application or filing with a Governmental
Authority, (iii) promptly notifying the other Party of, and furnishing the other
Party with copies of, any material written communications from or with any
Governmental Authority with respect to the transactions contemplated by this
Agreement and the Transaction Documents, (iv) permitting the other Party to
review in advance and considering in good faith the views of the other Party in
connection with any such proposed communication, filing or application made to
any Governmental Authority, (v) providing the other Party and its counsel with
advance notice of any substantive discussion, telephone call or meeting with any
Governmental Entity in respect of any material filing, investigation or other
inquiry in connection with the transactions contemplated by this Agreement or
the other Transaction Documents and (vi) promptly notifying the other Party of
any written notice or other communication from any party to any material
contract or agreement to the effect that such party is terminating or otherwise
materially adversely modifying its relationship with respect to the Contributed
Business as a result of the transactions contemplated by this
Agreement.

       

      (d)  At all
times prior to the Closing Date, each Party shall promptly notify the other
Party in writing of any fact, condition, event or occurrence that would
reasonably be 

       

       

      
        
          
          

        

        
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      expected
to result in the failure of any of the conditions contained in Section 5.2, in
the case of Citigroup, and Section 5.1, in the case of Morgan Stanley, promptly
upon becoming aware of the same; provided, however, that no
Party may elect not to proceed to the Closing based solely on any failure to so
notify.

       

      (e)  Without
limiting the foregoing provisions of this Section 4.3, if (i) a Law is enacted
or (ii) a Governmental Authority issues, or seeks the issuance of, an Order of
the type that would cause any of the closing conditions set forth in Sections
5.1(c) and 5.2(c) not to be satisfied, the Parties shall, and shall cause their
respective Subsidiaries to, use their reasonable best efforts to obtain the
elimination of such Law or the lifting, withdrawal or termination of such Order
or the termination of the efforts by such Governmental Authority to obtain the
issuance of such an Order at the earliest practicable time and/or to negotiate
in good faith to implement alternative arrangements that will permit the Closing
and the consummation of the transactions contemplated hereby to be consummated
without a violation of such Law or Order and without altering in any material
respect the rights or obligations of the Parties under this Agreement or any
other Transaction Document.

       

      (f)  If and to
the extent that the valid, complete and perfected transfer or assignment (or
novation, if applicable) to any of the Company Entities of any Contributed
Assets (or from a Contributed Subsidiary of any asset that is not a Contributed
Asset), including in connection with the Citigroup Reorganization and the Morgan
Stanley Reorganization, would be a violation of applicable Laws or require any
Governmental Approval and/or Third Party Approval in connection with the
Closing, then, the applicable transfer or assignment shall be automatically
deemed deferred and any such purported transfer or assignment shall be null and
void until such time as all legal impediments are removed and/or such
Governmental Approvals and/or Third Party Approvals have been
obtained.  Notwithstanding the foregoing, any such asset shall be
deemed a Contributed Asset for purposes of determining whether any liability is
a Contributed Liability.  If the transfer or assignment of any assets
intended to be transferred or assigned hereunder is not consummated prior to or
at the Closing, whether as a result of the provisions of this Section 4.3(f) or
for any other reason, then each Party shall, or shall cause the relevant
Subsidiary which is retaining such asset to, (i) continue to use reasonable best
efforts to obtain any such Governmental Approval and/or Third Party Approval
after the Closing (or in lieu thereof agree after the Closing with the
counterparty to replace any such Contributed Asset) until such time as such
Governmental Approval and/or Third Party Approval (or substitute or replacement
in lieu thereof) has been obtained, (ii) hold such asset from and after the
Closing for the use and benefit, insofar as reasonably possible, of the Person
entitled thereto (at the expense of the Person entitled thereto), and (iii) take
such other actions as may be reasonably requested by the Person to whom such
asset is to be transferred in order to place such Person, insofar as reasonably
possible, in the same position as if such asset had been transferred as
contemplated hereby and so that all the benefits and burdens relating to such
assets, including possession, use, risk of loss, potential for gain, and
dominion, control and command over such assets, are to inure from and after the
Closing to the Person otherwise entitled to have such asset in accordance with
the terms of this Agreement or any other Transaction
Document.  Without limiting the foregoing, at the reasonable request
and expense of the other Party, each Party shall cooperate with the other to
enforce any rights or remedies the Party or its Subsidiaries may have with
respect to any asset the transfer of which is delayed or not completed whether
as a result of a required Governmental Approval and/or Third Party Approval or
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      Governmental
Approvals and/or Third Party Approvals, the absence of which caused the deferral
of transfer of any asset pursuant to this Section 4.3(f), are obtained, the
transfer of the applicable asset shall be effected in accordance with the terms
of this Agreement and/or the applicable Transaction Document.  The
Person retaining an asset due to the deferral of the transfer of such asset
shall not be obligated, in connection with this Section 4.3(f), to expend any
money unless the necessary funds are advanced by the Person entitled to the
asset pursuant to this Agreement or the relevant Transaction Document, other
than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar
fees, all of which shall be promptly reimbursed by the Person entitled to such
asset.

       

      (g)  Prior to
and after the Closing, each Party, at the request of the other, shall use its
reasonable best efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate or assign all obligations
under agreements, leases, licenses and other obligations or liabilities of any
nature whatsoever that constitute Excluded Liabilities, or to obtain in writing
the unconditional release of all parties to such arrangements so that, in any
such case, the Company Entities will have no liability or responsibility for
such obligations or liabilities; provided, however, that no
Party shall be obligated to pay any consideration therefor to any third party
(who is not a Subsidiary or Affiliate of such Party) from whom such consents,
approvals, substitutions and amendments are requested.  If the
applicable Party is unable to obtain, or to cause to be obtained, any such
required consent, approval, release, substitution or amendment, it shall
continue to pay, perform and discharge fully all such obligations or other
liabilities and shall indemnify the Company Entities, the other Party and the
Indemnitees in accordance with the terms of this Agreement.

       

      (h)  The
provisions of Section 4.3(f) and (g) shall survive the Closing.

       

      Section
4.4 
Sufficiency of
Assets.

       

      (a)  To the
extent that, after the Closing, any Self-Clearing Date or any Delayed
Contribution Date, as applicable, the Company or either Party discovers that an
asset or liability was erroneously included as a Contributed Asset or
Contributed Liability: (x) the applicable Company Entity that acquired or
retained such asset shall, subject to Section 4.3(f), transfer such asset to the
applicable transferor Party thereof in exchange for a payment by such Party of
an amount in cash equal to the reported value of such asset on the applicable
Final Closing Balance Sheet or applicable Final Self-Clearing Balance Sheet, and
(y) the applicable Company Entity that acquired or retained such liability
shall, subject to Section 4.3(g), transfer such liability to the applicable
transferor Party thereof and shall make a payment to such Party of an amount in
cash equal to the reported value of such liability on the applicable Final
Closing Balance Sheet or applicable Final Self-Clearing Balance
Sheet.

       

      (b)  To the
extent that, after the Closing, any Self-Clearing Date or any Delayed
Contribution Date, as applicable, the Company or either Party discovers an asset
or liability that should have been included as a Contributed Asset or
Contributed Liability (including as necessary to make the representations set
forth in Sections 3.1(h), 3.1(l), 3.1(m), 3.2(h), 3.2(l), and 3.2(m) accurate):
(x) the Party that should have transferred such asset shall, subject to Section
4.3(f), transfer such asset to the Company and in exchange receive a payment
from the Company of an amount in cash equal to the value of such asset, in the
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      Citigroup
Introducing Asset, a Morgan Stanley Introducing Asset, a Citigroup Delayed
Contribution Asset or a Morgan Stanley Delayed Contribution Asset as of the
Closing Date or, in the case of a Citigroup Self-Clearing Asset or Morgan
Stanley Self-Clearing Asset, as of the applicable Self-Clearing Date (in each
case as initially determined in good faith by the Company and notified to the
Parties) as if it had been included in the applicable Final Closing Balance
Sheet or applicable Final Self-Clearing Balance Sheet and (y) the Party that
should have transferred such liability shall, subject to Section 4.3(g),
transfer such liability to the Company, and such Party shall pay to the Company
an amount in cash equal to the value of such liability as of the Closing Date
or, in the case of a Citigroup Self-Clearing Liability or Morgan Stanley
Self-Clearing Liability, as of the applicable Self-Clearing Date (in each case
as initially determined in good faith by the Company and notified to the
Parties) as if it had been included in the applicable Final Closing Balance
Sheet or applicable Final Self-Clearing Balance Sheet; provided that any
disagreement between the Parties as to the value of any such asset or liability
shall be resolved by following the procedures set forth in Section 2.10(b) and Section
2.11(d).

       

      (c)  Prior to
the Closing, Citigroup and Morgan Stanley agree that they will not and will not
permit any of their Affiliates, directly or indirectly, to (i) solicit or hire
any of the financial advisors of the Citigroup Contributed Business or the
Morgan Stanley Contributed Business or (ii) conduct a solicitation program that
is specifically focused on customers or clients of the Citigroup Contributed
Business or the Morgan Stanley Contributed Business, respectively, in their
capacities as such (it being understood that (x) each Party may continue to have
contacts with such customers and clients in the ordinary course of its
respective business, consistent with past practice, and (y) nothing shall
prohibit the general solicitation of qualifying Citigroup employees for purposes
of becoming private banking or retail bank customers of Citigroup).

       

      (d)  Prior to
Closing, the Parties will work together in good faith to determine whether there
is any (i) owned Intellectual Property (other than any Trademarks) that is a
Citigroup Excluded Asset or a Morgan Stanley Excluded Asset that is reasonably
necessary in any material respect for the operation of the Citigroup Contributed
Business or the Morgan Stanley Contributed Business, as applicable, as conducted
on January 13, 2009 or (ii) any Citigroup Contributed IP or Morgan Stanley
Contributed IP that is necessary in any material respect for the operation of
the Citigroup Excluded Businesses or the Morgan Stanley Excluded Businesses, as
applicable, as conducted on January 13, 2009.  If, in the case of
clause (i) above, the Parties determine that there is any owned Intellectual
Property (other than any Trademarks) that is necessary in any material respect
for the operation of the Citigroup Contributed Business or the Morgan Stanley
Contributed Business, as applicable, the Company and the applicable Party will
enter into a non-exclusive, non-transferable license on terms consistent with
past practice to allow the Company to use such Intellectual Property in
connection with the operation of its business.  If, in the case of
clause (ii) above, the Parties determine that there is any Citigroup Contributed
IP or Morgan Stanley Contributed IP that is necessary in any material respect
for the operation of the Citigroup Excluded Businesses or the Morgan Stanley
Excluded Businesses, as applicable, the Company and the applicable Party will
enter into a non-exclusive, non-transferable license on terms consistent with
past practice to use such Intellectual Property in connection with the operation
of the Citigroup Excluded Businesses or the Morgan Stanley Excluded Businesses,
as applicable; provided that, in the
case of Trademarks, any such license shall be granted for an initial period of 6
months and may be extended for an additional 6 month period with the consent of
the grantor, such consent not to be unreasonably withheld.

       

       

      
        
          
          

        

        
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      (e)  The
provisions of Section 4.4 shall survive the Closing.

       

      Section
4.5 
Tax
Matters.

       

      (a)  Tax
Indemnification.

       

      (i)  Morgan
Stanley shall be responsible for and shall indemnify the other Party, the other
Party’s Affiliates and the Company Entities and their respective Affiliates and
hold them harmless from, without duplication, all liability for (A) Morgan
Stanley Excluded Taxes (except to the extent expressly included and provided for
in the calculation of Morgan Stanley Introducing Tangible Book Value reflected
in the Final Closing Balance Sheet of the Morgan Stanley Introducing Business
(excluding any liability or reserve for deferred Taxes established to reflect
timing differences between book and Tax income)); (B) Taxes arising from or in
connection with any breach by Morgan Stanley or any of its Subsidiaries of any
representation contained in Section 3.2(j) or any covenant contained in Section
2.2(a) – (c) and (e), 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 2.10, 2.11, 2.12, 4.1(b),
4.5, 4.8 or 4.10(d) of this Agreement; (C) the Tax Equivalent Amount with
respect to any Excess Flow-Through Income required to be included in gross
income by Citigroup or any of its Affiliates with respect to any Morgan Stanley
Contributed Subsidiary; (D) any Taxes imposed on any Company Entity that are
attributable to a failure by such entity to comply with any federal, state,
local or foreign Tax reporting or withholding requirement during the 9-month
period beginning on the Closing Date, if such failure is due to the use by such
entity of any procedure established by Morgan Stanley or any of its Affiliates
and in place as of the Closing Date for the solicitation, collection and
maintenance of any forms, certifications and other information or otherwise is
due to any form, certification or other required information in place as of the
Closing Date (or the absence of any such form, certification or information as
of the Closing Date), except to the extent that such failure is due to a change
in Law following the Closing or to the extent such failure is attributable to a
breach by the Company of the covenant contained in Section 4.5(k); (E) any Taxes
imposed on any Company Entity that arise from or are attributable to the actual
or deemed liquidation, for federal income tax purposes, of any entity listed on
Schedule
3.2(j)(i) other than Bank Morgan Stanley AG; and (F) all costs and
expenses (including but not limited to legal fees and expenses) attributable to
any item in clauses (A) through (E).

       

      (ii)  Citigroup
shall be responsible for and shall indemnify the other Party, the other Party’s
Affiliates and the Company Entities and their respective Affiliates and hold
them harmless from, without duplication, all liability for (A) Citigroup
Excluded Taxes (except to the extent expressly included and provided for in the
calculation of Citigroup Introducing Tangible Book Value reflected in the Final
Closing Balance Sheet of the Citigroup Introducing Business (excluding any
liability or reserve for deferred Taxes established to reflect timing
differences between book and Tax income)); (B) Taxes arising from or in
connection with any breach by Citigroup or any of its Subsidiaries of any
representation contained in Section 3.1(j) or any covenant contained in Section
2.2(a) – (c) and (e), 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 2.10, 2.11, 2.12, 4.1(b),
4.5, 4.8 or 4.10(d) of this Agreement; (C) the Tax Equivalent Amount with
respect to any Excess Flow-Through Income required to be included in gross
income by Morgan Stanley or any of its Affiliates with respect to any Citigroup
Contributed Subsidiary; (D) any Taxes imposed on any Company Entity that are
attributable to a failure by such entity to comply with any federal, state,
local or foreign Tax reporting or withholding requirement during the
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      month
period beginning on the Closing Date, if such failure is due to the use by such
entity of any procedure established by Citigroup or any of its Affiliates and in
place as of the Closing Date for the solicitation, collection and maintenance of
any forms, certifications and other information or otherwise is due to any form,
certification or other required information in place as of the Closing Date (or
the absence of any such form, certification or information as of the Closing
Date), except to the extent that such failure is due to a change in Law
following the Closing or to the extent such failure is attributable to a breach
by the Company of the covenant contained in Section 4.5(k); (E) any Taxes
imposed on any Company Entity that arise from or are attributable to the actual
or deemed liquidation, for federal income tax purposes, of any entity listed on
Schedule 3.1(j)(i) attached to this Agreement; and (F) all costs and expenses
(including but not limited to legal fees and expenses) attributable to any item
in clauses (A) through (E).

       

      (iii)  The
Company shall be responsible for and shall indemnify Citigroup, Morgan Stanley,
and their respective Affiliates and hold them harmless from all liability for
Applicable Taxes with respect to the portion of any Straddle Period that begins
after the Closing Date.

       

      (iv)  Any
indemnity payment to be made pursuant to this Section 4.5(a) shall be paid in
full within fifteen (15) Business Days after the indemnified party makes written
demand upon the indemnifying party or, if later, five (5) Business Days prior to
the date on which such amount is required to be paid to the relevant
Governmental Authority or other Third Party.  The written notice shall
set forth in reasonable detail the calculation of the amount for which
indemnification is sought and the circumstances giving rise to the indemnity
claim.

       

      (v)  In the
case of any Applicable Taxes with respect to a Straddle Period, (A) real,
personal and intangible property Taxes (“Property Taxes”) of
or with respect to the applicable Contributed Subsidiary or Contributed Business
allocable to the Pre-Closing Tax Period shall be equal to the amount of such
Property Taxes for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that are in
the Pre-Closing Tax Period and the denominator of which is the number of days in
the Straddle Period; and (B) Taxes (other than Property Taxes and Taxes arising
from an action on the Closing Date after the Closing outside of the ordinary
course of business (other than Taxes attributable to an action taken by, or at
the direction of, the contributing Party)) of or with respect to the applicable
Contributed Subsidiary or Contributed Business allocable to the Pre-Closing Tax
Period shall be computed as if such taxable period ended on and included the
Closing Date, provided, that
exemptions, allowances or deductions that are calculated on an annual basis
(including, but not limited to, depreciation and amortization deductions) shall
be allocated between the period ending on the Closing Date and the period
beginning after the Closing Date in proportion to the number of days in each
period.  Each Contributed Subsidiary that is classified as a
partnership or “flow-through” entity for Tax purposes shall be treated as if its
taxable year ended as of the close of business on the Closing Date and Taxes
attributable to the income and gain of each such entity through the close of
business on the Closing Date, determined based on a “closing of the books,”
shall be considered to be attributable to the Pre-Closing Tax
Period.

       

      (vi)  A Party’s
obligations to make an indemnity payment pursuant to Section 4.5(a) shall be net
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      reason of
the incurrence or payment of the indemnified liability and shall be increased by
any Tax costs incurred by the indemnified party as a result of the receipt of
the indemnity payment.

       

      (b)  Tax
Contests.

       

      (i)  Morgan
Stanley shall have the right to represent the interests of each of the Morgan
Stanley Contributed Subsidiaries in, and to control the conduct of, any Tax
audit or administrative or court proceeding (a “Tax Contest”) with
respect to any taxable period of such Subsidiary that ends on or prior to the
Closing Date.

       

      (ii)  Citigroup
shall have the right to represent the interests of each of the Citigroup
Contributed Subsidiaries in and to control the conduct of any Tax Contest with
respect to any taxable period of such Subsidiary that ends on or prior to the
Closing Date.

       

      (iii)  The
Company and Citigroup shall jointly represent the interests of each of the
Citigroup Contributed Subsidiaries in any Tax Contest to the extent relating to
a Straddle Period of any such Subsidiary.  The Company and Morgan
Stanley shall jointly represent the interests of each of the Morgan Stanley
Contributed Subsidiaries in any Tax Contest to the extent relating to a Straddle
Period of any such Subsidiary.

       

      (iv)  If the
resolution of any Tax Contest with respect to a Pre-Closing Tax Period or a
Straddle Period would reasonably be expected to result in a material increase in
the amount of Taxes required to be borne by the Party not in control of such Tax
Contest (the “Non-Controlling Tax
Party”) or would reasonably be expected to result in the Non-Controlling
Tax Party having an obligation to make an indemnity payment pursuant to Section
4.5(a), (A) the Party in control of such Tax Contest (the “Controlling Tax
Party”) shall keep the Non-Controlling Tax Party informed of any
proceedings, events and developments relating to or in connection with such Tax
Contest; (B) the Non-Controlling Tax Party shall be entitled to receive copies
of all material correspondence and documents relating to such Tax Contest; and
(C) if requested, the Controlling Tax Party shall consult with the
Non-Controlling Tax Party or its counsel and shall not enter into any settlement
or compromise with respect to any such Tax Contest that could result in an
adverse effect on the Non-Controlling Tax Party that is material without the
Non-Controlling Tax Party’s prior written consent, which consent shall not be
unreasonably withheld.

       

      (c)  Preparation and Filing of
Tax Returns.

       

      (i)  Morgan
Stanley shall timely prepare and file, or cause to be timely prepared and filed,
on a basis consistent with past practice, all Tax Returns of any Morgan Stanley
Contributed Subsidiary and all Tax Returns required to be filed with respect to
the Morgan Stanley Contributed Business for all taxable periods that end on or
before the Closing Date.  Except to the extent otherwise required
pursuant to a “determination” within the meaning of Section 1313(a) of the Code
(or any comparable provision of state, local or foreign Law), the Company shall
not amend (and shall not permit any of its Subsidiaries to amend) any such Tax
Returns without the prior written consent of Morgan Stanley, such consent not to
be unreasonably withheld.

       

       

      
        
          
          

        

        
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      (ii)  Citigroup
shall timely prepare and file, or cause to be timely prepared and filed, on a
basis consistent with past practice, all Tax Returns of any Citigroup
Contributed Subsidiary and all Tax Returns required to be filed with respect to
the Citigroup Contributed Business for all taxable periods that end on or before
the Closing Date.  Except to the extent otherwise required pursuant to
a “determination” within the meaning of Section 1313(a) of the Code (or any
comparable provision of state, local or foreign Law), the Company shall not
amend (and shall not permit any of its Subsidiaries to amend) any such Tax
Returns without the prior written consent of Citigroup, such consent not to be
unreasonably withheld.

       

      (iii)  The
Company shall timely prepare and file, or cause to be timely prepared and filed,
on a basis consistent with past practice, all Tax Returns of any Contributed
Subsidiary required to be filed with respect to a Straddle Period of such
Subsidiary.  The Company shall furnish any such Tax Return that is
material to the Party that contributed such Contributed Subsidiary for such
Party’s review and comment at least thirty (30) days prior to the due date
(taking into account all applicable extensions) for filing such Tax
Return.  Except to the extent otherwise required pursuant to a
“determination” within the meaning of Section 1313(a) of the Code (or any
comparable provision of state, local or foreign Law), the Company shall not
amend (and shall not permit any of its Subsidiaries to amend) any such Tax
Returns without the prior written consent of the Party that contributed such
Contributed Subsidiary, such consent not to be unreasonably
withheld.

       

      (d)  Cooperation.  Each
of Morgan Stanley, Citigroup, and the Company shall reasonably cooperate, and
shall cause their respective Affiliates, officers, employees, agents, auditors
and representatives to reasonably cooperate, with respect to Tax
matters.  Morgan Stanley, Citigroup and the Company agree to furnish
or cause to be furnished to each other, upon request, as promptly as
practicable, such information and assistance relating to the Contributed
Subsidiaries and Contributed Businesses as is reasonably necessary for the
filing of any Tax Return, the preparation for any audit and the prosecution or
defense of any claim, suit or proceeding relating to any proposed adjustment, in
each case, with respect to a Pre-Closing Tax Period or a Straddle Period of a
Contributed Subsidiary.  The Parties shall reasonably cooperate to (i)
identify all Tax-related information with respect to the Contributed Businesses
that is held by Citigroup, Morgan Stanley or their respective Affiliates and is
reasonably necessary for the preparation of any Tax Return of a Company Entity,
(ii) agree on the format in which such documentation will be provided to the
Company Entities, and (iii) take all actions reasonably necessary to transfer
such information to the Company at the Closing.

       

      (e)  Refunds.  Except
to the extent reflected as an asset in the Final Closing Balance Sheet of the
Citigroup Contributed Business or the Morgan Stanley Contributed Business, as
applicable, any refunds of Applicable Taxes for any taxable period that ends on
or prior to the Closing Date actually received or applied against a Tax
liability of a Contributed Subsidiary, the Company or any of its Affiliates
after the Closing Date shall be for the account of the Party that contributed
such Contributed Subsidiary or such Contributed Business.  The Company
shall be entitled to any refund of Applicable Taxes for any taxable period
beginning after the Closing Date.  Any refunds of Applicable Taxes
with respect to a Straddle Period shall be apportioned equitably between the
Company and the Party that contributed such Contributed Subsidiary or such
Contributed Business.  Each Party shall forward, and shall cause its
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      to
forward, to the Party entitled to a refund of Taxes, the amount of such refund
within ten (10) days after such refund is received, in each case net of any
costs to the Party receiving the refund.

       

      (f)  Characterization of Certain
Transactions.  Except to the extent otherwise required pursuant
to a “determination” within the meaning of Section 1313(a) of the Code (or any
comparable provision of state, local or foreign Law), the Parties agree to
treat, for federal income tax purposes, (i) the transactions described in
Section 2.4(b), 2.4(c) and
2.6(h)(i) hereof as contributions described in Section 721(a) of the Code, (ii)
the transactions described in Section 2.4(l) and 2.6(h)(ii) hereof as a purchase
by Morgan Stanley or one of its Affiliates and a sale by Citigroup or one of its
Affiliates of a partnership interest in the Company, (iii) the contributions of
the Self-Clearing Businesses on the Self-Clearing Date(s) as contributions
described in Section 721(a) of the Code, and (iv) the transfers of the Delayed
Contribution Businesses (other than the Managed Futures Business), to the extent
such transfers are structured as contributions to the Company (rather than as
purchases by the Company with cash previously contributed to the Company) as
contributions described in Section 721(a) of the Code.

       

      (g)  Tax Sharing
Agreements.  Citigroup shall terminate or cause to be
terminated prior to the Closing any Tax sharing agreement or arrangement to
which any Citigroup Contributed Subsidiary, on the one hand, and Citigroup or
any of its Affiliates, on the other hand, are parties.  Morgan Stanley
shall terminate or cause to be terminated prior to the Closing any Tax sharing
agreement or arrangement to which any Morgan Stanley Contributed Subsidiary, on
the one hand, and Morgan Stanley or any of its Affiliates, on the other hand,
are parties.  No party shall have any rights or obligations under any
such agreements following the Closing.

       

      (h)  Transfer
Taxes.  Any irrecoverable excise, sales, use, transfer, real
property transfer, documentary, stamp or similar Taxes (“Transfer Taxes”)
resulting from the transfer of the Contributed Assets to the Company and the
transaction described in Section 2.4(l) shall be borne equally by Morgan
Stanley, on the one hand, and Citigroup, on the other; provided, that, solely
with respect to transfers of Contributed Assets from an entity organized in the
United States, any state thereof or the District of Columbia to the Company, (i)
Morgan Stanley shall be responsible for and shall bear any incremental Transfer
Taxes arising from or attributable to any failure by Morgan Stanley or any of
its Affiliates to comply with the transaction steps described in Schedule 4.5(h)(1),
and (ii) Citigroup shall be responsible for and shall bear any incremental
Transfer Taxes arising from or attributable to any failure by Citigroup or any
of its Affiliates to comply with the transaction steps described in Schedule
4.5(h)(2).  Except as otherwise provided in the Transaction
Documents (other than this Agreement) with respect to the transactions
contemplated thereby, all other Transfer Taxes arising from the transactions
contemplated in this Agreement shall be the responsibility of the Party that
incurs such Tax; provided, however,
that any Australian stamp duty resulting from the transfer of Contributed Assets
specified in Schedule
4.5(h)(3) to Citi Smith Barney Pty Ltd. prior to the contribution of Citi
Smith Barney Pty Ltd. to the Company shall be borne equally by Morgan Stanley,
on the one hand, and by Citigroup, on the other.  The Parties shall
reasonably cooperate to minimize the aggregate amount of Transfer
Taxes.

       

      (i)  Successor Information
Reporting.  The Company and the Parties hereby agree to
cooperate to evaluate whether it will be commercially practical to use the
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      procedure”
described in Section 5 of Revenue Procedure 99-50, 1999-2 C.B. 757, for each
Party’s information reporting obligations on all Forms 1042-S, all Forms in
series 1098, 1099, and Form 5498 with respect to customers of the Contributed
Businesses for the calendar year that includes the Closing Date, and, if the
parties so agree, to implement such procedure.

       

      (j)  Exclusivity.  Anything
in this Agreement to the contrary notwithstanding, indemnification for Taxes,
including indemnification for Excluded Taxes and for breaches of any
representation or warranty set forth in Section 3.1(j) or 3.2(j) or any covenant
specified in Section 4.5(a)(i)(B) or 4.5(a)(ii)(B), and the procedures with
respect thereto shall be governed exclusively by this Section 4.5, and the
provisions of Article 6 shall not apply; provided that
indemnification for Taxes arising out of a breach of any covenant in this
Agreement (other than the covenants specified in Section 4.5(a)(i)(B) or
4.5(a)(ii)(B)) shall be governed by Article 6. Anything in
Article
6 to the
contrary notwithstanding, the representations set forth in Section
3.1(j) and
3.2(j) and
the provisions of this Section
4.5 shall
survive until 90 days after the expiration of the applicable statute of
limitations with respect to matters covered thereby.

       

      (k)  Prior to
the Closing, if either Party holds Tax Documentation that, when contributed or
made available to the Company, would not permit the Company to rely on such Tax
Documentation in order to comply with any federal, state, local or foreign Tax
reporting or withholding requirement (the “Compliance
Requirements”), the Company and the Parties shall use commercially
reasonable efforts to take such actions, including pursuing an agreement with,
or ruling or other administrative guidance from, the IRS (a “Compliance Ruling”)
prior to the Closing Date, to enable the Company to satisfy the Compliance
Requirements through reliance on such Tax Documentation.  From and
after the Closing, if management of the Company has actual knowledge that any
Tax Documentation contributed or made available to the Company by the Parties or
their respective Affiliates is insufficient to enable the Company to satisfy the
Compliance Requirements, the Company and the Parties shall use commercially
reasonable efforts to take such actions, including pursuing a Compliance Ruling
after the Closing Date, that would enable the Company to satisfy the Compliance
Requirements.  The Parties shall, and shall cause the Company to,
cooperate in good faith in furtherance of this Section 4.5(k).

       

      (l)  Adjustments to Certain
Defined Terms.  (i) in the case of a Citigroup Self-Clearing
Business, references to “Closing” or “Closing Date” contained in the definitions
of “Citigroup Excluded Taxes,” “Pre-Closing Tax Period,” “Straddle Period” and
in Sections 4.5(a) through (e), (g), (i) and (k), shall be references to the
relevant Citigroup Self-Clearing Date, and references to “Citigroup Introducing
Tangible Book Value” and “Final Closing Balance Sheet of the Citigroup
Introducing Business” shall be references to “Citigroup Self-Clearing Tangible
Book Value” and “Final Self-Clearing Balance Sheet of the Citigroup
Self-Clearing Business,” respectively; provided, however, that solely
for purposes of  subclause (D) of Section 4.5(a)(ii), references to
“Closing” or “Closing Date” shall be references to the Citigroup Self-Clearing
Date with respect to the final contribution of the Citigroup Self-Clearing
Business; (ii) in the case of any Citigroup Delayed Contribution Business,
references to “Closing” or “Closing Date” contained in the definitions of
“Citigroup Excluded Taxes,” “Pre-Closing Tax Period,” “Straddle Period” and in
Sections 4.5(a) through (e), (g), (i) and (k) of the Contribution Agreement,
shall be references to the relevant Delayed Contribution Date;
(iii)  in the case of a Morgan Stanley Self-Clearing Business,
references to “Closing” or “Closing Date” contained in the definitions of
“Morgan Stanley Excluded Taxes,” “Pre-Closing Tax Period,” “Straddle Period” and
in Sections 

       

       

      
        
          
          

        

        
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      4.5(a)
through (e), (g), (i) and (k), shall be references to the relevant Morgan
Stanley Self-Clearing Date, and references to “Morgan Stanley Introducing
Tangible Book Value” and “Final Closing Balance Sheet of the Morgan Stanley
Introducing Business” shall be references to “Morgan Stanley Self-Clearing
Tangible Book Value” and “Final Self-Clearing Balance Sheet of the Morgan
Stanley Self-Clearing Business,” respectively; provided, however, that solely
for purposes of subclause (D) of Section 4.5(a)(i), references to “Closing” or
“Closing Date” shall be references to the Morgan Stanley Self-Clearing Date with
respect to the final contribution of the Morgan Stanley Self-Clearing Business;
and (iv) in the case of any Morgan Stanley Delayed Contribution Business,
references to “Closing” or “Closing Date” contained in the definitions of
“Morgan Stanley Excluded Taxes,” “Pre-Closing Tax Period,” “Straddle Period” and
in Sections 4.5(a) through (e), (g), (i) and (k) of the Contribution Agreement,
shall be references to the relevant Delayed Contribution Date.

       

      (m)  Certain Non-US Tax
Matters.

       

      (i)  Notwithstanding
the contribution of Quilter Holdings Limited as part of the Citigroup
Contributed Business pursuant to this Agreement, Morgan Stanley and Citigroup
acknowledge and agree that:

       

      (A)  Morgan
Stanley and/or its Subsidiaries, as applicable, shall remain liable after
Closing to the extent provided in: (i) the agreement relating to the sale and
purchase of the entire issued share capital of Quilter Holdings Limited dated 12
December 2006; and (ii) the tax deed of covenant in respect of the sale of
Quilter Holdings Limited dated 28 February 2007, both entered into by Morgan
Stanley Group (Europe) and Citibank Investments Limited (together, the “2006/2007 Quilter
Agreements”);

       

      (B)  to the
extent that any liability arises in Quilter Holdings Limited for which Citibank
Investments Limited has a claim against Morgan Stanley Group (Europe) under the
2006/2007 Quilter Agreements (or would have had such a claim if Quilter Holdings
Limited had not been contributed pursuant to this Agreement, any loss or
liability suffered by Citigroup pursuant to its obligations under this Agreement
in respect of such liability shall be deemed to be a loss of Citibank
Investments Limited for the purposes of the 2006/2007 Quilter Agreements (but
only to the extent of such claim for indemnification under this
Agreement);

       

      (C)  the
contribution of Quilter Holdings Limited pursuant to this Agreement shall not
prevent any claim being brought under the 2006/2007 Quilter Agreements unless
and to the extent otherwise specifically provided for in this Agreement;
and

       

      (D)  Morgan
Stanley shall, and shall cause or procure its Subsidiaries and the Company
Entities (as applicable) to, act in accordance to give effect to the rights
under this Section 4.5(m)(i) and take such steps and provide such information
and reasonable assistance as 

       

       

      
        
          
          

        

        
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      required
by Citigroup and/or its Subsidiaries to exercise their rights under this Section
4.5(m)(i).

       

      (ii) 

       

      (A)  Morgan
Stanley agrees to pay, or procure that its Subsidiaries pay, to any Company
Entity which is from time to time a member of the Morgan Stanley VAT Group (the
“Relevant MS VAT Group
Members”) on the due date for payment an amount equal to any VAT payable
by any member of the Morgan Stanley VAT Group or recharge of any VAT payable by
the representative member of the Morgan Stanley VAT Group attributable to any
supplies, self-supplies, importations or acquisitions made or deemed to have
been made for VAT purposes:

       

      (1)  by or to
those Relevant MS VAT Group Members before Closing; or

       

      (2)  by or to
members of the Morgan Stanley VAT Group (other than the Relevant MS VAT Group
Members),

       

      for which
the Relevant MS VAT Group Members are or become liable on or after Closing by
virtue of the failure of the representative member of the Morgan Stanley VAT
Group to pay when due such VAT or (in the case of a recharge of such VAT) by
virtue of any agreement or understanding between any member of the Morgan
Stanley VAT Group and the representative member of the Morgan Stanley VAT Group,
except, for the avoidance of doubt, to the extent that such VAT (in either case)
is attributable to any supplies, self-supplies, importations or acquisitions
made for VAT purposes by or to the Relevant MS VAT Group Members on or after
Closing and except to the extent expressly provided for in the calculation of
Morgan Stanley Tangible Book Value reflected in the Final Closing Balance Sheet
of the Morgan Stanley Contributed Business.

       

      (B)  The
deeming provisions of Section 43(1) VAT Act 1994 (other than Section 43(1)(a)
VAT Act 1994), or any equivalent VAT provision in respect of a jurisdiction
outside of the UK, shall be disregarded in determining what supplies, self
supplies, importations or acquisitions have been made or are deemed to have been
made by or to any person for the purposes of this Section
4.5(m)(ii).

       

      (iii)  Transfer
pricing.  If, in relation to any transaction to which the
Company Entities on the one hand and the Citigroup Entities or the Morgan
Stanley Entities on the other hand are party (a “Relevant
Transaction”), any adjustment for the purposes of corporation taxes
imposed in the United Kingdom is made to the actual economic terms of the
Relevant Transaction under Schedule 28AA of the Income and Corporation Taxes Act
of 1988 of the United Kingdom 

       

       

      
        
          
          

        

        
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      (as
amended or substituted from time to time) (a “Transfer Pricing
Amendment”), then the parties shall discuss, cooperate in good faith and
agree to take within a reasonable time period such actions as are necessary to
put the parties to the Relevant Transaction in the position they would have been
in had the Transfer Pricing Adjustment not occurred in a manner which does not
cause any material adverse Tax consequences in the United Kingdom or elsewhere
for either the Company Entities, the Citigroup Entities and the Morgan Stanley
Entities.

       

      Section
4.6 
Real Estate
Matters.  Following the date hereof and prior to the Closing,
the Parties shall prepare, execute and deliver, subject to Section
4.3(f):  (i) with respect to the Contributed Real Property, a special
warranty deed in proper form for recording in the appropriate jurisdiction from
the owner of each Contributed Real Property to one or more Company Subsidiaries,
and (ii) with respect to the Contributed Leased Real Property, a direct or
indirect assignment between the lessor as assignor and one or more Company
Subsidiaries as assignees providing for the assignment of such Contributed
Leased Real Property to one or more Company Subsidiaries.

       

      Section
4.7 
Transaction
Documents.   Each Party shall negotiate in good faith and
agree upon the full terms and conditions of the Transaction Documents in
accordance with the terms set forth on the applicable Exhibits hereto; provided that, in the
absence of such agreement on any Transaction Document, the terms set forth in
the applicable Exhibit shall be deemed to be the full terms and conditions of
such Transaction Document and shall be binding from and after the Closing unless
and until superseded by a full agreement with respect to such Transaction
Document mutually agreed by the Parties.  In addition, at and, if
necessary, after the Closing, the Parties shall, and shall cause their
respective Subsidiaries to, execute and deliver, to the extent applicable, all
bills of sale and assignment, assumption agreements and any other instruments of
transfer, assignment or conveyance necessary or desirable to consummate the
transactions contemplated by this Agreement.

       

      Section
4.8 
Actions by
Subsidiaries.  Each of Citigroup and Morgan Stanley shall
ensure that each of their respective Subsidiaries takes all actions necessary to
be taken by such Subsidiaries in order to fulfill the obligations of Citigroup
and Morgan Stanley, as the case may be, hereunder.  From the date of
this Agreement until the Closing, Morgan Stanley will not permit the Company to
engage in any activities or incur any liabilities other than in connection with
the transactions contemplated by this Agreement.

       

      Section
4.9 
Negotiations with
Others.  Until the Closing or the earlier termination of this
Agreement, each of Citigroup and Morgan Stanley will not and will cause each of
their respective Subsidiaries and representatives, as the case may be, not to,
directly or indirectly, without the written consent of the other, initiate
discussions or engage in negotiations concerning, or discuss, with any Person
other than the other Party hereto and their representatives, any proposal
regarding the acquisition of or joint venture with respect to all or part of the
Citigroup Contributed Assets, the Citigroup Contributed Equity Interests,
or the Citigroup Contributed Business, or the Morgan Stanley Contributed
Assets, the Morgan Stanley Contributed Equity Interests or the Morgan
Stanley Contributed Business, as the case may be.  Nothing in
this Section 4.9 shall interfere with the ability of either Citigroup or Morgan
Stanley to pursue or consider any merger or other business combination
transaction involving such Party, 

       

       

      
        
          
          

        

        
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      other
than any transaction that is reasonably likely to prevent the consummation of
the transactions contemplated hereby.

       

      Section
4.10 
Termination of
Agreements.

       

      (a)  Except as
set forth in Section 4.10(c), and subject to applicable Law, at the Closing,
Citigroup shall, and shall cause each of its Subsidiaries that is not a
Citigroup Contributed Subsidiary to, terminate, effective as of the Closing, any
and all agreements, arrangements, commitments or understandings, whether or not
in writing, between or among any Citigroup Entity, on the one hand, and any
Citigroup Contributed Subsidiary, on the other hand.  No such
terminated agreement, arrangement, commitment or understanding (including any
provision thereof which purports to survive termination) shall be of any further
force or effect after the Closing.  Citigroup shall, and shall cause
each Citigroup Entity to, and the Company shall and shall cause each Company
Entity to, at the reasonable request of Citigroup or the Company, take, or cause
to be taken, such other actions as may be necessary to effect the
foregoing.

       

      (b)  Except as
set forth in Section 4.10(c), and subject to applicable Law, at the Closing,
Morgan Stanley shall, and shall cause each of its Subsidiaries that is not a
Morgan Stanley Contributed Subsidiary to, terminate, effective as of the
Closing, any and all agreements, arrangements, commitments or understandings,
whether or not in writing, between or among any Morgan Stanley Entity, on the
one hand, and any Morgan Stanley Contributed Subsidiary, on the other
hand.  No such terminated agreement, arrangement, commitment or
understanding (including any provision thereof which purports to survive
termination) shall be of any further force or effect after the
Closing.  Morgan Stanley shall, and shall cause each Morgan Stanley
Entity to, and the Company shall and shall cause each Company Entity to, at the
reasonable request of Morgan Stanley or the Company, take, or cause to be taken,
such other actions as may be necessary to effect the foregoing.

       

      (c)  The
provisions of Section 4.10(a) and 4.10(b) shall not
apply to any of the following agreements, arrangements, commitments or
understandings (or to any of the provisions thereof):  (i) this
Agreement and any other Transaction Document (and each other agreement or
instrument expressly contemplated by this Agreement or any other Transaction
Document to be entered into by any of the Parties hereto or any of their
respective Affiliates), (ii) any agreements, arrangements, commitments or
understandings listed or described on Schedule 4.10(c),
(iii) any agreements, arrangements, commitments or understandings to which any
Person other than the Parties hereto and their respective Wholly-Owned
Subsidiaries is a party (it being understood that to the extent that the rights
and obligations of the Parties and their respective Affiliates under any such
agreements, arrangements, commitments or understandings constitute Contributed
Assets or Contributed Liabilities, they shall be assigned pursuant to this
Agreement) and (iv) any other agreements, arrangements, commitments or
understandings that this Agreement or any other Transaction Document expressly
contemplates will survive the Closing.

       

      (d)  Immediately
prior to the Closing, all intercompany receivables and payables (other than such
receivables or payables related to the supply of services or products or other
commercial contracts in the ordinary course), and all intercompany loans then
existing, in each case between (i) Citigroup and any of its Subsidiaries, on the
one hand, and the Citigroup 

       

       

      
        
          
          

        

        
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      Introducing
Business, on the other hand, or (ii) Morgan Stanley and any of its Subsidiaries,
on the one hand, and the Morgan Stanley Introducing Business, on the other hand,
shall be settled and repaid in full in cash.  Immediately prior to
each Self-Clearing Date and Delayed Contribution Date, all intercompany
receivables and payables (other than such receivables or payables related to the
supply of services or products or other commercial contracts in the ordinary
course), and all intercompany loans then existing, in each case between (a)
Citigroup and any of its Subsidiaries, on the one hand, and the Citigroup
Self-Clearing Business or Citigroup Delayed Contribution Business transferred to
the Company on such Self-Clearing Date or Delayed Contribution Date, on the
other hand, or (b) Morgan Stanley and any of its Subsidiaries, on the one hand,
and the Morgan Stanley Self-Clearing Business or Morgan Stanley Delayed
Contribution Business transferred to the Company on such Self-Clearing Date or
Delayed Contribution Date, on the other hand, shall be settled and repaid in
full in cash.

       

      Section
4.11 
Contributed Real
Property.  Notwithstanding Citigroup’s and Morgan Stanley’s
obligation to contribute Contributed Leased Real Property and Contributed Real
Property on the Closing Date pursuant to Section 2.4(b) and Section 2.4(c),
respectively, or any obligation to contribute Contributed Leased Real Property
or Contributed Real Property on a Delayed Contribution Date, each of Citigroup
and Morgan Stanley’s contribution of the Contributed Leased Real Property and
the Contributed Real Property shall take place at the times, in the manner and
pursuant to the terms and conditions set forth on Exhibit K
hereto.  For the avoidance of doubt, except as specifically set forth
above or in Exhibit K hereto, the terms and conditions of this Agreement shall
continue to apply to the treatment of Contributed Leased Real Property and
Contributed Real Property hereunder and each of Citigroup and Morgan Stanley’s
obligations with respect thereto.

       

      ARTICLE
5

       

      CONDITIONS
TO CLOSING

       

      Section
5.1 
Conditions to Citigroup’s
Obligations.  The obligation of Citigroup to perform its
obligations set forth in Section 2.4 and to consummate the Closing is subject to
the fulfillment, at or prior to the Closing, of the following
conditions:

       

      (a)  Representations and
Warranties. The representations and warranties of Morgan Stanley set
forth in this Agreement shall be true and correct (without giving effect to any
limitation as to “materiality” or “Material Adverse Effect” or similar
qualification set forth therein) as of January 13, 2009 and as of the Closing
Date as though made on and as of such date (except to the extent that any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date); provided, however, that
notwithstanding anything to the contrary contained herein, the condition set
forth in this Section 5.1(a) shall be deemed to have been satisfied even if any
representations or warranties of Morgan Stanley (other than those contained in
Section 3.2(c), which must be true and correct in all material respects, or in
the first sentence of Section 3.2(f)(iv), which must be true and correct in all
respects) are not so true and correct unless the failure of such representations
and warranties of Morgan Stanley to be so true and correct, individually or in
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      Material
Adverse Effect on the Morgan Stanley Contributed Business.  Citigroup
shall have received a certificate signed by an executive officer of Morgan
Stanley to the effect that the conditions set forth in this Section 5.1(a) have
been satisfied.

       

      (b)  Performance of
Agreements.  Morgan Stanley shall, and shall have caused its
Subsidiaries to, have performed and complied in all material respects with the
obligations, covenants and conditions applicable to Morgan Stanley to be
performed and complied with by Morgan Stanley or Morgan Stanley’s Subsidiaries
at or prior to the Closing in accordance with this Agreement, and Citigroup
shall have received a certificate from an executive officer of Morgan Stanley to
such effect.

       

      (c)  No
Injunction.  At the Closing Date, there shall be no Order of
any Governmental Authority of competent jurisdiction in effect, and no pending
Claim brought by any Governmental Authority of competent jurisdiction which
seeks the issuance or entry of an Order, (i) that restrains or prohibits or
renders illegal either (A) the Closing or (B) the consummation of the other
transactions contemplated by the Transaction Documents, other than, in the case
of clause (B), such other transactions the failure of which to be so consummated
would not reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the Company or Citigroup, or (ii) that would
otherwise reasonably be expected to have a Material Adverse Effect on the
Company or Citigroup if the Closing were to occur.

       

      (d)  Consents and
Approvals.  All Governmental Approvals set forth in Schedule 5.1(d) shall
have been obtained and shall be in full force and effect without any condition
or requirement that would reasonably be expected to have a Material Adverse
Effect on the Company or Citigroup, and any applicable waiting periods in
respect thereof shall have expired or been terminated.

       

      Section
5.2 
Conditions to Morgan
Stanley’s Obligations.  The obligation of Morgan Stanley to
perform its obligations set forth in Section 2.4 and to consummate the Closing
is subject to the fulfillment, at or prior to the Closing, of the following
conditions:

       

      (a)  Representations and
Warranties.  The representations and warranties of Citigroup
set forth in this Agreement shall be true and correct (without giving effect to
any limitation as to “materiality” or “Material Adverse Effect” or similar
qualification set forth therein) as of January 13, 2009 and as of the Closing
Date as though made on and as of such date (except to the extent that any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date); provided, however, that
notwithstanding anything to the contrary contained herein, the condition set
forth in this Section 5.2(a) shall be deemed to have been satisfied even if any
representations or warranties of Citigroup (other than those contained in
Section 3.1(c), which must be true and correct in all material respects, or in
the first sentence of Section 3.1(f)(iv), which must be true and correct in all
respects) are not so true and correct unless the failure of such representations
and warranties of Citigroup to be so true and correct, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse Effect on
the Citigroup Contributed Business.  Morgan Stanley shall have
received a certificate 

       

       

      
        
          
          

        

        
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      signed by
an executive officer of Citigroup to the effect that the conditions set forth in
this Section 5.2(a) have been satisfied.

       

      (b)  Performance of
Agreements.  Citigroup shall, and shall have caused its
Subsidiaries to, have performed and complied in all material respects with the
obligations, covenants and conditions applicable to Citigroup to be performed
and complied with by Citigroup or Citigroup’s Subsidiaries at or prior to the
Closing in accordance with this Agreement, and Morgan Stanley shall have
received a certificate from an executive officer of Citigroup to such
effect.

       

      (c)  No
Injunction.  At the Closing Date, there shall be no Order of
any Governmental Authority of competent jurisdiction in effect, and no pending
Claim brought by any Governmental Authority of competent jurisdiction which
seeks the issuance or entry of an Order (i) that restrains or prohibits or
renders illegal either (A) the Closing or (B) the consummation of the other
transactions contemplated by the Transaction Documents, other than, in the case
of clause (B), such other transactions the failure of which to be so consummated
would not reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect on the Company or Morgan Stanley, or (ii) that
would otherwise reasonably be expected to have a Material Adverse Effect on the
Company or Morgan Stanley if the Closing were to occur.

       

      (d)  Consents and
Approvals.  All Governmental Approvals set forth in Schedule 5.1(d) shall
have been obtained and shall be in full force and effect without any condition
or requirement that would reasonably be expected to have a Material Adverse
Effect on the Company or Morgan Stanley, and any applicable waiting periods in
respect thereof shall have expired or been terminated.

       

      ARTICLE
6

       

      INDEMNIFICATION

       

      Section
6.1 
Survival of Representations
and Warranties.

       

      (a)  The
representations and warranties contained in Sections 3.1 and 3.2 will survive
the Closing until 18 months following the Closing, except that (i) the
representations and warranties contained in Sections 3.1(l) and 3.2(l) of this
Agreement shall survive with respect to any Self-Clearing Assets until 18 months
following the applicable Self-Clearing Date on which such Self-Clearing Assets
were transferred to the Company, (ii) the representations and warranties set forth in the last two
sentences of Section 3.1(f)(i) and the last sentence of Section 3.1(f)(ii) shall
survive until 18 months following the Managed Futures Contribution Date,
and (iii) the representations and warranties contained in Sections 3.1(m)
and 3.2(m) of this Agreement shall survive with respect to any Citigroup Delayed
Contribution Assets and Citigroup Delayed Contribution Liabilities or Morgan
Stanley Delayed Contribution Assets and Morgan Stanley Delayed Contribution
Liabilities, as applicable, until 18 months following the applicable Delayed
Contribution Date on which such Citigroup Delayed Contribution Assets and
Citigroup Delayed Contribution Liabilities or Morgan Stanley Delayed
Contribution Assets and Morgan Stanley Delayed Contribution Liabilities were
transferred to the Company.  No 

       

       

      
        
          
          

        

        
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      covenants
or agreements of the Parties contained in this Agreement shall survive the
Closing Date, except as expressly set forth in this Agreement and except that
covenants which contemplate or may involve actions to be taken or obligations in
effect after the Closing shall survive in accordance with their
terms.

       

      (b)  Notwithstanding
the foregoing, any representation or warranty shall, to the extent that a Claim
with respect thereto is timely asserted in writing on or prior to the expiration
thereof, survive until a final adjudication or resolution of such
Claim.

       

      (c)  The right
of an Indemnitee to indemnification or to otherwise receive payments pursuant to
Section 6.2(a)(ii)
or (iii), 6.2(b) or 6.2(c) shall be
separate and in addition to, and shall not be limited by, such Person’s right to
indemnification pursuant to Section 6.2(a)(i), and shall survive any termination
or expiration of the representations and warranties set forth in this Agreement
pursuant to this Section 6.1.

       

      Section
6.2 
Indemnification.

       

      (a)  Subject
to the limitations set forth in this Article 6, each Party (the “Indemnitor”) shall
indemnify, defend and hold harmless the other Party, the other Party’s
Affiliates and the Company Entities and their Affiliates, including but not
limited to the respective directors, officers, employees, managers, agents and
representatives of each of the foregoing (collectively, the “Indemnitees”), from
and against any losses, damages, liabilities, costs, expenses (including but not
limited to legal fees and expenses), fees, penalties, fines, Taxes, judgments,
settlements and Claims of whatever kind and nature (each, a “Loss” and, in the
aggregate, “Losses”) incurred by
an Indemnitee arising out of:

       

      (i)  the
failure of any representation or warranty (other than any representation or
warranty contained in Section 3.1(j) or Section 3.2(j), indemnification for
which shall be governed by Section 4.5) to be true and correct when made (or
when deemed to be made) by the Indemnitor in this Agreement, and the failure of
any representation or warranty that was true and correct when made by the
Indemnitor in this Agreement to continue to be true and correct as of the
Closing (or as of such other date as is expressly specified in such
representation and warranty as the date at which such representation and
warranty is true) as if such representation and warranty were made again at the
Closing (or such other specified date) (in each case, without giving effect to
any limitation as to “materiality” or “Material Adverse Effect” or similar
qualification set forth therein);

       

      (ii)  the
failure by the Indemnitor or any of its Subsidiaries (other than the Company
Entities) to perform any of its or their covenants or agreements (other than the
covenants specified in Section 4.5(a)(i)(B) or 4.5(a)(ii)(B), indemnification
for which shall be governed by Section 4.5) contained in this Agreement
(including, without limitation, any failure to comply with any provision of, or
any failure to satisfy any liability or other obligation assumed or retained by
such Party or its Subsidiaries); or

       

      (iii)  in the
case of Citigroup as Indemnitor, the Citigroup Excluded Liabilities (other than
Citigroup Excluded Taxes, indemnification for which shall be 

       

       

      
        
          
          

        

        
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      governed
by Section 4.5), and in the case of Morgan Stanley as Indemnitor, the Morgan
Stanley Excluded Liabilities (other than Morgan Stanley Excluded Taxes,
indemnification for which shall be governed by Section 4.5).

       

      (b)  Morgan
Stanley shall indemnify, defend and hold harmless the Company and its
Subsidiaries from and against any Losses attributable to any write-down or
write-off effected in accordance with GAAP (i) with respect to any BusinesScape
or Portfolio Loan Account loans included in the Morgan Stanley Contributed
Assets and (ii) with respect to any loans included in the Morgan Stanley
Contributed Assets that are secured by auction rate securities, in each case net
of associated reserves.

       

      (c)  Citigroup
shall indemnify, defend and hold harmless the Company and its Subsidiaries from
and against any Losses attributable to:

       

      (i)  the net
write-down or write-off effected in accordance with GAAP, with respect to (x)
the loans and lines of credit that constitute Citigroup Contributed Assets, that
are secured by auction rate securities (“ARS”) as to which
borrowing power has been given prior to the Closing Date, or is given from and
after the Closing Date with the consent or at the direction of Citigroup on ARS
securing such loans and lines of credit and (y) any amendment, modification or
substitution that is made with the consent or at the direction of Citigroup of
any loan described in the foregoing clause (x) (collectively, the “Citigroup ARS
Loans”); and

       

      (ii)    
the
difference (if a positive number) between the Company’s actual cost of funding
the Citigroup ARS Loans, minus the aggregate amount of interest paid to the
Company with respect to the Citigroup ARS Loans.

       

      Losses
described in this Section 6.2(c) shall be calculated as of the last Business Day
of each month and Citigroup shall reimburse the Company for the amount of such
Losses recognized, in accordance with GAAP, in such monthly accounting period;
provided that
to the extent Citigroup has reimbursed the Company for reserves taken in respect
of Citigroup ARS Loans and such reserves are subsequently released, the Company
agrees to refund to Citigroup the amount of reimbursement payments the Company
received in respect of such released reserves.  In addition (but
without any duplication of any refund to Citigroup under the preceding
sentence), if the Company recovers amounts in respect of particular Citigroup
ARS Loans with respect to which a payment was previously made by Citigroup
relating to Losses with respect to such Citigroup ARS Loans described in clause
(i) above, then the Company shall pay to Citigroup the lesser of the amount of
such recoveries and the amount of such payment received from
Citigroup.

       

      (d)  Losses
incurred by the Citigroup Entities and Morgan Stanley Entities, respectively,
during the period commencing on May 29, 2009 and ending on the Closing Date in
connection with changes to the conversion of information technology platforms or
other operational actions made during such period in anticipation of and in
furtherance of the consummation of the transactions contemplated by this
Agreement 

       

       

      
        
          
          

        

        
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      shall be
borne by the Parties, subject to indemnification under Article 6, on the same
basis as if such Losses had been incurred after the Closing.

       

      Section
6.3 
Limitations on
Amounts.

       

      (a)  An Indemnitor shall have
no liability under Section 6.2(a)(i)
(other than in respect of any breach of the representations and warranties set
forth in the last two sentences of Section 3.1(f)(i) and the last sentence of
Section 3.1(f)(ii), for which the limitations set forth in Section 6.3(a)(i)
shall not apply, and the “Deductible” as defined in Section 6.3(a)(ii) shall be
deemed to mean an amount equal to $5 million):

       

      (i)  for any
Loss or series of related Losses unless the amount thereof exceeds $1 million
(each, a “De Minimis
Loss”); and

       

      (ii)  until the
amount of Losses (other than any De Minimis Losses) theretofore indemnifiable by
the Indemnitor but for this sentence exceeds an aggregate amount equal to $100
million (the “Deductible”);

       

      in which
case the Indemnitees shall be entitled to indemnification of all Losses in
excess of the Deductible (other than any De Minimis Losses).

       

      (b)  An
Indemnitor’s aggregate liability under Section 6.2(a)(i) shall in no event
exceed $1.5 billion.

       

      Section
6.4 
Other Indemnification
Provisions.

       

      (a)  For all
purposes of this Article 6, the amount of Losses arising out of any breach of a
representation or warranty, and whether a breach has occurred, shall be
determined without regard to qualifications of materiality or Material Adverse
Effect or similar qualifications (other than specified dollar thresholds) and
without regard to whether the matter giving rise to such Losses was disclosed to
the other Party (or its representatives) (other than in the applicable
Disclosure Letter or in the applicable Form ADV (or brochure) or Form BD
referred to in the first paragraph of Section 3.1 and 3.2) or was investigated
by the other Party (or its representatives).  The representations and
warranties contained in Article 3, and the rights and remedies that may be
exercised by any Person seeking indemnification hereunder, shall not be limited
or otherwise affected by or as a result of any information furnished to, or any
investigation made by, any such Person or its representatives.

       

      (b)  Notwithstanding
anything to the contrary contained in this Article 6, no Indemnitor shall be
liable for any indirect, special, consequential, exemplary or punitive damages
related to or arising in connection with any indemnification in this Article 6,
except in cases where such damages are recovered from an Indemnitee by a Third
Party.

       

      (c)  In no
event shall any Indemnitee recover more than once for any Loss, regardless of
whether alternative theories of recovery exist under this Agreement or
applicable Law.

       

       

      
        
          
          

        

        
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      (d)  This
Article 6 sets forth the Parties’ exclusive remedy, following the Closing, for
any Loss that may result from the breach of any of the representations or
warranties, covenants or agreements contained in this Agreement or any other
matter arising under this Agreement, except for Losses resulting from fraud of
an Indemnitor or its Affiliates or as provided in Section 4.5 or Section
9.9.

       

      (e)  Notwithstanding
anything to the contrary contained herein, no Indemnitor shall be required to
indemnify any Party (or its Affiliates) for any Loss relating to a reduction in
the value of the Company or any of its Subsidiaries to the extent the Company or
any of its Subsidiaries is indemnified therefor in accordance with the terms
hereof.

       

      (f)  If any
Indemnitee receives any amounts in respect of Losses previously paid by the
Indemnitor or obtains any judgment or award in any litigation relating to an
Excluded Liability or Excluded Claim of such Indemnitor which was previously
paid by such Indemnitor, the Indemnitee shall distribute such amounts received
to the Indemnitor.  Any Losses shall be net of any (i) amounts
actually recovered by any Indemnitee under applicable insurance policies and
(ii) Tax benefits actually realized by any Indemnitee by reason of the
incurrence or payment of any such Losses, and shall be increased by any Tax
costs incurred by any Indemnitee as a result of the receipt of the
indemnification payment.

       

      (g)  This
Agreement shall not be deemed to amend or otherwise modify the provisions or
application of any indemnification or similar agreement between (x) any broker
or other employee of a Party or a Company Entity and (y) such Party or its
Subsidiaries or such Company Entity.  In addition, notwithstanding any
provision in this Agreement to the contrary, nothing in this Agreement shall (x)
require the Indemnitor to indemnify the brokers or other employees of the
Indemnitor or any of its Subsidiaries or the Company Entities or (y) be deemed
to waive any right of the Indemnitor to receive reimbursement from such brokers
or other employees for, among other things, Losses caused by their criminal
conduct, willful misconduct or bad faith.

       

      (h)  Each
Indemnitee must mitigate to the extent required by applicable Law any Loss for
which such Indemnitee seeks indemnification under this Agreement.

       

      (i)  If Citigroup becomes aware
of any Loss for which the Company may be entitled to seek indemnification from
Morgan Stanley under this Agreement, Citigroup shall be entitled to seek
such indemnification on behalf of the Company and may exercise or cause to be
exercised all of the rights of the Company with respect to such Loss as if
Citigroup were the Indemnitee with respect to such Loss; provided that any
amounts recovered from Morgan Stanley with respect to such Loss shall be paid to
the Company.  If Morgan Stanley becomes
aware of any Loss for which the Company may be entitled to seek indemnification
from Citigroup under this Agreement, Morgan Stanley shall be entitled to
seek such indemnification on behalf of the Company and may exercise or cause to
be exercised all of the rights of the Company with respect to such Loss as if
Morgan Stanley were the Indemnitee with respect to such Loss; provided that any
amounts recovered from Citigroup with respect to such Loss shall be paid to the
Company.

       

       

      
        
          
          

        

        
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      Section
6.5 
Procedures.  In
the event any Indemnitee should have a Claim under this Article 6 against any
Indemnitor that does not involve a Claim being asserted against or sought to be
collected from such Indemnitee by a Third Party, the Indemnitee shall deliver
notice of such Claim, specifying in reasonable detail the basis therefor, with
reasonable promptness to the Indemnitor.  The failure or delay by any
Indemnitee so to notify the Indemnitor shall not relieve the Indemnitor from any
liability which it may have to such Indemnitee, except to the extent that the
Indemnitor has been actually prejudiced by such failure or delay.  If
the Indemnitor does not notify the Indemnitee within 60 Business Days following
its receipt of such notice that the Indemnitor disputes its liability to the
Indemnitee, such Claims specified by the Indemnitee in such notice shall be
conclusively deemed a liability of the Indemnitor, and the Indemnitor shall pay
the amount of such liability to the Indemnitee on demand or, in the case of any
notice in which the amount of the Claims (or any portion thereof) is estimated,
on such later date when the amount of such Claim (or such portion thereof)
becomes finally determined.

       

      Section
6.6 
Procedures for Non-Party
Claims other than Ordinary Course Customer Claims.  The
following procedures shall apply to all matters or circumstances that may result
in a Loss by reason of a Claim brought by a Third Party, including but not
limited to a Claim that may be asserted by a Governmental Authority (“Non-Party Claims”;
provided that
the term “Non-Party
Claim” shall include a Claim that may be asserted by an employee of a
Party or Company Entity) and provided further that if the
Non-Party Claim is determined to be an Ordinary Course Customer Claim pursuant
to the provisions of Section 6.7, the provisions of Section 6.7 shall apply in
lieu of the provisions of Section 6.6:

       

      (a)  Notice.  Promptly
after an Indemnitee receives written notice of any matter or circumstance that
may reasonably be expected to result in a Loss to such Indemnitee by reason of a
Non-Party Claim, the Indemnitee shall give written notice thereof to the
Indemnitor.  The right to indemnification hereunder will not be
affected by any failure of an Indemnitee to give such notice (or delay by any
Indemnitee in giving such notice) unless (and then only to the extent that) the
rights and remedies of the Indemnitor have been actually prejudiced as a result
of the failure to give, or the delay in giving, such notice.  The
notice of the Non-Party Claim shall describe the Non-Party Claim in reasonable
detail.

       

      (b)  Control of Non-Party
Claims.  Non-Party Claims other than Ordinary Course Customer
Claims shall be controlled as follows:

       

      (i)  Except
for Excluded Claims referred to in Section 6.6(g), which shall be administered
in accordance with that section, the Indemnitor shall be the Person entitled to
control the defense of such Non-Party Claim (the “Controlling Party”)
and if the Indemnitor elects to control it shall:  (A) retain counsel
of its own choosing, which counsel shall be reasonably acceptable to the
Indemnitee, and (B) control and direct the defense of any such Non-Party Claim,
including the development and implementation of legal strategy for such
Non-Party Claim, subject to Section 6.6(c).

       

       

      
        
          
          

        

        
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      (c)  Settlements.  No
Party shall have any liability for any settlement or compromise effected without
its consent, which consent shall not be unreasonably withheld or
delayed.  No Controlling Party may effect any settlement or compromise
unless the Indemnified Party has no liability or obligation in connection
therewith which is not fully satisfied by the Controlling Party.

       

      (d)  Conflicts of
Interest.  The Indemnitee in respect of any Claim shall be
entitled to engage separate counsel of its choice to participate in the defense
of such Claim; provided that, except
as set forth in the remainder of this Section 6.6(d), the fees and expenses of
such separate counsel shall be borne solely by the Indemnitee and shall not be
subject to reimbursement by the Indemnitor; and provided, further, that this
sentence shall not affect, in any respect, the control of such Claim as provided
in Section 6.6(b).  Notwithstanding the foregoing, if the defendants
in a Claim include both an Indemnitee and the Indemnitor, and counsel to the
Indemnitee (or, if the Indemnitee is the Controlling Party, counsel to the
Indemnitor) shall have reasonably concluded that joint representation would be
inappropriate due to potential or actual conflicts of interest between the
Controlling Party, the Indemnitor and/or the Indemnitee, the Indemnitee shall
have the right to retain a single firm of separate counsel reasonably acceptable
to the Controlling Party (and, if the Company is the Controlling Party, the
Indemnitor) (each of which consents shall be timely sought and shall not be
unreasonably withheld or delayed) to participate in the defense of that Claim on
behalf of such Indemnitee and at the expense of the Indemnitor.

       

      (e)  Status.  The
Controlling Party shall at the request of the Indemnitee from time to time
notify the Indemnitee  regarding the status, including any significant
developments, with respect to Non-Party Claims the defense of which is being
conducted by the Controlling Party on behalf of an Indemnitee (or the
Indemnitor, as the case may be).

       

      (f)  Defense of Claims against
Officers and Directors.  Notwithstanding any provision to the
contrary regarding the rights of an Indemnitor to be the Controlling Party with
respect to Non-Party Claims, to the extent that any executive officer or
director of a Party is named as a defendant in a Non-Party Claim under
circumstances in which such individual is an Indemnitee, that individual
nevertheless may, at its sole discretion, conduct its own defense or elect to
transfer the defense to the Indemnitor, in either situation with the cost of the
defense to be borne by the Indemnitor.

       

      (g)  Pre-Closing
Litigation.  Without limiting any other provision in this
Agreement and subject to Section 6.7 in the case of Ordinary Course Customer
Claims, the Parties agree that (i) each Party shall remain responsible for, and
control, all litigation with respect to its Contributed Business pending or
threatened in writing prior to the Closing, including, without limitation, any
Claims pending or threatened in writing by each Party as plaintiff relating to
its Contributed Business (the “Pre-Closing
Litigation”) (which Claims such Party shall continue to prosecute and
shall use good faith efforts to obtain a favorable judgment or settlement), and
(ii) no Pre-Closing Litigation shall be contributed to, or be the responsibility
of, the Company Entities, which shall be treated as Indemnitees for purposes of
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      litigation
(it being understood that any settlement of any Claim being pursued as plaintiff
will not be settled without the consent of the Company (which consent will not
be unreasonably withheld or delayed) if such settlement would impair the value
of any Contributed Asset in any respect and any proceeds of any such settlement
with respect to any Contributed Asset shall be paid over to the
Company).

       

      Section
6.7 
Ordinary Course Customer
Claims.

       

      (a)  Notice.  Promptly
after either a Party or any of its Affiliates or any Indemnitee receives written
notice of any matter or circumstance subject to indemnification hereunder that
may reasonably be expected to result in a Loss to the Company or any other
Person by reason of a Claim by a current or former customer or client of either
Contributed Business that does not seek actual damages in excess of $2 million
in the aggregate (an “Ordinary Course Customer
Claim”), such Person shall give written notice thereof to the
Company.  The right to indemnification hereunder will not be affected
by any failure of any Person to give such notice (or delay in giving such
notice) unless (and then only to the extent that) the rights and remedies of the
Indemnitor have been actually prejudiced as a result of the failure to give, or
the delay in giving, such notice.  The notice shall describe the
Ordinary Course Customer Claim in reasonable detail.

       

      (b)  Control of Ordinary Course
Customer Claim.  The Company shall be entitled to control and
direct the defense of any Ordinary Course Customer Claim, as well as any related
regulatory investigation resulting therefrom in the ordinary course, with
outside counsel of its own choosing, which counsel shall be reasonably
acceptable to the Indemnitor, at the expense of the
Indemnitor.  Nothing in this Section 6.7 shall be deemed to relieve
the Indemnitor from indemnifying the Company Entities and their Affiliates to
the extent any of them are Indemnitees hereunder.  The Indemnitor may
also participate in the defense of any such Ordinary Course Customer Claim at
its own expense.

       

      (c)  Settlements.  No
Party shall have any liability for any settlement or compromise of any Ordinary
Course Customer Claim (or related regulatory investigation) effected without its
consent.  The Company may not settle or compromise any Ordinary Course
Customer Claim (or related regulatory investigation) without the consent of the
Indemnitor, which shall not be unreasonably withheld or delayed.

       

      (d)  Status.  The
Company shall at the request of the Indemnitor from time to time notify the
Indemnitor  regarding the status, including any significant
developments, with respect to Ordinary Course Customer Claims (or related
regulatory investigations) the defense of which is being conducted by the
Company.

       

      (e)  Disputes.  In
the event of a bona fide dispute by the Parties as to whether a Claim is an
Ordinary Course Customer Claim, the Claim shall not be treated as an Ordinary
Course Customer Claim, unless the Company has already commenced the defense
thereof and the Company or any Indemnitee would be adversely impacted
thereby.

       

       

      
        
          
          

        

        
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      Section
6.8 
Mutual
Assistance.  The Indemnitor and Indemnitee shall reasonably
cooperate with each other in the defense of any Claim subject to indemnity
pursuant to this Article 6 and with respect to any
Pre-Closing Litigation.  Without limiting the foregoing, after
the Closing, Citigroup agrees that it will, and that it will cause the other
Citigroup Entities to, Morgan Stanley agrees that it will, and will cause the
other Morgan Stanley Entities to, and the Company agrees that it will, and will
cause the other Company Entities to, cooperate with each of the Parties, the
Company and their respective Subsidiaries, generally seek to avoid the
imposition of regulatory sanctions on the Parties, the Company or their
Subsidiaries to the extent reasonable under the circumstances, and furnish to
each of them access to such employees and other Persons under their control, and
such information, documents, records, evidence, testimony and other assistance
as any of them may reasonably request, in connection with any actions,
proceedings, arrangements or disputes of any nature involving or affecting the
Company Entities that reasonably relate to matters that occurred prior to the
Closing and in which any of them, as the case may be, was involved or for which
such Person has records, information or knowledge.  The reasonable
expenses incurred by any Person in complying with any request for cooperation
pursuant to this Section 6.8 shall be borne by the Indemnitor or other Person
requesting such cooperation; provided, however, that such
expenses shall not include incidental time incurred by employees of any Party
responding to such a request for cooperation.

       

      ARTICLE
7

       

      FURTHER
AGREEMENTS

       

      Section
7.1 
No
Commitments.  Each Party agrees that, except for the
liabilities to be assumed by the Company pursuant to this Agreement and the
other Transaction Documents or as expressly contemplated or permitted hereby or
thereby (including under the LLC Agreement), neither it nor any of its
Subsidiaries will take, without the prior written consent of the other Party,
any action that will commit or bind the Company or any member thereof (in such
capacity) to any act, agreement, contract or undertaking of any kind or nature
whatsoever.

       

      Section
7.2 
Further
Assurances.  Following the Closing Date, each Party shall, and
shall cause each of its Subsidiaries to, from time to time, execute and deliver
such additional instruments, documents, conveyances or assurances and take such
other actions as shall be necessary, or otherwise reasonably be requested by the
Company or the other Party (including, without limitation, sharing all
reasonable participant information necessary for, and cooperating with each
other in good faith in connection with, the administration and integration of
the Benefit Plans and any Benefit Plan-related services), to confirm and assure
the rights and obligations provided for in the Transaction Documents and render
effective the consummation of the transactions contemplated by the Transaction
Documents, or otherwise to carry out the intent and purposes of the Transaction
Documents.  For purposes of this Article 7, a Party shall not be
obligated to cause Affiliates that it does not control to comply with this
Article 7, but shall be obligated to use its reasonable best efforts to cause
such Affiliates to comply with this Article 7.

       

      Section
7.3 
Citigroup ARS
Loans.

       

      (a)  The
Company will, to the extent reasonably requested by
Citigroup, cooperate with Citigroup and take or refrain from taking actions with
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      Citigroup
ARS Loans and the ARS securing such Citigroup ARS Loans to the extent necessary
to enable the Citigroup Entities to comply with their obligations under
applicable Law, including their settlement agreements with state and federal
authorities relating to their sales of ARS to customers (the “Settlements”).  Citigroup
agrees to pay the Company for the Company’s direct costs and expenses incurred
in connection with taking actions requested by Citigroup pursuant to this
Section 7.3(a) in the manner and pursuant to the methodology set forth in the
General Transition Services Agreement with Citigroup (for the avoidance of
doubt, Section 6.2(c) of this Agreement shall control with respect to the
matters addressed therein in the event of any inconsistency between the
applicable terms of such General Transition Services Agreement with Citigroup
and Section 6.2(c) of this Agreement).  For the avoidance of doubt,
subject to applicable Law, without limitation to the foregoing, Citigroup may
reasonably request the Company to take, and the Company shall not unreasonably
refuse to take, the following actions pursuant to this Section
7.3(a):

       

      (i)  implementing
amendments, extensions or modifications or granting waivers of terms of
Citigroup ARS Loans, (including interest rates, fees, advance rates, maturity,
repayment dates and other terms);

       

      (ii)  granting
releases or agreeing to substitutions of collateral securing Citigroup ARS
Loans;

       

      (iii)  exercising
or forbearing from exercising rights and remedies of the lenders and secured
parties under the terms of Citigroup ARS Loans;

       

      (iv)  taking
(or causing to be taken) actions to establish new loans with borrowing power
against ARS for any current or former customer accounts of a Citigroup Entity as
to whose ARS-related Losses Citigroup has an indemnity obligation under Section
6.2 of this Agreement; provided that upon
the establishment of such loans pursuant to the request of Citigroup, they shall
automatically become Citigroup ARS Loans for purposes of Section 6.2(c) of this
Agreement; and

       

      (v)  adopting,
implementing and/or modifying reasonable control policies and practices relating
to the Citigroup ARS Loans and ARS securing such loans; provided that such
policies and practices do not to unduly interfere with the management and
business of the Company or its Subsidiaries.

       

      (b)  The
Company agrees (x) not to take any of the actions referred to in clauses (i)
through (iv) above without the consent of Citigroup, such consent not to be
unreasonably withheld or delayed, and (y) not to change the control policies and
practices relating to the Citigroup ARS Loans and ARS securing such loans
without reasonably prior consultation with Citigroup.  The Company
agrees to use commercially reasonable efforts to (x) provide the same level of
loan servicing support with respect to the Citigroup ARS Loans as was provided
to the Citigroup Contributed Business prior to the Closing Date and (y) provide
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      information
with respect to the Citigroup ARS Loans and ARS securing such loans as may be
reasonably requested by Citigroup.

       

      (c)  In
addition, the Company agrees to use commercially reasonable efforts to (x)
promptly notify Citigroup of any customer request or inquiry regarding the
provision by a Citigroup Entity of liquidity to ARS holders or regarding the
terms,  management  or implementation of any ARS Legacy Loan
and (y) promptly notify Citigroup regarding any significant developments of
which it becomes aware regarding a Citigroup ARS Loan or any applicable
borrower.

       

      Section
7.4 
Replacement of
Guarantees.

       

      (a)  From and
after the date hereof, the Company shall use its reasonable best efforts to
cause the unconditional release of Citigroup, Morgan Stanley and their
respective Affiliates from their obligations under each of the agreements and
instruments set forth on Schedule 7.4 (each, a
“Guaranty”) to
the extent that such obligations relate to the Citigroup Contributed Business or
the Morgan Stanley Contributed Business, respectively, which have been
contributed to the Company, by entering into a replacement guaranty or cash
collateral or similar arrangements satisfactory to the counterparty to each such
Guaranty.

       

      (b)  If, from
and after the Closing, (i) any amounts are drawn or required to be paid under
any Guaranty by Citigroup, Morgan Stanley or any of their respective Affiliates
in connection with events or other matters occurring after the Closing Date or
(ii) Citigroup, Morgan Stanley or any of their respective Affiliates is required
to pay any fees, costs or expenses under the terms of such Guaranty, then
Citigroup or Morgan Stanley, respectively, shall promptly provide the Company
with written evidence of the underlying payment obligation.  Upon
receipt of such notice, the Company shall promptly satisfy such payment
obligation on behalf of Citigroup, Morgan Stanley or their respective
Affiliates, or, if Citigroup, Morgan Stanley or any of their Affiliates have
made such payments, the Company shall reimburse Citigroup, Morgan Stanley or
their respective designated Affiliates for such amounts promptly after receipt
from Citigroup or Morgan Stanley of proof of payment.

       

      (c)  Any
amount described in Section 7.4(b) that is paid by Citigroup, Morgan Stanley or
their respective Affiliates and subject to reimbursement by the Company shall
bear interest at a rate equal to LIBOR plus 60 basis points commencing on the
date that written notice of such payment is given to the
Company.  Such interest shall be payable by the Company at the same
time as the reimbursement payment to which it relates and shall be calculated
daily on the basis of a year of 365 days and the actual number of days
elapsed.

       

      Section
7.5 
SEC Rule 204T
Matters.  Each of Citigroup and Morgan Stanley agree, and shall
cause their respective Subsidiaries, CGMI and Morgan Stanley & Co.
Incorporated (each, a “Clearing Firm”), to
agree that, for as long as any Customer Accounts are cleared by the relevant
Clearing Firm pursuant to the terms of the Citigroup Securities Clearing
Agreement or the Morgan Stanley Securities Clearing Agreement, as the case may
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      Clearing
Firm shall close out any and all “fail to deliver” positions in equity
securities as prescribed in SEC Rule 204T, and will not avail itself of
provision (d) of SEC Rule 204T to allocate a fail to the Company.

       

      ARTICLE
8

       

      TERM
AND TERMINATION

       

      Section
8.1 
Termination Prior to
Closing.  This Agreement may be terminated at any time prior to
the Closing:

       

      (a)  by mutual
written consent of the Parties at any time;

       

      (b)  by either
Party upon written notice to the other Party in the event that (i) any
Governmental Authority the Governmental Approval of which is a condition under
Section 5.1(d) or 5.2(d) shall have issued an Order or taken any other official
action denying such Governmental Approval or (ii) any Governmental Authority
shall have issued an Order that causes the conditions set forth in Section
5.1(c) (in the case of Citigroup) or 5.2(c) (in the case of Morgan Stanley) not
to be satisfied, and in either case such Order or other action shall have become
final and non-appealable; provided that the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to any Party that is at such time in material breach of its
obligations pursuant to Section 4.3;

       

      (c)  by any
Party upon written notice to the other Party at any time after 5:00 p.m., New
York City time, on March 31, 2010, in the event that the Closing shall not have
occurred on or prior to such date and time; provided, however, that such
date shall be extended by an additional 60 days if (i) the conditions set forth
in Section 5.1(d) or 5.2(d) shall not have been satisfied prior to such date and
time, and (ii) all other conditions to Closing in this Agreement have been
satisfied or waived; and provided, further, that the
right to terminate this Agreement under this Section 8.1(c) shall not be
available to any Party that is at such time in material breach of any of its
obligations under any of the provisions of this Agreement or any other
Transaction Document;

       

      (d)  by
Citigroup, upon written notice to Morgan Stanley, if (A) there has been a
material misrepresentation or breach of warranty or covenant or agreement made
or to be performed by or on the part of Morgan Stanley pursuant to this
Agreement, (B) such misrepresentation or breach has not been or cannot be cured
within a period of 60 days following the delivery of written notice to Morgan
Stanley of such misrepresentation or breach by Citigroup, and (C) the effect of
such misrepresentation or breach is to prevent the satisfaction of any condition
specified in Section 5.1(a) or 5.1(b);

       

      (e)  by Morgan
Stanley, upon written notice to Citigroup, if (A) there has been a material
misrepresentation or breach of warranty or covenant or agreement made or to be
performed by or on the part of Citigroup pursuant to this Agreement, (B) such
misrepresentation or breach has not been or cannot be cured within a period of
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      following
the delivery of written notice to Citigroup of such misrepresentation or breach
by Morgan Stanley, and (C) the effect of such misrepresentation or breach is to
prevent the satisfaction of any condition specified in Section 5.2(a) or
5.2(b);

       

      (f)  by
Citigroup, if (A) within six months of January 13, 2009 either a Change of
Control of Morgan Stanley shall have occurred or a definitive agreement, letter
of intent or other similar agreement or understanding shall have been executed
by Morgan Stanley that would, if the transactions contemplated thereby were
consummated, result in a Change of Control of Morgan Stanley, and (B) within 45
days following such Change of Control or announcement of the execution of such
definitive agreement or understanding, as applicable, Citigroup delivers written
notice of termination under this Section 8.1(f) to Morgan Stanley;
or

       

      (g)  by Morgan
Stanley, if (A) within six months of January 13, 2009 either a Change of Control
of Citigroup shall have occurred or a definitive agreement, letter of intent or
other similar agreement or understanding shall have been executed by Citigroup
that would, if the transactions contemplated thereby were consummated, result in
a Change of Control of Citigroup, and (B) within 45 days following such Change
of Control or announcement of the execution of such definitive agreement or
understanding, as applicable, Morgan Stanley delivers written notice of
termination under this Section 8.1(g) to Citigroup.

       

      Section
8.2 
Termination After
Closing.  If the Closing occurs, this Agreement shall continue
to remain in full force and effect unless the Parties mutually agree in writing
to terminate this Agreement.

       

      Section
8.3 
Effect of
Termination.  If this Agreement is terminated in whole or with
respect to any Person in accordance with Section 8.1 or 8.2, no covenants,
agreements, representations or warranties contained herein shall survive the
termination of this Agreement except (x) Article 9 (other than Section 9.2), (y)
those provisions that by their express terms survive such termination and (z) in
the case of a termination pursuant to Section 8.2, Article 6 (and, to the extent
set forth in Section 6.1, the representations and warranties referred to
therein); provided, however, that no
termination of this Agreement shall release a breaching Party from any liability
for any willful misconduct, fraud or willful breach of a covenant contained in
this Agreement occurring prior to such termination.

       

      ARTICLE
9

       

      MISCELLANEOUS

       

      Section
9.1 
Expenses.  Except
as expressly provided for herein, each of the Parties shall pay the fees and
expenses of its respective counsel, accountants and other experts and shall pay
all other fees and expenses incurred by it in connection with the negotiation,
preparation and execution of the Transaction Documents and the consummation of
the transactions contemplated by this Agreement.

       

       

      
        
          
          

        

        
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      Section
9.2 
Publicity.  No  press
release or other public disclosure with respect to this Agreement or the
transactions contemplated hereby may be issued by any Party or its Affiliates
without the other Party’s consent, which consent shall not be unreasonably
withheld, conditioned or delayed by such other Party; provided, however, that if any
Party is required by Law, including the rules of any stock exchange on which
such Party’s securities are listed, to issue a press release or other public
disclosure with respect to this Agreement or the transactions contemplated
hereby, such Party shall consult with the other Party as to the content of such
press release or other public disclosure before it is issued to the extent
practicable in the circumstances; and provided, further, that nothing
in this provision shall affect the Company’s right to issue press releases with
respect to its operations following the Closing Date.

       

      Section
9.3 
Amendment or
Modification.  This Agreement may not be amended or modified by
the Parties, except by an instrument in writing signed by each of the
Parties.

       

      Section
9.4 
Waiver.  Except
as otherwise specifically provided herein, any provision of this Agreement may
only be waived at any time by an instrument signed in writing by the Party
entitled to the benefit thereof.  Except as specifically provided
herein, the failure or delay of any Party to enforce at any time any of the
provisions of this Agreement shall in no way be construed to be a waiver of any
such provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of such Party thereafter to enforce each and every such
provision.  No waiver of any breach of or non-compliance with this
Agreement shall be held to be a waiver of any other or subsequent breach or
non-compliance.  Except as specifically provided herein, all remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.

       

      Section
9.5 
Entire
Agreement.  This Agreement, the Confidentiality Agreement, the
Disclosure Letters, the Schedules and Exhibits hereto and the other documents
and agreements contemplated hereby (including the other Transaction Documents
and any documents and agreements contemplated thereby) contain the entire
agreement between the Parties with respect to the subject matter hereof and
supersede and cancel all prior agreements, understandings, representations and
warranties, both oral and written, between the Parties with respect
thereto.  There are no agreements, undertakings, representations or
warranties of any of the Parties with respect to the transactions contemplated
hereby and thereby other than those set forth herein or therein or made or to be
made hereunder or thereunder.

       

      Section
9.6 
Third-Party
Beneficiaries.  Nothing in this Agreement, express or implied,
is intended to confer, nor shall anything herein confer, on any Person other
than the Parties and their respective successors or permitted assigns, any
rights, remedies, obligations or liabilities, except that the Indemnitees shall
be third-party beneficiaries of the provisions of Article 6 applicable to
them.

       

      Section
9.7 
Non-Assignability; Binding
Effect.  This Agreement shall not be assignable, in part or in
whole, by either Party without the prior written consent of the other
Party.  A purported assignment of this Agreement or any of the rights,
interests or obligations hereunder not in compliance with the provisions of the
Agreement shall be null and void ab 

       

       

      
        
          
          

        

        
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-

          
            

          

        

        
          
          

        

      

       

       

      initio.  Subject
to the foregoing, this Agreement shall inure to the benefit of and be binding
upon the Parties and their respective successors and permitted
assigns.

       

      Section
9.8 
Severability.  Every
provision of this Agreement is intended to be severable.  If any term
or provision hereof is declared or held illegal or invalid, in whole or in part,
for any reason whatsoever, such illegality or invalidity shall not affect the
validity or enforceability of the remainder of the Agreement, and such provision
shall be deemed amended or modified to the extent, but only to the extent,
necessary to cure such illegality or invalidity.  Upon such
determination of illegality or invalidity, the Parties shall negotiate in good
faith to amend this Agreement to effect the original intent of the
Parties.  In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of this Agreement, including that provision, in any other
competent jurisdiction.

       

      Section
9.9 
Injunctive
Relief.   The Parties acknowledge and agree that a
violation of any of the terms of  this Agreement will cause the other
Party and the Company irreparable injury for which an adequate remedy at law is
not available, and if any Party institutes any action or proceeding to enforce
such provisions, any Party against whom such action or proceeding is brought
hereby waives the claim or defense therein that an adequate remedy at law
exists.  Accordingly, it is agreed that each of the Parties and the
Company will be entitled to an injunction, restraining order or other equitable
relief to prevent breaches of this Agreement and to enforce specifically such
provisions hereof in any court of competent jurisdiction, in addition to any
other remedy to which they may be entitled at law or equity, except as otherwise
specifically provided in this Agreement.  Each Party hereby waives any
requirement of any posting of bond.

       

      Section
9.10 
GOVERNING
LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

       

      Section
9.11 
Submission to
Jurisdiction.  Each Party irrevocably submits to the exclusive
jurisdiction of (i) the state courts of the State of Delaware and (ii) the
United States District Court for the District of Delaware for the purposes of
any suit, action or other proceeding arising out of or relating to this
Agreement, any other Transaction Document or any transaction contemplated hereby
or thereby.  Each Party agrees to commence any action, suit or
proceeding relating hereto only in either such court.   Each
Party irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (A) the state court of the State of
Delaware, or (B) the United States District Court for the District of Delaware,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient
forum.  Each Party further irrevocably consents to the service of
process out of any of the aforementioned courts in any such suit, action or
other proceeding by the mailing of copies thereof by mail to such Party at its
address set forth in this Agreement, such service of process to be effective
upon acknowledgment of receipt of such registered mail; provided that nothing
in this Section 9.11 shall affect the right of any Party to serve legal process
in any other manner 

       

       

      
        
          
          

        

        
          - 102
-

          
            

          

        

        
          
          

        

      

       

       

      permitted
by Law.  The consent to jurisdiction set forth in this Section 9.11
shall not constitute a general consent to service of process in the State of
Delaware and shall have no effect for any purpose except as provided in this
Section 9.11.  The Parties agree that a final judgment in any such
suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
Law.

       

      Section
9.12 
WAIVER OF JURY
TRIAL.  EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTERS (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.  EACH OF THE PARTIES HERETO HEREBY
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 9.12.

       

      Section
9.13 
Notices.  All
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective Persons giving them (and in the case of
any corporation, the signature shall be by an appropriate officer thereof) and
delivered by hand, or sent by registered mail, return receipt requested, or
nationally recognized courier, or by facsimile to the following
addresses:

       

      If to
Citigroup:

       

      Michael
Corbat

      Chief
Executive Officer

      Citi
Holdings

      Citigroup
Inc.

      399 Park
Avenue

      New York,
New York 10022

      Facsimile:  (646)
291-1665

      Telephone:  (212)
559-1000

       

      And a
copy (which copy shall not constitute notice) to:

       

      Davis
Polk & Wardwell

      450
Lexington Avenue

      New York,
New York  10017

      Attention:  George
R. Bason, Jr.

      John A. Bick

       

       

      
        
          
          

        

        
          - 103
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      Facsimile:  (212)
450-3800

      Telephone:
(212) 450-4000

       

      If to
Morgan Stanley:

       

      Morgan
Stanley

      1585
Broadway

      New York,
New York  10036

      Attention:
General Counsel

      Facsimile:  (212)
761-0331

      Telephone:  (212)
761-4000

       

      And a
copy (which copy shall not constitute notice) to:

       

      Wachtell,
Lipton, Rosen & Katz

      51 West
52nd
Street

      New York,
New York  10019

      Attention:  Edward
D. Herlihy

      Steven A. Rosenblum

      Facsimile:  (212)
403-2000

      Telephone:  (212)
403-1000

       

      If to
Morgan Stanley Smith Barney Holdings LLC:

       

      Morgan
Stanley Smith Barney Holdings LLC

      1585
Broadway

      New York,
New York  10036

      Attention:
General Counsel

      Facsimile:  (212)
761-0331

      Telephone:  (212)
761-4000

       

      And a
copy (which copy shall not constitute notice) to:

       

      Wachtell,
Lipton, Rosen & Katz

      51 West
52nd
Street

      New York,
New York  10019

      Attention:  Edward
D. Herlihy

      Steven A. Rosenblum

      Facsimile:  (212)
403-2000

      Telephone:  (212)
403-1000

       

      By
written notice to the other Party, any Party may change the address to which
notices shall be directed.

       

      Section
9.14 Counterparts.  This
Agreement may be executed in any number of counterparts, and delivered by
facsimile or otherwise, each of which shall be deemed an original of this
Agreement and all of which together shall constitute one and the same
instrument.

       

       

      
        
          
          

        

        
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      Section
9.15 
Interpretation.  Captions,
headings and titles contained in this Agreement, Exhibits and the Schedules are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement, Exhibits or the Schedules.  When a
reference is made in this Agreement to Articles, Sections, Exhibits or
Schedules, such reference shall be to an Article or Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated.  Whenever the
words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.” The words
“herein,” “hereof,” “hereunder” and words of similar import shall be deemed to
refer to this Agreement as a whole, including the Exhibits and Schedules hereto,
and not to any particular provision of this Agreement.  Any pronoun
shall include the corresponding masculine, feminine and neuter
forms.  The term “primarily” includes “exclusively” unless the context
otherwise requires.

       

      Section
9.16 
Schedules.  Inclusion
of information in the Schedules hereto shall not be construed as an admission of
liability under any applicable Law or that such information contained therein is
(x) material to the business, operations, assets, liabilities, financial
condition or results of operations of a Party or its Subsidiaries or of any of
the Contributed Businesses or (y) a representation or warranty that a potential
consequence will occur as described.  Matters reflected in the
Schedules hereto are not necessarily limited to the matters required by this
Agreement to be disclosed by the Parties in such Schedules.  The
Schedules set forth items of disclosure with specific reference to the
particular section or subsection of this Agreement to which the items or
information in such Schedule relates; provided, however, that any
information set forth in one section or subsection of a Schedule pertaining to
representations, warranties and covenants of a Party shall be deemed to apply to
each other section or subsection of such Party’s Schedules pertaining to
its representations, warranties and covenants to the extent that it is
reasonably apparent on its face from a reading of such disclosure that it is
relevant to such other sections or subsections of the Party’s
Schedules.

       

      [THE NEXT
PAGE IS THE SIGNATURE PAGE]

       

       

      
        
          
          

        

        
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      IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the
date and year first above written.

       

      

      
        
          
            	 	
                    CITIGROUP
      INC.

                  	 
	 	 	 	 
	 	
                    By:
      

                  	/s/
      Vincent Fandozzi 	 
	 	 	Name:
      Vincent Fandozzi 	 
	 	 	Title:  
      Managing Director 	 

          

        

      

      
        
 

        
          
            
              	 	
                      MORGAN
      STANLEY

                    	 
	 	 	 	 
	 	
                      By:
      

                    	/s/
      James Gorman	 
	 	 	Name:
      James Gorman	 
	 	 	Title:  
      Co-President	 

            

          

        

        
          
            
 

            
              
                
                  	 	
                          MORGAN
      STANLEY SMITH

                          BARNEY
      HOLDINGS LLC

                        	 
	 	 	 	 
	 	
                          By:
      

                        	/s/
      James Gorman	 
	 	 	Name:
      James Gorman	 
	 	 	Title:  
      Presidentexv10w1

Exhibit 10.1

EXECUTION COPY

FORM OF VOTING AGREEMENT

     This Voting Agreement (this “Agreement”), is made and entered into as of [                    ], 2009, by
and between ev3 Inc., a Delaware corporation (“Parent”), and the undersigned shareholder
(“Shareholder”) of Chestnut Medical
Technologies, Inc., a California corporation (the
“Company”).

Recitals

     A. Concurrently with the execution of this Agreement, Parent, Starsky Merger Sub, Inc., a
California corporation and a direct wholly owned subsidiary of Parent (“Merger Sub”), Starsky
Acquisition Sub, Inc., a California corporation and a direct wholly owned subsidiary of Parent
(“Acquisition Sub”) and the Company are entering into an Agreement and Plan of Merger (as may be
amended from time to time, the “Merger Agreement”), pursuant to which the Merger Sub will be merged
with and into Company, immediately followed by the Company merging with and into Acquisition Sub
(the “Merger”). Capitalized terms used but not defined herein shall have the meanings given to
them in the Merger Agreement.

     B. Shareholder is the record and beneficial owner of such number of outstanding shares of
Company Capital Stock and/or Company Options as is indicated on the signature pages to this
Agreement.

     C. As a material inducement to enter into the Merger Agreement, Parent desires Shareholder to
agree, and Shareholder is willing to agree, to vote the Shares (as defined in Section 1.1 below),
and such other shares of capital stock of the Company over which Shareholder has voting power, so
as to facilitate consummation of the Merger.

     In consideration of the foregoing and the representations, warranties, covenants and
agreements set forth in this Agreement, the parties agree as follows:

1. Voting of Shares.

     1.1 Shares. The term “Shares” shall mean all issued and outstanding shares of Company
Capital Stock owned of record and beneficially owned by Shareholder or over which Shareholder
exercises voting power, in each case, as of the date of this Agreement. Shareholder agrees that
any shares of capital stock of the Company that Shareholder purchases or with respect to which
Shareholder otherwise acquires beneficial ownership or over which Shareholder exercises sole voting
power after the date of this Agreement and prior to the termination of this Agreement pursuant to
Section 4 below shall be subject to the terms and conditions of this Agreement to the same extent
as if they constituted Shares as of the date hereof.

     1.2 Agreement to Vote Shares. Shareholder hereby covenants and agrees that during the
period commencing on the date hereof and continuing until this Agreement terminates pursuant to
Section 4 hereof, at any meeting (whether annual or special and whether or not an adjourned or
postponed meeting) of the shareholders of the Company, however called, and in any action by written
consent of the shareholders of the Company, Shareholder shall appear at the meeting or otherwise
cause any and all Shares to be counted as present thereat for purposes of establishing a quorum and
vote (or cause to be voted), or give his, her or its consent with

 

 

respect to, any and all Shares: (i) in favor of the Company Shareholder Proposal (which
includes approval of the Merger and the Merger Agreement); and (ii) against any of the following
(or any agreement to enter into, effect, facilitate or support any of the following): (A) any
Acquisition Proposal (other than the Merger); (B) any merger agreement or merger (other than the
Merger Agreement and the Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company; or
(C) any amendment of the Company’s Articles of Incorporation or Bylaws or any other proposal or
transaction involving the Company, the purpose of which amendment or other proposal or transaction
is to delay, prevent or nullify the Merger or the transaction contemplated by the Merger Agreement
or change in any manner the voting rights of any capital stock of the Company (collectively,
“Frustrating Transactions”). Shareholder further agrees not to enter into any agreement or
understanding with any person or entity the effect of which would be inconsistent with or violative
of any provision contained in this Section 1.2. Any vote or consent (or withholding of consent) by
the Shareholder that is not in accordance with this Section 1.2 shall be considered null and void,
and the provisions of Section 1.3 shall be deemed to take immediate effect. Notwithstanding
anything to the contrary contained herein, nothing in this Agreement shall be construed to limit or
restrict Shareholder from acting in his or her capacity as a director of the Company or voting in
Shareholder’s sole discretion on any matter other than those matters referred to in the first
sentence of this Section 1.2.

     1.3 Irrevocable Proxy. The Shareholder hereby irrevocably grants to, and appoints,
Parent and any designee of Parent, and each of them individually, as the Shareholder’s proxy and
attorney-in-fact (with full power of substitution and resubstitution), for and in the name, place
and stead of the Shareholder, to vote the Shares of the Shareholder, or grant a consent or approval
in respect of the Shares of the Shareholder in a manner consistent with Section 1.2. The
Shareholder understands and acknowledges that Parent is entering into the Merger Agreement in
reliance upon the Shareholder’s execution and delivery of this Agreement. The Shareholder hereby
affirms that the irrevocable proxy set forth in this Section 1.3 is given in connection with the
execution of the Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. The Shareholder agrees that
this proxy shall be irrevocable during the term of this Agreement and is coupled with an interest
sufficient at law to support an irrevocable proxy and given to Parent as an inducement to enter
into the Merger Agreement and, to the extent permitted under applicable law, shall be valid and
binding on any person to whom Shareholder may transfer any of his, her or its Shares in breach of
this Agreement. The Shareholder hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the Shareholder and any obligation of the
Shareholder under this Agreement shall be binding upon the heirs, personal representatives,
successors and assigns of the Shareholder. Notwithstanding anything to the contrary herein, the
irrevocable proxy granted hereunder shall automatically terminate upon the termination of this
Agreement pursuant to Section 4 hereof.

     1.4 Adjustments Upon Changes in Capitalization. In the event of any change in the
number of issued and outstanding shares of Company Capital Stock by reason of any stock split,
reverse split, stock dividend (including any dividend or distribution of securities convertible
into Company Capital Stock), combination, reorganization, recapitalization or other like change,

 

 

conversion or exchange of shares, or any other change in the corporate or capital structure of
the Company, the term “Shares” shall be deemed to refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for which any or all of the
Shares may be changed or exchanged.

2. Other Restrictions.

     2.1 Transfers and Other Restrictions. Shareholder represents, covenants and agrees
that, except as contemplated by this Agreement: (i) Shareholder shall not, directly or indirectly,
during the period commencing on the date hereof and continuing until this Agreement terminates
pursuant to Section 4 hereof, (A) offer for sale or agree to sell, transfer, tender, assign,
pledge, hypothecate or otherwise dispose of or enter into any contract, option or other arrangement
or understanding with respect to, or consent to, the offer for sale, sale, transfer, tender,
pledge, hypothecation, encumbrance, assignment or other disposition of, or create any Lien of any
nature whatsoever with respect to, any or all of the Shares or any interest therein or (B) take any
action that could make any of its representations or warranties contained herein untrue or
incorrect or could have the effect of preventing or disabling the Shareholder from performing any
of its obligations hereunder; (ii) Shareholder shall not grant any proxy or power of attorney, or
deposit any Shares into a voting trust or enter into a voting agreement or other arrangement, with
respect to the voting of Shares (each a “Voting Proxy”) except as provided by this Agreement; and
(iii) Shareholder has not granted, entered into or otherwise created any Voting Proxy which is
currently (or which will hereafter become) effective, and if any Voting Proxy has been created,
such Voting Proxy is hereby revoked.

     2.2 No Appraisal Rights. The Shareholder hereby waives, and agrees not to exercise or
assent to, any appraisal rights in accordance with the California Corporations Code in connection
with the Merger.

3. Representations and Warranties of Shareholder. Shareholder represents and warrants to
Parent that:

     3.1 Authority; Validity. Shareholder has all requisite capacity, power and authority
to enter into this Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Shareholder and the consummation by Shareholder of the
transactions contemplated hereby have been duly and validly authorized by all necessary action on
the part of Shareholder. This Agreement has been duly executed and delivered by Shareholder and,
assuming the due authorization, execution and delivery of this Agreement by Parent, this Agreement
constitutes the legal, valid and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms subject, as to enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of
creditors generally and to the effect of general principles of equity. No consent, approval,
order, authorization or permit of, or registration, declaration or filing with, or notification to,
any Governmental Entity is required to be obtained or made by or with respect to the Shareholder in
connection with the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby. If this Agreement is being executed in a representative or
fiduciary capacity with respect to Shareholder, the person signing this Agreement has full power
and authority to enter into and perform this Agreement.

 

 

     3.2 Non-Contravention. The execution, delivery and performance of this Agreement does
not, and the consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, contravene, conflict with, or result in any violation of, breach of or
default by (with or without notice or lapse of time, or both) Shareholder under, or give rise to a
right of termination, cancellation or acceleration of any obligation under, or result in the
creation of any Lien (other than pursuant to this Agreement) upon any of the properties or assets
of Shareholder under, any provision of (i) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise or license
applicable to Shareholder or (ii) any judgment, order, decree, statute, law, ordinance, injunction,
rule or regulation applicable to Shareholder or any of Shareholder’s properties or assets, other
than any such conflicts, violations, defaults, rights, or Liens that, individually or in the
aggregate, would not impair the ability of Shareholder to perform Shareholder’s obligations
hereunder or prevent, limit or restrict in any respect the consummation of any of the transactions
contemplated hereby. There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which Shareholder is settlor or trustee or any other person or entity,
including any Governmental Entity, whose consent, approval, order or authorization is required by
or with respect to Shareholder for the execution, delivery and performance of this Agreement by
Shareholder or the consummation by Shareholder of the transactions contemplated hereby.

     3.3 Title. As of the date hereof, Shareholder is the record and beneficial owner of
and has good and marketable title to the shares of Company Capital Stock indicated on the signature
pages hereto, free and clear of any Liens. The number of Shares set forth on the signature pages
hereto are all of the Shares owned of record or beneficially owned by Shareholder or over which
Shareholder exercises voting power and, except as set forth on such signature pages, Shareholder
holds no options or warrants to purchase or rights to subscribe for or otherwise acquire any
securities of the Company and has no other interest in or voting rights with respect to any
securities of the Company.

     3.4 Power. Shareholder has sole voting power and sole power to issue instructions
with respect to the matters set forth in Section 1 and Section 2 hereof and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to all of the Shares,
with no limitations, qualifications or restrictions on such rights.

     3.5 Absence of Litigation. As of the date hereof, there is no litigation, suit,
claim, action, proceeding or investigation pending or, to the knowledge of the Shareholder,
threatened against the Shareholder, or any property or asset of the Shareholder, before any
Governmental Entity that would reasonably be expected to delay or prevent the consummation of the
Merger or of the transactions contemplated by the Merger Agreement.

     3.6 Shareholder Representative. Shareholder acknowledges that if the Merger and the
adoption of Merger Agreement is approved by the shareholders of the Company, he, she or it will be
bound by the appointment of CMT SR, Inc., a California corporation, as the Shareholder
Representative, and such person will have all of the powers set forth in Section 2.11 of the Merger
Agreement and to act in the name, place and stead of Shareholder for all of the matters set forth
in Section 2.11.

 

 

4. Effectiveness; Termination; No Survival. This Agreement shall become effective upon its
execution by Shareholder and Parent. This Agreement may be terminated at any time by mutual
written consent of Shareholder and Parent. This Agreement, and the obligations of Shareholder
hereunder, including, without limitation, Shareholder’s obligations under Section 1 and Section 2
above, shall terminate, without any action by the parties hereto, upon the earlier to occur of the
following: (i) the Effective Time; and (ii) such date and time as the Merger Agreement shall have
been validly terminated pursuant to Article VI thereof. Nothing in this Section 4 shall relieve
any party of liability for breach of this Agreement. If the Merger occurs, the provisions of
Section 3.6 will survive any termination of this Agreement.

5. Further Assurances. Subject to the terms of this Agreement, from time to time,
Shareholder shall execute and deliver such additional documents and use commercially reasonable
efforts to take, or cause to be taken, all such further actions, and to do or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.

6. Miscellaneous.

     6.1 Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is invalid, void or
unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.

     6.2 Binding Effect and Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but, except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties without the prior written consent of the other. Any purported
assignment in violation of this Section 6.2 shall be void.

     6.3 Amendments and Modification. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement executed by the
parties hereto.

     6.4 Specific Performance; Injunctive Relief; Attorneys Fees. The parties hereto
acknowledge that Parent may be irreparably harmed and that there may be no adequate remedy at law
for a violation of any of the covenants or agreements of Shareholder set forth herein. Therefore,
it is agreed that, in addition to any other remedies that may be available to Parent upon any such
violation, Parent shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law or in equity and
Shareholder hereby irrevocably and unconditionally waives any objection to Parent

 

 

seeking so to enforce such covenants and agreements by specific performance, injunctive relief
and other means.

     6.5 Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given upon delivery either personally or by commercial delivery service, or sent
via facsimile or electronic transmission (receipt confirmed) to the parties at the following
addresses or facsimile numbers (or at such other address or facsimile numbers for a party as shall
be specified by like notice):

if to Parent, to:

ev3 Inc.

9600 54th Avenue North

Plymouth, MN 55442

Facsimile No.: (763) 398-7200

Attention: Kevin M. Klemz, Esq.

with copies to:

Oppenheimer Wolff & Donnelly LLP

Plaza VII, Suite 3300

45 South Seventh Street

Minneapolis, MN 55402

Facsimile: (612) 607-7100

Attention: Phillip B. Martin, Esq.

if to Shareholder, at its address set forth on the signature pages hereto, with a copy (which shall not constitute notice) to each of:

Chestnut
Medical Technologies, Inc.

Chestnut Medical Technologies, Inc.

173 Jefferson Dr.

Menlo Park, CA 94025

Attention: Aaron Berez

Facsimile No.: (650) 566-0072

And

Shareholder Representative

CMT SR, Inc.

1485 Laurel Street

Menlo Park, CA 94025

Attention: Aaron L. Berez, MD

Facsimile No.:

And

 

 

McDermott Will & Emery LLP

11682 El Camino Real, Suite 400

San Diego, CA 92130

Attention: Peter N. Townshend

Facsimile No.: (858) 720-7800

     6.6 Governing Law; Submission to Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof. The parties hereby
irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the courts of
the United States of America in the State of California located in the city of Irvine for any
actions, suits or proceedings arising out of or relating to this Agreement (and the parties agree
not to commence any action, suit or proceeding relating thereto except in such courts), and further
agree that service of any process, summons, notice or document by U.S. certified mail shall be
effective service of process for any action, suit or proceeding brought against the parties in any
such court. The parties hereby irrevocably and unconditionally waive any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement in the courts of the
United States of America in the State of California located in the city of Irvine, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.

     6.7 Entire Agreement. The Merger Agreement and this Agreement constitute and contain
the entire agreement and understanding of the parties with respect to the subject matter hereof and
supersede any and all prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter hereof.

     6.8 Counterparts; Facsimile Signature Pages. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement may be executed by facsimile signature (including
signatures in Adobe PDF or similar format).

     6.9 Captions. The captions to sections of this Agreement have been inserted only for
identification and reference purposes and shall not be used to construe or interpret this
Agreement.

     6.10 Shareholder Capacity. Shareholder has executed this Agreement solely in its
capacity as the record and/or beneficial holder of Shares.

[signature page follows]

 

 

     In Witness Whereof, the parties hereto have caused this Voting Agreement to be
executed as of the date first above written.

	 	 	 	 	 	 	 
	 	 	ev3 Inc.	 	 
	 
	 	 	 	 	 	 
	 
	 	By:	 	 	 	 
	 
	 	 	 	 
	 	 
	 	 	Name: Kevin M. Klemz	 	 
	 	 	Title:   Senior Vice President, Secretary
and 
Chief Legal Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Shareholder:	 	 
	 
	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 	(Signature)	 	 
	 
	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 	(Print Full Name)	 	 
	 
	 	 	 	 	 	 
	 	 	Additional Signature (if held jointly):	 	 
	 
	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 	(If held jointly)	 	 
	 
	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 	(Printed Full Name)	 	 

Attention (Please complete):

	 	 	 	 	 	 	 
	Outstanding Shares and
Class and Series of
Company Capital Stock
Beneficially Owned by
Shareholder:
	 	 	 	Shareholder’s Address for Notice:	 	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	Options, Warrants or
Rights to purchase
Company Capital Stock
Beneficially Owned by
Shareholder:

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