Document:

U.S. Employee Matters Agreement, dated June 30, 2007

 Exhibit 10.2 
 EXECUTION COPY 
 U.S. EMPLOYEE MATTERS AGREEMENT 
 by and between 
 MORGAN STANLEY 
 and 
 DISCOVER FINANCIAL SERVICES 

Dated as of June 30, 2007 

 TABLE OF CONTENTS 
  

  

					
	 	 	 	  	PAGE
	 ARTICLE 1
 SCOPE AND DEFINITIONS
  

	Section 1.01.	 	Scope	  	1
	Section 1.02.	 	Definitions	  	2
	Section 1.03.	 	Interpretation	  	5
	  
 ARTICLE 2
 ASSIGNMENT OF EMPLOYEES
  

	Section 2.01.	 	Active Employees	  	7
	Section 2.02.	 	Former Employees	  	8
	Section 2.03.	 	Employment Law Obligations	  	9
	Section 2.04.	 	Employee Records	  	10
	Section 2.05.	 	Morgan Stanley Executive Compensation Website	  	11
	  
 ARTICLE 3
 EQUITY COMPENSATION PLANS
  

	Section 3.01.	 	Stock Options	  	13
	Section 3.02.	 	Restricted Stock Units	  	14
	Section 3.03.	 	Approval and Terms of Equity Awards	  	14
	Section 3.04.	 	Responsibility For Tax Withholding, Reporting, And Social Insurance Contributions	  	15
	Section 3.05.	 	No Change of Control	  	16
	  
 ARTICLE 4
 EMPLOYEE STOCK PURCHASE PLAN
  

	Section 4.01.	 	ESPP	  	16
	  
 ARTICLE 5
 GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
  

	Section 5.01.	 	General Principle	  	17
	Section 5.02.	 	Establishment of Discover Plans	  	18
	Section 5.03.	 	Transfer of Assets and Liabilities	  	18
	Section 5.04.	 	Exceptions	  	19
	Section 5.05.	 	Cooperation	  	19
	Section 5.06.	 	Service Credit	  	19
	Section 5.07.	 	Plan Administration	  	20

  

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	 ARTICLE 6
 U.S.
PENSION PLAN SPIN-OFF
  
	  	
	Section 6.01.	 	General Principle	  	21
	Section 6.02.	 	Determination and Transfer of Initial Transfer Amount	  	22
	Section 6.03.	 	Determination of the Final Pension Transfer Amount	  	22
	Section 6.04.	 	True-Up Adjustment	  	24
	Section 6.05.	 	Form and Selection of Assets to be Transferred	  	24
	Section 6.06.	 	Adjustment Payment for Data Errors	  	25
	  
 ARTICLE 7
 U.S. 401(K) PLAN AND ESOP
  

	Section 7.01.	 	General Principle	  	25
	Section 7.02.	 	Transfer of Accounts	  	26
	Section 7.03.	 	Funding of 2007 Matching Contribution	  	26
	Section 7.04.	 	Continuing Obligations Regarding Proxy Statement, Tender Offers and Similar Rights and Restrictions	  	27
	  
 ARTICLE 8
 U.S. WELFARE BENEFIT PLANS
  

	Section 8.01.	 	General Principle and Exceptions	  	27
	Section 8.02.	 	Establishment of Discover Plans	  	28
	Section 8.03.	 	No Transfer of Assets	  	29
	Section 8.04.	 	Insurance Contracts	  	29
	Section 8.05.	 	Third Party Vendors	  	30
	  
 ARTICLE 9
 FRINGE BENEFIT AND OTHER U.S. PLANS AND
PROGRAMS
  

	Section 9.01.	 	General Principle and Exceptions	  	30
	Section 9.02.	 	Transition of Coverage Under Plans and Programs	  	31
	  
 ARTICLE 10
 WORKERS COMPENSATION AND UNEMPLOYMENT COMPENSATION
  

	Section 10.01.	 	Allocation of Workers Compensation and Unemployment Claims	  	32
	  
 ARTICLE 11
 COMPENSATION MATTERS AND GENERAL BENEFIT AND
EMPLOYEE MATTERS
  

	Section 11.01.	 	Restrictive Covenants in Employment and Other Agreements	  	32
	Section 11.02.	 	Non-Solicitation of Employees	  	33
	Section 11.03.	 	Severance	  	33

  

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	Section 11.04.	 	Accrued Vacation Days Off	  	34
	Section 11.05.	 	Leaves of Absence	  	34
	Section 11.06.	 	Morgan Stanley Assets	  	34
	Section 11.07.	 	Morgan Stanley Deferred Compensation Plans	  	34
	  
 ARTICLE 12
 GENERAL PROVISIONS
  

			
	Section 12.01.	 	Preservation of Rights to Amend	  	35
	Section 12.02.	 	Confidentiality	  	35
	Section 12.03.	 	Administrative Complaints/Litigation	  	35
	Section 12.04.	 	Reimbursement and Indemnification	  	35
	Section 12.05.	 	Costs of Compliance with Agreement	  	36
	  
 ARTICLE 13
 MISCELLANEOUS
  

			
	Section 13.01.	 	Notices	  	36
	Section 13.02.	 	Amendments; No Waivers	  	37
	Section 13.03.	 	Successors and Assigns	  	37
	Section 13.04.	 	Governing Law	  	37
	Section 13.05.	 	Counterparts; Effectiveness; Third-Party Beneficiaries	  	37
	Section 13.06.	 	Entire Agreement	  	38
	Section 13.07.	 	Jurisdiction	  	38
	Section 13.08.	 	WAIVER OF JURY TRIAL	  	38
	Section 13.09.	 	Severability	  	39
	Section 13.10.	 	Survival	  	39
	Section 13.11.	 	Captions	  	39
	Section 13.12.	 	Specific Performance	  	39
	Section 13.13.	 	Limited Liability	  	39
	Section 13.14.	 	Mutual Drafting	  	40
	Section 13.15.	 	Implementation	  	40
	Section 13.16.	 	Effect if Distribution Does Not Occur	  	40
	Section 13.17.	 	Corporate Authorization	  	40

  

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 U.S. EMPLOYEE MATTERS AGREEMENT 
 THIS U.S. EMPLOYEE MATTERS AGREEMENT dated as of June 30, 2007 between Morgan Stanley, a Delaware corporation (“Morgan Stanley”),
and Discover Financial Services, a Delaware corporation (“Discover”) (collectively, the “Parties”). 
 RECITALS 
 WHEREAS, Morgan Stanley and Discover have entered into a Separation and Distribution Agreement of even date
herewith (the “Distribution Agreement”) pursuant to which Morgan Stanley will distribute on a pro rata basis to the holders of Morgan Stanley’s Common Stock, par value $0.01 per share (“Morgan Stanley Common
Stock”), without any consideration being paid by such holders, all of the outstanding shares of Common Stock, par value $0.01 per share of Discover (“Discover Common Stock”) then owned by Morgan Stanley (the
“Distribution”). 
 WHEREAS, in connection with the Distribution, Morgan Stanley and Discover desire to enter into this U.S.
Employee Matters Agreement as a complement to the Distribution Agreement. 
 NOW THEREFORE, in consideration of the mutual covenants
contained herein and in the Distribution Agreement, the Parties hereto agree as follows: 
 ARTICLE 1 
 SCOPE AND DEFINITIONS 
 Section 1.01. Scope. Notwithstanding anything to the contrary contained herein (i) this Agreement shall not apply with respect to any Employee whose primary employer within the Morgan Stanley Group or
Discover Group is or was an entity domiciled in the United Kingdom, except that this Agreement shall apply with respect to the employees listed on Schedule 1.01(i) solely to the extent relevant with respect to the appropriate treatment of the
benefits of such employees addressed herein and not addressed in the U.K. Employee Matters Agreement and (ii) the terms of this Agreement shall apply only to the extent relevant with respect to the appropriate treatment of any Employee whose
primary employer within the Morgan Stanley Group or Discover Group is or was an entity domiciled in a country other than the United Kingdom or the U.S. or in Puerto Rico. For the avoidance of doubt, any relevant portions of this Agreement shall
apply with respect to the Employees listed on Schedule 1.01(ii) hereof (who are Employees who are or have been located outside the U.S., but are or have been covered under U.S. compensation and benefit plans and arrangements). However, 

  

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this Agreement shall not apply with respect to the Employees listed on Schedule 1.01(iii) hereof (who are Employees who are, as of the date hereof, located
within the U.S. but are employed by U.K. entities and covered under U.K. compensation arrangements and benefit plans and arrangements). 
 Section 1.02. Definitions. Unless otherwise defined herein, each capitalized term shall have the meaning specified for such term in the Distribution Agreement. As used in this Agreement: 
 “Agreement” means this U.S. Employee Matters Agreement together with those parts of the Distribution Agreement referenced herein, all
Schedules hereto and all amendments, modifications and changes hereto and thereto. 
 “Business Day” means any
day, other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized or obligated by law to close. 
 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at Section 4980B of the Code, as amended. 
 “Code” means the U.S. Internal Revenue Code of 1986, as amended. 
 “Conversion Ratio” means the closing price of Morgan Stanley common stock immediately prior to the Distribution divided by
the opening price of Discover common stock immediately following the Distribution, in each case as reported on the New York Stock Exchange. 
 “Discover Business Employee” means any individual who is, immediately prior to the Distribution, employed by Morgan Stanley, Discover or any of their respective Subsidiaries and has employment duties primarily related to
the Discover Business, as reasonably agreed by the Parties consistent with the foregoing description. A Discover Business Employee may not be a Morgan Stanley Business Employee. 
 “Discover Equity Plans” shall mean one or more plans adopted by Discover and approved by Morgan Stanley, as shareholder of Discover,
under the authority of which the Discover equity awards described in Article 3 shall be issued. 
 “Discover Initial Price”
shall mean the opening price of Discover common stock immediately following the Distribution as reported on the New York Stock Exchange. 
 “Discover Non-ERISA U.S. Benefit Arrangement” means any Non-ERISA U.S. Benefit Arrangement sponsored or maintained by Discover. 
  

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 “Discover Pension and Welfare Benefit Plan” means any Pension Plan or Welfare Plan
sponsored or maintained by Discover or a Discover Subsidiary. 
 “Discover RSU” shall mean a right, issued in accordance
with Section 3.02, representing the contractual entitlement to receive one share of Discover Common Stock in accordance with the terms and conditions of the award and the Discover Equity Plans under which the Discover RSU is granted.

 “Discover Stock Option” shall mean a right, issued in accordance with Section 3.01, representing the contractual
entitlement to purchase one share of Discover Common Stock in accordance with the terms and conditions of the award and the Discover Equity Plans under which the Discover Stock Option is granted. 
 “Discover Subsidiary” means any entity of which securities or other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are expected to be directly or indirectly owned by Discover immediately after the Distribution. 
 “Employee” means any Morgan Stanley Business Employee or Former Morgan Stanley Employee or Discover Business Employee or Former Discover Employee. 
 “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended. 
 “FMLA” means the U.S. Family Medical Leave Act, as amended. 
 “Former Discover Employees” has the meaning set forth in Section 2.02(c). 
 “Former Morgan Stanley Employees” has the meaning set forth in Section 2.02(b). 
 “HIPAA” means the U.S. Health Insurance Portability and Accountability Act, as amended. 
 “IRS” means the U.S. Internal Revenue Service. 
 “Morgan Stanley Business Employee” means any individual who is, immediately prior to the Distribution, employed by Morgan Stanley or any of its Subsidiaries or Affiliates and is not a Discover
Business Employee. 
 “Morgan Stanley CMDS Committee” shall mean the Compensation, Management Development and Succession
Committee of the Board of Directors of Morgan Stanley. 
  

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 “Morgan Stanley Equity Plans” shall mean any plan or arrangement under the authority of
which Morgan Stanley has granted compensatory stock options, restricted stock units or any other compensatory awards based on Morgan Stanley Common Stock, which awards are outstanding on the Distribution Date. 
 “Morgan Stanley ESPP” means the Morgan Stanley Employee Stock Purchase Plan. 
 “Morgan Stanley Final Price” shall mean the closing price of Morgan Stanley common stock immediately prior to the Distribution as
reported on the New York Stock Exchange. 
 “Morgan Stanley Non-ERISA U.S. Benefit Arrangement” means any Non-ERISA U.S.
Benefit Arrangement sponsored or maintained by Morgan Stanley. 
 “Morgan Stanley Pension and Welfare Benefit Plan” means
any Pension Plan or Welfare Plan sponsored or maintained by Morgan Stanley or a Morgan Stanley Subsidiary. 
 “Morgan Stanley
RSU” shall mean a right representing a contractual entitlement to one share of Morgan Stanley Common Stock, in accordance with the terms of the relevant award and the Morgan Stanley Equity Plans under which the Morgan Stanley RSU is
granted. 
 “Morgan Stanley Subsidiary” means any entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons performing similar functions are expected to be directly or indirectly owned by Morgan Stanley immediately after the Distribution. 
 “Morgan Stanley Stock Option” shall mean a right representing the contractual entitlement to purchase one share of Morgan Stanley Common
Stock in accordance with the terms of the relevant award and the Morgan Stanley Equity Plans. 
 “MS 401(k) Plan” means the
Morgan Stanley 401(k) Plan (f/k/a the Morgan Stanley DSP/START Plan). 
 “MS ESOP” means the Morgan Stanley Employee Stock
Ownership Plan. 
 “MS Excess Plan” means the Morgan Stanley & Co. Incorporated Excess Benefit Plan.

 “MS Pension Plan” means the Morgan Stanley Employees Retirement Plan. 
  

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 “MS Retiree Medical Plan” means that portion of the Morgan Stanley Health and Welfare
Benefits Plan that provides post-employment medical benefits beyond those required to be provided pursuant to COBRA. 
 “MS
SERP” means the Morgan Stanley Supplemental Executive Retirement Plan. 
 “Non-ERISA U.S. Benefit Arrangement”
means any contract, agreement, policy, practice, program, plan, trust or arrangement, other than a Pension Plan or Welfare Plan, providing for benefits, perquisites or compensation of any nature to any Employee, or to any family member, dependent or
beneficiary of any such Employee, including, without limitation, disability, severance, health, dental, life, accidental death and dismemberment, travel and accident, tuition reimbursement, supplemental unemployment, vacation, sick, personal or
bereavement days, holidays, retirement, deferred compensation, profit sharing, bonus, stock-based compensation or other forms of incentive compensation. 
 “Pension Plan” means any pension plan as defined in Section 3(2) of ERISA, without regard to Section 4(b)(4) or 4(b)(5) of ERISA. 
 “Welfare Plan” means any employee welfare plan as defined in Section 3(1) of ERISA, without regard to Section 4(b)(4) of
ERISA. 
 “WARN” means the U.S. Workers Adjustment Retraining and Notification Act, as amended. 
 Section 1.03. Interpretation. In this Agreement, unless the context clearly indicates otherwise: 
 (a) words used in the singular include the plural and words used in the plural include the singular; 
 (b) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement, and a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution; 
 (c) references to any gender include the other gender; 
 (d) the words “include,”
“includes” and “including” shall be deemed to be followed by the words “without limitation”; 
 (e) references
to any Article, Section or Schedules mean such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause mean such clause of such Section or definition; 
  

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 (f) the words “herein,” “hereunder,” “hereof,” “hereto” and words
of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof; 
 (g)
references to any agreement, instrument or other document mean such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement; 

(h) references to any law (including statutes and ordinances) mean such law (including all rules and regulations promulgated thereunder) as amended,
modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability; 
 (i) relative
to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”; 
 (j) accounting terms used herein shall have the meanings historically ascribed to them by Morgan Stanley and its Subsidiaries, including Discover, in its
and their internal accounting and financial policies and procedures in effect prior to the date of this Agreement; 
 (k) if there is any
conflict between the provisions of the Distribution Agreement and this Agreement, the provisions of this Agreement shall control with respect to the subject matter hereof; if there is any conflict between the provisions of the body of this Agreement
and the Schedules hereto, the provisions of the body of this Agreement shall control unless explicitly stated otherwise in such Schedule; 
 (l) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;

 (m) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean
that such Party shall also be obligated to cause its relevant Affiliates to take such action or refrain from taking such action, as the case may be; and 
 (n) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the United States. 
  

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 ARTICLE 2 
 ASSIGNMENT OF EMPLOYEES 
 Section 2.01. Active
Employees.  
 (a) Discover Business Employees. Except as otherwise set forth in this Agreement, effective not later than
the Distribution Date, the employment of each Discover Business Employee who is employed by Morgan Stanley or a Morgan Stanley Subsidiary shall be assigned and transferred to Discover or a Discover Subsidiary. As of the Distribution Date, Discover
shall and shall cause each Discover Subsidiary to continue the employment of each Discover Business Employee who is employed by Discover or a Discover Subsidiary. Discover shall, or shall cause the appropriate Discover Subsidiary to, honor any legal
right of any Discover Business Employee or Former Discover Employee in a leave or other non-working status to return to work by providing such employee employment on terms that comply with such right. 
 (b) Morgan Stanley Business Employees. Effective not later than the Distribution Date, the employment of each Morgan Stanley Business Employee who
is employed by Discover or a Discover Subsidiary shall be assigned and transferred to Morgan Stanley or a Morgan Stanley Subsidiary. As of the Distribution Date, Morgan Stanley shall and shall cause each Morgan Stanley Subsidiary to continue the
employment of each Morgan Stanley Business Employee who is employed by Morgan Stanley or a Morgan Stanley Subsidiary. Morgan Stanley shall, or shall cause the appropriate Morgan Stanley Subsidiary to, honor any legal right of any Morgan Stanley
Business Employee or Former Morgan Stanley Employee in a leave or other non-working status to return to work by providing such employee employment on terms that comply with such right. 
 (c) At-Will Status. Notwithstanding the above or any other provision of this Agreement, nothing in this Agreement shall create any obligation on
the part of Morgan Stanley, Discover or any of their respective Affiliates to continue the employment of any employee for any definite period following the Distribution Date or to change the employment status of any employee from “at
will.” 
 (d) Employee Secondment. Concurrently with the execution of this Agreement, the parties are entering into one or more
Transition Services Agreements pursuant to which Morgan Stanley has agreed to provide certain services relating to the subject matter of this Agreement. In addition, and notwithstanding the foregoing, if and only to the extent necessary to preserve
payroll, benefits, or other legal entitlements with respect to any employees (whether inside or outside the United States), a Discover Subsidiary and a Morgan Stanley Subsidiary may enter into one or more agreements whereby one such subsidiary may
lease employees from another for a period of not more than three 

  

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calendar months following the Distribution Date. Any such agreement(s) shall require the company benefiting from the services of such employee(s) to fully
reimburse the leasing company for the full cost of the employee(s) remuneration and shall contain other terms and conditions consistent with an arm’s length commercial relationship between the leasing entity and the service recipient.

 (e) Severance. Neither the Distribution nor any of the assignment, transfer or continuation of the employment of employees in
connection therewith shall be deemed a severance of employment of any employee for purposes of any plan, policy, practice or arrangement of Morgan Stanley, Discover or any of their respective Subsidiaries, except as otherwise provided herein.

 Section 2.02. Former Employees.  
 (a) General Principal. Except as otherwise provided in this Agreement, each former employee of Morgan Stanley or any Morgan Stanley Subsidiary or Discover or any Discover Subsidiary as of the Distribution Date
will be considered a former employee of the business as to which his or her duties were primarily related immediately prior to his or her termination of employment with all of Morgan Stanley, Discover and their respective Affiliates. 
 (b) Former Morgan Stanley Employees. For these purposes, former employees of Morgan Stanley and the Morgan Stanley Subsidiaries shall be deemed to
include (i) all employees who, as of their last day of employment with all of Morgan Stanley, Discover and their respective Affiliates, had employment duties primarily related to the Morgan Stanley Business and (ii) without limiting the
foregoing, (x) all employees who, as of their last day of employment with all of Morgan Stanley, Discover and their respective Affiliates were employed by Morgan Stanley entities providing institutional or asset management services, including,
without limitation, Van Kampen Funds Inc., Miller Anderson & Sherrard, LLP, Discover Brokerage Direct, Barra, Inc. and any other former Affiliate of the Dean Witter or Morgan Stanley Asset Management or Morgan Stanley Institutional
Securities group and (y) all former employees of Morgan Stanley Credit Corporation (“MSCC”) whose last day of employment with MSCC and its Affiliates was on or after January 1, 2006 (collectively, the “Former
Morgan Stanley Employees”). 
 (c) Former Discover Employees. Former employees of Discover and the Discover Subsidiaries
shall be deemed to include (i) all employees who, as of their last day of employment with all of Morgan Stanley, Discover and their respective Affiliates, had employment duties primarily related to the Discover Business and (ii) without
limiting the foregoing, (x) all employees who, as of their last day of employment with all of Morgan Stanley, Discover and their respective Affiliates were employed by Sears Roebuck and Co./Sears Holdings Corporation, The Allstate Corporation,
Coldwell Banker Real Estate Corporation, Sears 

  

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Mortgage Corporation/Sears Mortgage Banking Group, Sears Savings Bank, any other former Sears Affiliate (other than an entity in the Dean Witter or Morgan
Stanley Asset Management or Morgan Stanley Institutional Securities lines of business), former employees of SPS Payment Systems, Inc. and former employees of PULSE EFT Association LP and (y) all former employees of MSCC whose last day of
employment with MSCC and its Affiliates was prior to January 1, 2006 (collectively, the “Former Discover Employees”). 
 Section 2.03. Employment Law Obligations.  
 (a) WARN Act. Morgan Stanley and the Morgan Stanley Subsidiaries
shall be responsible for providing any necessary WARN notice (and meeting any similar state law notice requirements) with respect to any termination of any Morgan Stanley Business Employee. Discover and the Discover Subsidiaries shall be responsible
for providing any necessary WARN notice (and meeting any similar state law notice requirements) with respect to any termination of any Discover Business Employee; provided, however, that Morgan Stanley and the Morgan Stanley
Subsidiaries shall be responsible for providing any necessary WARN notice (and any similar state law notice requirements) to any Discover Business Employee or any governmental authority in connection with any transfer of the employment of any
Discover Business Employee from a Morgan Stanley Group entity to a Discover Group entity in contemplation of the Distribution. 
 (b)
Compliance With Employment Laws. On and after the Distribution Date (i) Morgan Stanley and the Morgan Stanley Subsidiaries shall be responsible for adopting and maintaining any policies or practices, and for all other actions and
inactions, necessary to comply with employment-related laws and requirements relating to the employment of the Morgan Stanley Business Employees and the treatment of the Former Morgan Stanley Employees in respect of their former employment with
Morgan Stanley and its Affiliates and (ii) Discover and the Discover Subsidiaries shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related
laws and requirements relating to the employment of the Discover Business Employees and the treatment of the Former Discover Employees in respect of their former employment with Morgan Stanley, Discover and their respective Affiliates. Without
limiting the generality of the foregoing (i) Morgan Stanley and the Morgan Stanley Subsidiaries shall be responsible for administering compliance with the Morgan Stanley Group employee leave policies and the FMLA (and any similar applicable
state law) as relates to Morgan Stanley Business Employees following the Distribution Date and (ii) Discover and the Discover Subsidiaries shall be responsible for administering compliance with the Discover Group employee leave policies and the
FMLA (and any similar applicable state law) as relates to Discover Business Employees following the Distribution Date. 
  

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 Section 2.04. Employee Records.  
 (a) Records Relating to Morgan Stanley Business Employees and Former Morgan Stanley Employees. All records and data in any form relating to Morgan
Stanley Business Employees and Former Morgan Stanley Employees shall be the property of Morgan Stanley, except that data pertaining to such an employee and relating to any period that such employee was employed by Discover or a Discover Subsidiary
shall be jointly owned by Morgan Stanley and Discover. 
 (b) Records Relating to Discover Business Employees and Former Discover
Employees. All records and data in any form relating to Discover Business Employees and Former Discover Employees shall be the property of Discover, except that data pertaining to such an employee and relating to any period that such employee
was employed by Morgan Stanley, Discover or any of their respective Subsidiaries prior to the Distribution shall be jointly owned by Morgan Stanley and Discover. 
 (c) Sharing of Records. The Parties shall provide each other such records and information only as necessary or appropriate to carry out their obligations under law, this Agreement or any other Distribution
Document, or for the purposes of administering their respective employee benefit plans and policies. Records and data described in Section 2.04(b) available to Morgan Stanley, which are reasonably requested by Discover shall be provided to
Discover as soon as reasonably practicable upon such request; provided Morgan Stanley shall use its reasonable best efforts to provide to Discover before the Distribution Date the records and data available to Morgan Stanley and listed on Schedule
2.04(c) hereof; and provided further that Discover shall reimburse Morgan Stanley for the reasonable costs and expenses associated with the provision of such records and data (including a reasonable allocable share of any compensation and overhead
expense of personnel deployed to assist in the provision of such records and data, except to the extent that such cost is insignificant). Subject to applicable law, all information and records regarding employment and personnel matters of Discover
Business Employees and Former Discover Employees shall be accessed, retained, held, used, copied and transmitted after the Distribution Date by Discover in accordance with all laws and policies relating to the collection, storage, retention, use,
transmittal, disclosure and destruction of such records. 
 (d) Access to Records. To the extent consistent with this Agreement,
access to such records after the Distribution Date will be provided to Morgan Stanley and Discover in accordance with the Distribution Agreement. In addition, notwithstanding anything to the contrary, Morgan Stanley shall retain reasonable access to
those records necessary for Morgan Stanley’s continued administration of any plans or programs on behalf of Employees after the Distribution Date, provided that such access shall be limited to individuals who have a job-related 

  

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need to access such records. Morgan Stanley shall also retain copies of all confidentiality and non-compete agreements with any Discover Business Employee or
Former Discover Employee in which Morgan Stanley has a valid business interest. 
 (e) Maintenance of Records. With respect to
retaining, destroying, transferring, sharing, copying and permitting access to all such information, Morgan Stanley and Discover shall each comply with all applicable laws, regulations and internal policies, and each Party shall indemnify and hold
harmless the other Party from and against any and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party or its agents) to so comply with all applicable laws, regulations and internal policies applicable to
such information. 
 (f) No Access to Computer Systems or Files. Except as set forth in the Distribution Agreement or any Transition
Services Agreement(s), no provision of this Agreement shall give either Party direct access to the computer systems or other files, records or databases of the other Party, unless specifically permitted by the owner of such systems, files, records
or databases. 
 (g) Relation to Distribution Agreement. The provisions of this Section 2.04 shall be in addition to, and not in
derogation of, the provisions of the Distribution Agreement governing Confidential Information and access to and use of employees, information and records, including Sections 5.01 and 5.05 of the Distribution Agreement. 
 Section 2.05. Morgan Stanley Executive Compensation Website. 
 (a) For a period of 12 months after the Distribution Date (the “Services Term”), Discover Business Employees and Former Discover Employees shall be afforded access to the Morgan Stanley Executive
Compensation Website (the “Website”) in respect of equity awards relating to Discover shares. During such period, Discover shall not, and shall not allow any third party to: 
 (i) edit, modify, truncate, filter or change the order of the information contained on the Website including any Results Page or
Destination Page, as such terms are defined below; 
 (ii) frame, obscure or modify the Website or any Results Page or
Destination Page including (A) inserting any of Discover’s Brand Features, as such terms are defined below, on the Website or any Results Page or Destination Page, (B) displaying any other material or content in connection with the
Website or any Results Page or Destination Page other than such material or content provided by Morgan Stanley in connection therewith or (C) providing a version of any Results Page or Destination Page different from the page an employee would
access by going directly to the Results Page or Destination Page; 
  

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 (iii) display any information contained on the Website, including any Results Page or
Destination Page, to any third parties other than the employee accessing such Website; 
 (iv) minimize, remove or otherwise
inhibit the full and complete display of the Website or any Results Page or Destination Page; 
 (v) modify, adapt, translate,
prepare derivative works from, decompile, reverse engineer, disassemble or otherwise attempt to derive source code from the Website or any other Morgan Stanley technology, content, data, routines, algorithms, methods, ideas, design, user interface
techniques, software, materials, and documentation; or 
 (vi) remove, deface, obscure, or alter Morgan Stanley’s
copyright notice, trademarks or other proprietary rights notices affixed to or displayed on the Website or any Results Page or Destination Page, or any other Morgan Stanley technology, software, materials and documentation; 
 (b) Morgan Stanley and Discover agree that, as between them (i) Morgan Stanley shall own all right, title and interest, including without limitation
all Intellectual Property Rights, as such term is defined below, relating to the Website, including any Results Page or Destination Page (and any derivative works or enhancements thereof), and its Brand Features, including but not limited to, all
software, technology, information, content, materials, guidelines and documentation provided in connection therewith; (ii) Discover shall not acquire any right, title, or interest therein, except for the limited use rights expressly set forth
in this Section 2.05, and (iii) any rights not expressly granted herein are deemed withheld and reserved to Morgan Stanley. 
 (c)
Subject to the terms and conditions of this Section 2.05, Morgan Stanley grants to Discover a limited, nonexclusive, nontransferable and nonsublicensable license during the Services Term to access the Website and display Morgan Stanley’s
Brand Features in connection therewith, but in each case solely as provided in this Section 2.05. 
 (d) For purposes of this
Section 2.05, the following terms shall have the meanings set forth below: 
 (i) “Brand Features” means
the trade names, trademarks, service marks, logos, domain names, and other distinctive brand features of each party, respectively, as secured by such party from time to time. 
  

 12 

 (ii) “Destination Page” means any web page on the Website which may be
accessed by clicking on any link on the Website or any Results Page. 
 (iii) “Intellectual Property Rights”
means any trademark, service mark, trade name, mask work, invention, patent, copyright, trade secret, know-how, software (including any goodwill associated therewith) or any other similar type of proprietary intellectual property right and all
applications, renewals, extensions, restorations and re-instatements thereof, now or hereafter in force and effect worldwide. 
 (iv) “Results Page” means the web page on which the results of the employee’s query are displayed. 
 ARTICLE 3

 EQUITY COMPENSATION PLANS 
 Section 3.01. Stock Options. Morgan Stanley and Discover shall take any and all action as shall be necessary or appropriate, so that each
award of Morgan Stanley Stock Options issued and currently outstanding under any Morgan Stanley Equity Plan held at the time of the Distribution Date by a Discover Business Employee shall be adjusted, pursuant to the terms of the Morgan Stanley
Equity Plans and the Morgan Stanley Stock Options, by converting such options into Discover Stock Options on the first trading day immediately following the Distribution. Such adjustment shall be effected by replacing such Morgan Stanley Stock
Options with substitute Discover Stock Options in a manner such that on the first trading day immediately following the Distribution, (i) each such holder of a Morgan Stanley Stock Option will receive a number of substitute Discover Stock
Options equal to the Conversion Ratio multiplied by the number of Morgan Stanley Stock Options held by such holder, and (ii) the per share option exercise price of each such Discover Stock Option will be determined by dividing the exercise
price of the original Morgan Stanley Stock Option by the Conversion Ratio, and such adjustment shall be effected in a manner intended to satisfy requirements of Section 424 of the Code and avoid treatment of the Discover Stock Options as
non-qualified deferred compensation subject to Section 409A of the Code. Such substituted Discover Stock Options will in the sole and absolute judgment of the Morgan Stanley CMDS Committee preserve the aggregate intrinsic value of the original
Morgan Stanley Stock Options for which they are substituted and the ratio in the original option of the exercise price to the fair market value of the stock by adjusting the number of shares purchasable and the exercise price, based on a comparison
of the Morgan Stanley Final Price and the Discover Initial Price. Fractional shares shall be adjusted or compensated by Morgan Stanley as appropriate in the sole discretion of the Morgan Stanley CMDS Committee. Such substitute Discover Stock Options
will take into 

  

 13 

 
account all employment with both Morgan Stanley and Discover, and their respective Subsidiaries and Affiliates, for purposes of determining when the Discover
Stock Options will become exercisable and/or vest. 
 Section 3.02. Restricted Stock Units. Morgan Stanley and Discover shall
take any and all action as shall be necessary or appropriate so that Discover Business Employees who hold Morgan Stanley RSUs will have each of their awards of Morgan Stanley RSUs adjusted pursuant to the terms of the Morgan Stanley Equity Plans and
Morgan Stanley RSUs, by converting such Morgan Stanley RSUs into Discover RSUs on the first trading day immediately after the Distribution. Such adjustment shall be effected by replacing such Morgan Stanley RSUs with substitute Discover RSUs in a
manner such that on the first trading day immediately following the Distribution each such holder of a Morgan Stanley RSU will receive a number of substituted Discover RSUs equal to the Conversion Ratio multiplied by the number of Morgan Stanley
RSUs held by such holder. Such substituted Discover RSUs will take into account all employment with both Morgan Stanley and Discover, and their respective Subsidiaries and Affiliates, for purposes of determining when the Discover RSUs will vest
and/or be paid. Such adjustment and replacement shall be conducted in a manner intended not to modify the treatment of the Discover RSUs under Section 409A of the Code from the treatment that would otherwise apply with respect to the
corresponding Morgan Stanley RSU award. Fractional shares shall be adjusted or compensated by Morgan Stanley as appropriate in the sole discretion of the Morgan Stanley CMDS Committee. 
 Section 3.03. Approval and Terms of Equity Awards. Morgan Stanley, acting as the sponsor of the Morgan Stanley Equity Plans and as sole
shareholder of Discover shall, and shall cause Discover to, take such actions and give or obtain such approvals as are necessary or desirable to ensure that the issuance of the Discover awards provided for in this Article 3 shall comply with all
applicable tax, securities law and stock exchange requirements. The parties intend that each Discover Stock Option and Discover RSU (each, a “Discover Adjustment Award”) shall be (i) granted pursuant to governing plan terms of
a Discover Equity Plan which are substantially similar to the plan terms of the relevant Morgan Stanley Equity Plan under which the relevant predecessor award was granted and (ii) subject to the terms of the applicable award agreement under
which the relevant predecessor award was granted (as such plan and award documents may have been duly amended from time to time), except to the extent that the terms of such Discover Adjustment Award shall be varied pursuant to the terms of this
Agreement or by any action of Discover. 
  

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 Section 3.04. Responsibility For Tax Withholding, Reporting, And Social Insurance
Contributions. 
 (a) Morgan Stanley and Discover agree that, unless prohibited by applicable law, Discover shall be responsible for all
tax withholding and reporting obligations and shall pay the employer’s share of any social insurance tax obligations that arise in connection with the grant, vesting, exercise, transfer or other settlement of the adjusted replacement awards
held by Discover Business Employees. Morgan Stanley and Discover further agree that, unless prohibited by applicable law, Morgan Stanley shall be responsible for all tax withholding and reporting obligations and shall pay the employer’s share
of any social insurance tax obligations that arise in connection with the grant, vesting, exercise, transfer or other settlement of the equity awards held by Morgan Stanley Business Employees and Former Morgan Stanley Business Employees. 

(b) With respect to equity awards held by Former Discover Employees, Morgan Stanley and Discover further agree that Discover shall be responsible for
all tax withholding and reporting obligations and shall pay the employer’s share of any social insurance tax obligations that arise in connection with the exercise, transfer or other settlement of such awards, and that Morgan Stanley shall
transfer to Discover, on a timely basis after such event, to the extent that such event gives rise to tax withholding or reporting obligations for Discover, the amount in cash of any income tax withholding and employee’s share of social
insurance tax obligations, as well as any information regarding such event that Discover is obligated to report to the IRS, arising in connection therewith. For a period of two years following the Distribution Date, Morgan Stanley shall act as the
agent of Discover for purposes of withholding income and payroll taxes and reporting and remitting such amounts to the IRS arising from or in connection with the exercise or settlement of equity awards held by such Former Discover Business Employees
in accordance with the terms of this Section 3.04(b) and the agreements referred to in paragraph (c) below; provided, however that Morgan Stanley’s role as agent hereunder shall not extend to services which Morgan Stanley
reasonably determines cannot practicably be performed by it, in light of applicable legal requirements and procedures of federal and state tax authorities. Without limiting the generality of the foregoing, during the second year of such two year
period, Morgan Stanley shall not file or be responsible for filing Forms 940 or 941 on behalf of Discover, but in accordance with this Section 3.04(b) and with paragraph (c) below shall cooperate with Discover as necessary to timely
provide the information needed by Discover for such forms in connection with the exercise and settlement of such equity awards. In addition, Morgan Stanley will remit to Discover for distribution through Discover payroll channels, all dividend
equivalent amounts owing to Former Discover Business Employees in respect of outstanding Morgan Stanley equity awards. The agency and other services to be provided by Morgan Stanley pursuant to this Section 3.04 will be deemed to be
“Services” being provided by Morgan Stanley as the “Provider” within the 

  

 15 

 
meaning of such terms as set forth in the Transition Services Agreement by and between Morgan Stanley and Discover dated as of June 30, 2007 (the
“Transition Services Agreement”), and such Services will be provided in accordance with and governed by the terms of such agreement. 
 (c) Morgan Stanley and Discover agree to enter into any necessary agreements, including but not limited to the Transition Services Agreement, regarding the subject matter of this Section 3.04 to enable them to
fulfill their respective obligations hereunder, including but not limited to compliance with all applicable laws and regulations regarding the reporting, withholding or remitting of income and social insurance taxes. 
 Section 3.05. No Change of Control. For the avoidance of doubt, the Distribution will not constitute a “change of ownership” or a
“change in control” or a termination of the employment of any employee for purposes of Morgan Stanley equity awards which are outstanding as of the Distribution Date. 
 ARTICLE 4 
 EMPLOYEE STOCK PURCHASE
PLAN 
 Section 4.01. ESPP. Discover Business Employees and Former Discover Employees shall be treated for
purposes of the Morgan Stanley ESPP as terminated Morgan Stanley employees as of and after the Distribution Date and shall be entitled to receive benefits in accordance with the provisions of the ESPP; provided, however, that Morgan Stanley may take
such actions as it deems appropriate with respect to the shares of Discover Common Stock received by participant accounts under the Morgan Stanley ESPP as a result of the Distribution, including, without limitation, modification of the plan and
notification to plan participants to facilitate (i) the retention of such shares within the participant’s accounts under the plan in lieu of an automatic distribution of such shares to participants and/or (ii) an election by
participants to receive distribution of such shares or direct the sale of such shares and the distribution of the proceeds of such sale to the participant; provided, further that Discover Business Employees shall not, as a result of any such
changes, be treated any less favorably under the ESPP than similarly situated Morgan Stanley Business Employees. Discover Business Employees shall not contribute to the Morgan Stanley ESPP after the Distribution Date, unless they shall become
employed by Morgan Stanley following the Distribution Date. 
  

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 ARTICLE 5 
 GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES 
 Section 5.01. General Principle.  
 (a) Cessation of Participation in Morgan Stanley Pension
and Welfare Benefit Plans and Non-ERISA U.S. Benefit Arrangements. Morgan Stanley and Discover shall take any and all action as shall be necessary or appropriate so that participation in Morgan Stanley Pension and Welfare Benefit Plans and
Morgan Stanley Non-ERISA U.S. Benefit Arrangements by all Discover Business Employees and Former Discover Employees shall terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under
this Agreement, as of the close of business on the Distribution Date) and Discover and each Discover Subsidiary shall cease to be a participating employer under the terms of such Morgan Stanley Pension and Welfare Benefit Plans and Morgan Stanley
Non-ERISA U.S. Benefit Arrangements as of such time. 
 Except as otherwise agreed below, Discover shall have all liabilities and all assets
relating to employee benefits for Discover Business Employees and Former Discover Employees and Morgan Stanley shall have all liabilities and all assets relating to employee benefits for Morgan Stanley Business Employees and Former Morgan Stanley
Employees. 
 (b) Assumption of Certain Obligations by Discover Group. Except as otherwise provided in this Agreement, effective as of
the close of business on the Distribution Date, Discover shall assume or continue the sponsorship of, and none of Morgan Stanley or any Morgan Stanley Subsidiary shall have any further liability for or under, the following agreements, obligations
and liabilities, and Discover shall indemnify Morgan Stanley and the Morgan Stanley Subsidiaries, and the officers, directors, and employees of each, and hold them harmless with respect to such agreements, obligations or liabilities: 
 (i) Agreements entered into between Morgan Stanley, its Subsidiaries or Affiliates and Discover Business Employees and Former Discover
Employees; 
 (ii) Agreements entered into between Morgan Stanley, its Subsidiaries or Affiliates and independent contractors
providing services primarily to the Discover Business; 
 (iii) All collective bargaining agreements, collective agreements,
trade union, or works council agreements entered into between Morgan Stanley, its Subsidiaries or Affiliates and any union, works council, or other body representing only Discover Business Employees and Former Discover Employees; 
  

 17 

 (iv) All wages, salary, incentive compensation, commissions, bonuses and results share
payable to Discover Business Employees and Former Discover Employees on or after the Distribution Date, without regard to when such wages, salary, incentive compensation, commissions, bonuses and results share are or may have been earned;

 (v) All moving expenses and obligations related to relocation, repatriation, transfers, or similar items incurred by or
owed to Discover Business Employees and Former Discover Employees; 
 (vi) All immigration-related, visa, work application, or
similar rights, obligations and liabilities related to Discover Business Employees and Former Discover Employees; and 
 (vii)
All liabilities and obligations whatsoever of the Discover Business with respect to claims made by or with respect to Discover Business Employees and Former Discover Employees or any other persons who at any time prior to the Distribution Date had
employment duties primarily related to the Discover Business relating to any employee benefit plan, program or policy not otherwise retained or assumed by Morgan Stanley pursuant to this Agreement, including such liabilities relating to actions or
omissions of or by Discover or any officer, director, employee or agent thereof prior to the Distribution Date. 
 Section 5.02.
Establishment of Discover Plans. Except as otherwise provided in this Agreement, sponsorship of Morgan Stanley benefit plans that cover solely Discover Business Employees and Former Discover Employees shall be transferred to Discover no later
than the Distribution Date. Morgan Stanley benefit plans that cover Discover Business Employees and Former Discover Employees and that also cover Morgan Stanley Business Employees and/or Former Morgan Stanley Employees shall be split into two
separate plans, one covering Discover Business Employees and Former Discover Employees and one covering Morgan Stanley Business Employees and/or Former Morgan Stanley Employees, and sponsorship of the plans covering Discover Business Employees and
Former Discover Employees shall be transferred to Discover immediately prior to the Distribution Date. 
 Section 5.03. Transfer of
Assets and Liabilities. To the extent necessary to effectuate the foregoing, Discover and Morgan Stanley shall, in compliance with applicable law, transfer assets (if any) and liabilities of any such benefit plans to each other, including under
the following plans: 
 (i) the MS Pension Plan; 
  

 18 

 (ii) the MS 401(k) Plan; 
 (iii) the MS ESOP; 
 (iv) MS Excess Plan; and 
 (v) MS SERP. 
 Section 5.04. Exceptions. Notwithstanding Section 5.02, Section 5.03, or any other provision of this Agreement to the contrary, the
following plans in which both Morgan Stanley and Discover participate shall not be split: 
 (i) health, welfare and wellness
plans described below in Section 8.01; 
 (ii) the MS ESPP; and 
 (iii) fringe benefit plans. 
 In addition, no transfer of assets or liabilities shall be made with respect to such plans. 
 Section 5.05. Cooperation.
Discover and Morgan Stanley and their respective Affiliates shall cooperate to share data necessary for each other to administer their respective benefit plans. Except as provided under any Transition Services Agreement(s) or in any secondment
agreement that may be entered into in accordance with Section 2.01(d), neither Discover nor Morgan Stanley shall charge the other any fee for such cooperation. Except as set forth in the Distribution Agreement or any Transition Services
Agreement(s), this provision shall not require Discover or Morgan Stanley to provide the other with direct access to such company’s databases or records. This provision shall continue in effect as long as necessary. 
 Section 5.06. Service Credit.  
 (a) Service for Eligibility and Vesting. Except as otherwise provided in any other provision of this Agreement (i) for purposes of participation eligibility and vesting under the Discover Pension and Welfare Benefit Plans,
Discover shall, and shall cause the Discover Subsidiaries to, give to each Discover Business Employee and Former Discover Employee service credit for any employment with Morgan Stanley or any Morgan Stanley Affiliate prior to the Distribution Date
to the extent that such service is taken into account pursuant to the terms of the comparable Morgan Stanley plan and (ii) for purposes of participation eligibility and vesting under the Morgan Stanley Pension and Welfare Benefit 

  

 19 

 
Plans, Morgan Stanley shall, and shall cause the Morgan Stanley Subsidiaries to, give to each Morgan Stanley Business Employee and Former Morgan Stanley
Employee service credit for any employment with Discover or any Discover Affiliate prior to the Distribution Date, except under the MS SERP and MS Excess Plan; and provided, further, that the foregoing vesting service credit under any plan subject
to Section 401(a) of the Code will be limited to the minimum amount of service credit required to fully vest the employee under the relevant plan. 
 (b) Service for Benefit Purposes. Except as otherwise provided in any other provision of this Agreement (i) for purposes of benefit levels and accruals, post-retirement welfare benefit contribution rates
and benefit commencement entitlements under the Discover Pension and Welfare Benefit Plans, Discover shall, and shall cause the Discover Subsidiaries to, give to each Discover Business Employee and Former Discover Employee service credit for any
employment with Morgan Stanley or any Morgan Stanley Affiliate prior to the Distribution Date to the extent that such service is taken into account pursuant to the terms of the comparable Morgan Stanley plan and (ii) for purposes of benefit
levels and accruals, post-retirement welfare benefit contribution rates and benefit commencement entitlements under the Morgan Stanley Pension and Welfare Benefit Plans, Morgan Stanley shall, and shall cause the Morgan Stanley Subsidiaries to, give
to each Morgan Stanley Business Employee and Former Morgan Stanley Employee service credit for any employment with Discover or any Discover Affiliate prior to the Distribution Date (including under the MS Retiree Medical Plan and for determining the
level of retirement credits under the post-July 1, 2007 retirement design under the MS Pension Plan). 
 (c) Evidence of Prior
Service. Notwithstanding anything to the contrary, but subject to applicable law, upon reasonable request by one Party to the other Party, the first Party will provide to the other copies of any records available to the first Party to document
such service, plan participation and membership and cooperate with the first Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with
respect to such Discover Business Employees and Former Discover Employees. 
 Section 5.07. Plan Administration.  
 (a) Transition Services. Morgan Stanley will administer Discover’s benefit programs for a transitional period under the terms of the
applicable Transition Services Agreement, which will include appropriate provisions relating to HIPAA. 
 (b) Administration. Discover
shall, and shall cause the Discover Subsidiaries to, administer its benefit plans in a manner that does not jeopardize 

  

 20 

 
the tax favored status of the tax favored benefit plans maintained by Morgan Stanley and the Morgan Stanley Subsidiaries. Morgan Stanley shall, and shall
cause the Morgan Stanley Subsidiaries to, administer its benefit plans in a manner that does not jeopardize the tax favored status of the tax favored benefit plans maintained by Discover and the Discover Subsidiaries. 
 (c) Participant Elections and Beneficiary Designations. All participant elections and beneficiary designations made under any Morgan Stanley plan
prior to the date as of which assets or liabilities relating to that plan are transferred to Discover shall continue in effect under any plan maintained by Discover or any Discover Subsidiary to which liabilities are transferred pursuant to this
Agreement until such time as the participant changes his or her elections or beneficiary designations in accordance with the procedures of the relevant plan, as the case may be. 
 ARTICLE 6 
 U.S. PENSION PLAN
SPIN-OFF 
 Section 6.01. General Principle. Effective on or before the Distribution Date, Discover
shall establish and adopt a defined benefit pension benefit plan and trust (the “Discover Pension Plan”) intended to be qualified under Code Section 401(a) and containing provisions that will provide to each Discover Business
Employee and Former Discover Employee (and each alternate payee or beneficiary of such person) (the “Discover Pension Beneficiaries”) benefits identical to those accrued with respect to such person under the MS Pension Plan as of
December 31, 2006 (the “Pension Measurement Date”). On or before the Distribution Date, Morgan Stanley shall (i) determine the Initial Transfer Amount (as defined below) and (ii) cause assets equal to the Initial
Transfer Amount (adjusted as provided below) to be transferred to the trust under the Discover Pension Plan in the form described below (the “Initial Transfer”). As of the date of such transfer of the Initial Transfer Amount (the
“Initial Transfer Date”), Discover shall commence making the required benefit payments under the terms of the Discover Pension Plan and shall assume all liabilities with respect to the payment of benefits previously accrued by the
Discover Pension Beneficiaries under the MS Pension Plan. A Discover Business Employee shall not accrue benefits under the MS Pension Plan after the date on which such employee becomes eligible to participate under the Discover Pension Plan, unless
such Discover Pension Beneficiary shall become employed by Morgan Stanley or a Morgan Stanley Subsidiary after such date. A Morgan Stanley Business Employee shall not accrue benefits under the Discover Pension Plan, unless such Morgan Stanley
Business Employee shall become employed by Discover or a Discover Subsidiary. For purposes of the provisions in the MS Pension Plan bridging service for breaks in service of less than 12 months, a break in the 

  

 21 

 
service of an employee which includes a period of service as a Discover Business Employee or Former Discover Employee following the Distribution shall not be
counted as a bridgeable break in service. Following the Initial Transfer Date (i) an enrolled actuary appointed by Morgan Stanley (the “MS Actuary”) shall determine the Final Pension Transfer Amount (as defined below) and
(ii) a True-Up Adjustment shall be made with respect to the MS Pension Plan and the Discover Pension Plan, as provided below. The Parties shall use reasonable best efforts to cause the determination of the Final Pension Transfer Amount and the
True-Up Adjustment to be completed as reasonably promptly as practicable, subject to the time frames established under Section 6.03, but in no event later than December 31, 2007. Before or promptly after the date hereof, Morgan Stanley and
Discover shall file requests with the IRS for qualification determination letters under Code Section 401(a) with respect to the MS Pension Plan and the Discover Pension Plan and shall take any and all reasonable action, including the adoption
of any amendments requested by the IRS, as shall be necessary to obtain such determination letters. The transfers hereunder shall occur prior to, but subject to the subsequent receipt of, favorable determination letters issued by the IRS with
respect to the MS Pension Plan and Discover Pension Plan, copies of which shall be shared among Morgan Stanley and Discover promptly upon issuance. 
 Section 6.02. Determination and Transfer of Initial Transfer Amount. On or before the Distribution Date, with the assistance of the MS Actuary, Morgan Stanley shall establish and communicate to Discover the amount equal to 95%
of the amount carried on Morgan Stanley pension plan books as attributable to benefits accrued by Discover Pension Beneficiaries under the MS Pension Plan as of the Pension Measurement Date, adjusted for contributions, distributions, trust gains and
losses, payments and other appropriate items as of the Initial Transfer Date, all as estimated in good faith by Morgan Stanley (the “Initial Transfer Amount”). Following the determination of the Initial Transfer Amount by Morgan
Stanley, Morgan Stanley shall cause to be transferred from the trust under the MS Pension Plan to the trust under the Discover Pension Plan assets having an aggregate Value (as defined below) equal to the Initial Transfer Amount. Such assets shall
be in the form of cash, securities and other property, determined in accordance with the provisions below. 
 Section 6.03.
Determination of the Final Pension Transfer Amount.  
 (a) Calculation of the MS Actuary. Following the Distribution Date, the MS
Actuary shall determine the Final Pension Transfer Amount, which shall be equal to the amount required to be transferred from the MS Pension Plan to the Discover Pension Plan in respect of the assumption by the Discover Pension Plan of the benefit
obligations of the MS Pension Plan for benefits accrued by the Discover Pension Beneficiaries as of the Pension Measurement Date plus any additional pension obligations in respect of benefits accrued by the Discover 

  

 22 

 
Pension Beneficiaries under the MS Pension Plan between the Pension Measurement Date and the Distribution Date, as determined in accordance with
Section 414(l) of the Code and the regulations thereunder and the actuarial assumptions and methods set forth in Schedule 6.03 hereof, as appropriately adjusted to reflect the following amounts arising after the Pension Measurement Date and
before the True-Up Adjustment: (A) any distributions and contributions made in respect of the Discover Pension Beneficiaries, (B) administrative expenses of the MS Pension Plan reasonably allocable to the Discover Pension Beneficiaries,
(C) earnings realized by the MS Pension Plan, (D) the net gain or loss (realized and unrealized) of the MS Pension Plan and (E) other appropriate items (the “Final Pension Transfer Amount”). Morgan Stanley and
Discover shall each cause the appropriate amount of assets to be contributed to the MS Pension Plan prior to the Distribution Date so that the MS Pension Plan is deemed to be fully funded as of December 31, 2006 and no ERISA Section 4044
allocation is required. Promptly upon determination of the Final Pension Transfer Amount, Morgan Stanley shall cause the MS Actuary to provide to Discover a written statement of the Final Pension Transfer Amount, a summary of the calculation of such
amount (the “Pension Statement”) and a written statement that the sum of the Initial Transfer Amount and the Final Transfer Amount satisfies the requirements of Section 414(l) of the Code. 
 (b) Resolution of Differences. Morgan Stanley shall provide Discover with all information reasonably necessary to review the calculation of the
Final Pension Transfer Amount in all material respects and to verify that such calculations have been performed in a manner consistent with the terms of this Agreement. The determination of the Final Pension Transfer Amount by the MS Actuary shall
be final, conclusive and binding for all purposes under this Agreement, unless Discover provides to Morgan Stanley, within thirty (30) days after receipt of the Pension Statement, a written objection prepared by an enrolled actuary retained by
Discover setting forth in detail a reasonable basis for the conclusion that the Final Pension Transfer Amount set forth in the Pension Statement is understated by an amount in excess of 5%. Upon receipt of such objection, Morgan Stanley and Discover
shall make a good faith attempt to resolve their dispute as to the Final Pension Transfer Amount. Should such dispute remain unresolved for more than thirty (30) days, Morgan Stanley and Discover shall promptly select and appoint a third
enrolled actuary who is mutually satisfactory to both Parties. The third actuary shall recalculate the Final Pension Transfer Amount and if such recalculated amount exceeds the Final Pension Transfer Amount set forth in the Pension Statement by more
than 5%, then such recalculated amount shall serve as the Final Pension Transfer Amount for all purposes under this Agreement. If such recalculated amount does not exceed the Final Pension Transfer Amount set forth in the Pension Statement by more
than 5%, then for all purposes under this Agreement the Final Pension Transfer Amount shall be the Final Pension Transfer Amount as set forth in the 

  

 23 

 
Pension Statement. The recalculation of such third party actuary shall be completed within thirty (30) days of the retention of such third party actuary
and shall be conclusive as to any dispute with respect to the Final Pension Transfer Amount, except as set forth in Section 6.06 below. The cost of such third party actuary shall be divided equally between Morgan Stanley and Discover. Each
Party shall be responsible for the cost of its own actuary. 
 Section 6.04. True-Up Adjustment. The following transfer shall be
made promptly after the date that the Final Pension Transfer Amount is determined as set forth above: (A) if the Final Pension Transfer Amount exceeds the Initial Transfer Amount, Morgan Stanley shall promptly cause to be transferred from the
MS Pension Plan trust to the Discover Pension Plan trust assets having a Value equal to such excess and (B) if the Initial Transfer Amount exceeds the Final Pension Transfer Amount, Discover shall promptly cause to be transferred from the
Discover Pension Plan trust to the MS Pension Plan trust assets having a Value equal to such excess. 
 Section 6.05. Form and
Selection of Assets to be Transferred. The assets to be transferred in the Initial Transfer and the True-Up Adjustment Assets will be transferred in-kind or in cash pro rata from each investment manager under the transferring plan in a manner
that represents, as closely as commercially practical, a pro rata portion of each asset and position held by the manager as of the date of such transfer, except that reasonable adjustments shall be made where Morgan Stanley determines such transfers
cannot reasonably be made by the MS Pension Plan due to investment manager account minimums or where other considerations prevent such pro rata transfers or render such pro rata transfers impractical. Notwithstanding the foregoing, in respect of
long duration fixed income investments to be transferred from the MS Pension Plan to the Discover Pension Plan (i) a combination of cash and in-kind fixed income assets will be transferred from the MS Pension Plan to the Discover Pension Plan,
(ii) such in-kind fixed income assets shall be transferred under accounts managed by State Street Global Advisors (no assets shall be transferred from other fixed income managers under the MS Pension Plan) and (iii) the Discover Pension
Plan shall be entitled to an added amount equal to 50% of the investment transaction expenses associated with the initial investment of the cash transferred in respect of the fixed income component. For purposes of the Agreement, the
“Value” of all pension assets shall be the value of such assets as determined in good faith by Morgan Stanley based on all relevant information known to Morgan Stanley at the time of such determination, including the most recent
account statements or schedules of asset values provided to Morgan Stanley by any service providers maintaining or overseeing any such assets or any investment vehicles which represent or hold the relevant plan assets. Morgan Stanley shall select
the assets to be transferred and provide a schedule of such assets to Discover 14 days prior to the transfer of such assets. Discover shall communicate to Morgan Stanley any objection to the schedule of the assets to be transferred promptly, and
upon receipt by Morgan 

  

 24 

 
Stanley of such objection, Morgan Stanley and Discover shall make a good faith attempt to resolve their dispute as to the assets to be transferred within the
period remaining prior to the transfer of the assets. Should such dispute remain unresolved upon the asset transfer date, the assets shall be transferred in accordance with the schedule provided by Morgan Stanley. Any assets that are liquidated
prior to transfer shall be reduced by the asset liquidation expenses actually incurred. 
 Section 6.06. Adjustment Payment for Data
Errors. If, after the completion of the True-Up Adjustment, critical data used in the determination of the Final Pension Transfer Amount, the True-Up Adjustment or the Value of assets for purposes of the transfers under this Article 6 are
determined to have been erroneous, the Final Pension Transfer Amount and True-Up Adjustment shall be recalculated using corrected data (but otherwise applying the same methodologies used to determine the Final Pension Transfer Amount) and upon
completion of the recalculation Discover shall pay to Morgan Stanley, or Morgan Stanley shall pay to Discover, as the case may be, an amount necessary to reflect the corrected data; provided that no such correction payment shall be made unless the
aggregate of all such correction adjustments is greater than 1% of the Final Pension Transfer Amount used for purposes of the original True-Up Adjustment. Any payment under this Section 6.06 shall be made by wire transfer in readily available
funds. Notwithstanding the foregoing provisions of this Section 6.06, no payment or corrective adjustment shall be made by either Party with respect to an error unless the Party seeking such payment or adjustment has provided written notice
identifying the specific error to the other Party prior to June 30, 2008. 
 ARTICLE 7 
 U.S. 401(K) PLAN AND ESOP 
 Section 7.01. General Principle. Effective on or before the Distribution Date, Discover shall establish and adopt a qualified employee cash or deferred arrangement under Code Section 401(k) (the
“Discover 401(k) Plan”) containing a Discover common stock fund intended to be an employee stock ownership plan and a Morgan Stanley common stock fund, and intended to be qualified under Code Section 401(a) and containing
provisions that will provide benefits for each Discover Business Employee and Former Discover Employee (and each beneficiary and alternate payee of such person) (the “Discover DC Plan Beneficiaries”) with equivalent benefit levels
and forms of distribution to those in effect for the Discover DC Plan Beneficiaries as of the date of transfer of assets and liabilities with respect to such plans (as described below). Before or as soon as practicable after the Distribution Date,
the assets and liabilities relating to the Discover DC Plan Beneficiaries under the MS 401(k) Plan and the MS ESOP shall be transferred to the Discover 401(k) Plan. Discover Business Employees 

  

 25 

 
shall not make or receive additional contributions under the MS 401(k) Plan and the MS ESOP after the effective date of the Discover 401(k) Plan, unless such
Discover Business Employee shall become employed by Morgan Stanley or a Morgan Stanley Subsidiary after such date. A Morgan Stanley Business Employee shall not participate in the Discover 401(k) Plan after the effective date of the Discover 401(k)
Plan, unless such Morgan Stanley Business Employee shall become employed by Discover or a Discover Subsidiary after such date. 
 Section 7.02. Transfer of Accounts. Effective before or as soon as practical following the Distribution Date, but in no event later than six months following the Distribution Date, Morgan Stanley shall cause to be transferred
from trusts under the MS 401(k) Plan and the MS ESOP to the trust under the Discover 401(k) Plan the aggregate amount that is credited to the accounts of the Discover DC Plan Beneficiaries (disregarding any participant loans from the
plans) as of the date of transfer, but not less than or more than permitted by law, as determined by Morgan Stanley. The transfer shall be an in-kind transfer, subject to fund substitutions agreed between the relevant plan representatives and any
other substitutions made by Morgan Stanley subject to the reasonable consent of the trustee of the Discover 401(k) Plan and shall include the transfer of the aggregate assets held in the accounts relating to each Discover DC Plan Beneficiary
under the MS 401(k) Plan and MS ESOP and any participant loan notes held under such plans. Any assets that are liquidated prior to transfer shall be reduced by the asset liquidation expenses, such as commissions or early withdrawal
penalties, actually incurred. Morgan Stanley shall cause the Discover 401(k) Plan to allocate the portion of any forfeiture account under the MS 401(k) Plan that relates to forfeitures by Former Discover Employees consistent with Morgan
Stanley’s past practice regarding allocation of forfeitures under the MS 401(k) Plan. Before or promptly after the date hereof, Morgan Stanley and Discover shall file requests with the IRS for qualification determination letters under Code
Section 401(a) and 401(k) (as applicable) with respect to the MS 401(k) Plan, MS ESOP and Discover 401(k) Plan and shall take any and all reasonable actions, including the adoption of amendments requested by the IRS, as shall be
necessary to obtain such determination letters. The transfers under this Section 7.02 shall occur prior to, but subject to the subsequent receipt of favorable determination letters issued by the IRS with respect to the MS 401(k) Plan,
MS ESOP, Discover 401(k) Plan, copies of which shall be shared among Morgan Stanley and Discover promptly upon issuance. 
 Section 7.03. Funding of 2007 Matching Contribution. Discover shall fund and allocate the full amount of any 2007 matching contribution accrued under the terms of the MS 401(k) Plan and MS ESOP to eligible Discover DC Plan
Beneficiaries under the Discover 401(k) Plan within the time permitted by law (determined based on the terms of the MS 401(k) Plan and MS ESOP immediately prior to the transfer to the Discover 401(k) Plan as if the transfer to the Discover 401(k)
Plan did not occur, but paid and contributed by Discover to the Discover 401(k) Plan). 
  

 26 

 Section 7.04. Continuing Obligations Regarding Proxy Statement, Tender Offers and Similar Rights
and Restrictions. Discover shall provide all proxy materials to the trustee of the MS 401(k) Plan and MS ESOP to the extent necessary to pass through the voting rights on any Discover shares held in the MS 401(k) Plan and MS ESOP. Morgan
Stanley shall provide all proxy materials to participants in the Discover 401(k) Plan to the extent necessary to pass through the voting rights on any Morgan Stanley shares held in the Discover 401(k) Plan. 
 ARTICLE 8 
 U.S. WELFARE
BENEFIT PLANS 
 Section 8.01. General Principle and Exceptions. 
 (a) General Principle. Except as provided below and in Section 8.02, on or about May 31, 2007, liabilities relating to Discover Business
Employees and Former Discover Employees shall be transferred to newly established Discover welfare benefit plans that shall contain the same benefit provisions as in effect for Discover Business Employees and Former Discover Employees immediately
prior to such date, and Discover Business Employees and Former Discover Employees shall cease to participate in the Morgan Stanley welfare benefit plans. No assets shall be transferred on account of any such plans. Welfare benefit plans include
health, welfare, and wellness benefits plans (including, medical, dental, prescription drug and vision benefits, life insurance, accidental death and disability insurance, business travel accident insurance, disability (STD and LTD), long term care,
flexible spending accounts, severance, Employee Assistance Plan, wellness and similar types of plans). Discover Business Employees and Former Discover Employees shall not participate in Morgan Stanley welfare benefit plans following the effective
date of the Discover plans described in this section, unless they shall become employed by Morgan Stanley after such date. Morgan Stanley Business Employees and Former Morgan Stanley Employees shall not participate in any Discover welfare benefit
plans following the effective date of such plans, unless they shall become employed by Discover after such date. 
 (b) Exceptions.
The following provisions shall supersede the provisions of Section 8.01(a) to the extent that the provisions of Section 8.01(a) are inconsistent with the following provisions: 
 (i) Discover Business Employees and Former Discover Employees shall continue to be covered under the Mayo Clinic and Medical Decision
Support wellness plans (except Harris Health Trends, which coverage shall terminate on or about May 31, 2007); 
  

 27 

 (ii) Discover Business Employees and Former Discover Employees who participate in the
Winged Keel portion of the Morgan Stanley LTD plan as of May 31, 2007 shall be permitted to continue those policies and maintain them on an individual basis; 
 (iii) Discover Business Employees and Former Discover Employees shall cease to be covered under the Morgan Stanley executive disability
and life insurance plans on or about May 31, 2007, except that employees already contributing to an executive disability or life insurance policy shall be permitted to continue such policy on an individual basis; 
 (iv) Discover Business Employees and Former Discover Employees shall cease to be covered under the Morgan Stanley severance plan as of the
Distribution Date; 
 (v) Morgan Stanley Business Employees and Former Morgan Stanley Employees shall cease to be covered
under the Morgan Stanley SelectHealth Medical Option no later than the Distribution Date, the CMO contract for which shall be transferred to Discover effective no later than the Distribution Date; 
 (vi) Discover Business Employees and Former Discover Employees shall cease to be covered under the Morgan Stanley Kaiser Medical Options
as of the Distribution Date; and 
 (vii) Discover Business Employees and Former Discover Employees shall cease to be covered
under the Morgan Stanley VEBA as of the Distribution Date. 
 Section 8.02. Establishment of Discover Plans.  
 (a) General Rule. Subject to the provisions of 8.01 and this 8.02, Discover Business Employees and Former Discover Employees shall cease to
participate in the Morgan Stanley welfare benefit plans on or about May 31, 2007. Discover shall indemnify Morgan Stanley for any liability relating to Discover Business Employees or Former Discover Employees on account of any such plan.

 (b) Treatment of Claims Incurred. Morgan Stanley shall retain the liability for payment of all covered claims (including medical,
dental, life insurance and long-term disability) and expenses incurred by any Discover Business Employee and beneficiaries thereof under the Morgan Stanley Welfare Plans and Morgan Stanley Non-ERISA U.S. Benefit Arrangements, and Discover shall not
assume nor shall it be responsible for any liability with respect to any such claims or expenses. Discover shall have the liability only for covered claims incurred under the terms of the Discover Welfare Plans and Discover Non-ERISA U.S. Benefit
Arrangements. 
  

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 (c) Credit for Deductibles and Other Limits. With respect to each Discover Business Employee and
Former Discover Employee, and each covered dependent, beneficiary, or other related party of such individual (the “Discover Welfare Plan Participants”), the Discover welfare benefit plans will give credit in the year of the
Distribution Date for any amount paid under the comparable type Morgan Stanley plan by such Discover Welfare Plan Participant in the year of the Distribution Date toward deductibles, out-of-pocket maximum, or other, similar limitations to the extent
such amounts are taken into account under the comparable type Morgan Stanley plan. For purposes of any life-time maximum out-of-pocket limit on expenses paid by a covered participant, the Discover welfare plans will recognize any expenses incurred
by a Discover Welfare Plan Participant prior to the Distribution to the same extent such expenses would be recognized in respect of an active plan participant under the comparable type Morgan Stanley plan. 
 (d) COBRA. Effective as of the date of cessation of participation in the Morgan Stanley welfare benefit plans by the Discover Business Employees
and Former Discover Employees (as provided above), Discover shall assume and satisfy all requirements under COBRA with respect to all Discover Business Employees and Former Discover Employees and their qualified beneficiaries, including for
individuals who are already receiving benefits as of such date under COBRA. 
 (e) Disabled Persons. The Parties intend that any
Employee who has, prior to the Distribution Date, become eligible to receive any long-term disability benefits pursuant to any third-party insurance policy applicable under any welfare benefit plan shall continue to be eligible to receive such
benefits in accordance with the terms of such plan and policy. 
 Section 8.03. No Transfer of Assets. No assets held in the
Morgan Stanley VEBA, the Morgan Stanley short term disability trust or any other trust, account or other funding vehicle shall be transferred between or on account of the Discover and Morgan Stanley welfare benefit plans, unless any such trust,
account or funding vehicle shall have material net assets as of the Distribution Date, in which case the Parties shall negotiate in good faith to determine an equitable allocation of such assets. 
 Section 8.04. Insurance Contracts. To the extent any Morgan Stanley welfare benefit plan is funded through the purchase of an insurance
contract, Morgan Stanley and Discover will cooperate and use their reasonable best efforts to “clone” such insurance contracts for Discover and to maintain any pricing discounts or other preferential terms for both Morgan Stanley and
Discover 

  

 29 

 
through the end of the term of the applicable Transition Services Agreement. Morgan Stanley shall not be liable for failure to obtain such pricing discounts
or other preferential terms for Discover. The cost of “cloning”, including any increases in premiums, charges or administrative fees relating to Discover Business Employees and Former Discover Employees shall be the obligation of Discover.

 Section 8.05. Third Party Vendors. Except as provided below, to the extent any Morgan Stanley welfare benefit plan is
administered by a third-party vendor, Morgan Stanley and Discover will cooperate and use their best efforts to “clone” any contract with such third-party vendor for Discover and to maintain any pricing discounts or other preferential terms
for both Morgan Stanley and Discover. Morgan Stanley shall not be liable for failure to obtain such pricing discounts or other preferential terms for Discover. The cost of “cloning”, including any increases in premiums, charges or
administrative fees relating to Discover Business Employees and Former Discover Employees shall be the obligation of Discover. Notwithstanding the foregoing, the record keeping and administration contract between Morgan Stanley and ACS and the
consulting agreements between Morgan Stanley and Mercer HR Consulting shall not be cloned. 
 ARTICLE 9 
 FRINGE BENEFIT AND OTHER U.S. PLANS AND PROGRAMS

 Section 9.01. General Principle and Exceptions. 
 (a) General Principle. Except as otherwise provided under this Agreement, effective on or about May 31, 2007, Discover Business Employees and Former Discover Employees shall not be eligible to participate
in any of the following Morgan Stanley fringe benefit plans: 
 (i) the Morgan Stanley baby spoon program; 
 (ii) the Morgan Stanley service award program; 
 (iii) the Morgan Stanley adoption assistance program; 
 (iv) the Morgan Stanley commuter benefits plan; 
 (v) the Morgan Stanley legal assistance plan; and 
 (vi) any other plan, policy or arrangement of Morgan Stanley or a Morgan Stanley Subsidiary providing fringe benefits to employees or
former employees. 
  

 30 

 Section 9.02. Transition of Coverage Under Plans and Programs. 
 (a) Commuter Benefit Plan. Effective as of June 1, 2007, Discover shall adopt a commuter benefits plan for Discover Business Employees with
substantially the same terms as in effect as of May 31, 2007 under the Morgan Stanley commuter benefits plan. No Morgan Stanley commuter benefits will paid to Discover Business Employees in respect of commutation occurring after the
Distribution Date. 
 (b) Legal Assistance Plan. Legal assistance benefits will not be provided to Discover Business Employees under
the Morgan Stanley legal assistance program in respect of legal services after the Distribution Date; provided, however, that if a Discover Business Employee has begun a representation under the Morgan Stanley legal assistance program on or prior to
May 31, 2007, such representation shall be covered under the Morgan Stanley legal assistance program through December 31, 2007 in accordance with the terms of that program. 
 (c) Service Award Program. Discover Business Employees who have reached their milestone anniversary on or prior to the date of the Distribution
Date shall be entitled to receive a gift under the Morgan Stanley Service Award Program. Discover shall reimburse Morgan Stanley for the cost of providing such benefit in an amount determined consistently with the cost allocation method in effect
prior to the Distribution Date. Discover Business Employees who reach their milestone anniversary after the Distribution Date shall not be eligible to receive a gift under the Morgan Stanley Service Award Program. 
 (d) Adoption Assistance Program. Discover Business Employees who have completed an adoption that is eligible under the Morgan Stanley Adoption
Assistance Program on or prior to the Distribution Date shall be entitled to benefits under that program. Discover shall reimburse Morgan Stanley for the cost of providing such benefits in an amount determined consistently with the cost allocation
method in effect prior to the Distribution Date. Discover Business Employees who complete an adoption after the Distribution Date shall not be eligible to receive benefits under the Morgan Stanley adoption assistance program. 
 (e) Baby Spoon Program. Discover Business Employees who are employed as of Distribution Date and have given birth to a baby or completed an
eligible adoption prior to the Distribution Date shall be entitled to receive a baby spoon under the Morgan Stanley baby spoon program. Discover shall reimburse Morgan Stanley for the cost of providing such benefit in an amount determined
consistently with the cost allocation method in effect prior to the Distribution Date. Discover Business Employees who give birth or complete adoption of a child after the Distribution Date shall not be eligible to receive a baby spoon under the
Morgan Stanley baby spoon program. 
  

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 ARTICLE 10 
 WORKERS COMPENSATION AND UNEMPLOYMENT COMPENSATION 
 Section 10.01. Allocation of Workers Compensation and Unemployment Claims. Discover shall have and assume the obligations for all claims and liabilities relating to workers compensation and unemployment
compensation benefits for all Discover Business Employees and Former Discover Employees. Morgan Stanley shall have and assume the obligations for all claims and liabilities relating to workers compensation and unemployment compensation benefits for
all Morgan Stanley Business Employees and Former Morgan Stanley Employees. Discover and Morgan Stanley shall make reasonable efforts to provide that workers compensation and unemployment insurance costs are not adversely affected for either of them
by reason of the Distribution. 
 ARTICLE 11 
 COMPENSATION MATTERS AND GENERAL BENEFIT AND EMPLOYEE MATTERS 
 Section 11.01. Restrictive Covenants in Employment and Other Agreements. To the fullest extent permitted by the agreements and applicable
law, Morgan Stanley hereby assigns, for and on behalf of itself and its Affiliates, to Discover or its appropriate Affiliate as designated by Discover all agreements containing restrictive covenants (including but not limited to confidentiality and
non-competition provisions) between Morgan Stanley (or a Morgan Stanley Affiliate) and a Discover Business Employee, effective as of the Distribution Date. To the extent that assignment of such agreements is not permitted, following the
Distribution, Discover and its Subsidiaries and Affiliates shall be considered to be successors to Morgan Stanley and its Subsidiaries and Affiliates for purposes of, and third-party beneficiaries with respect to, all agreements containing
restrictive covenants (including but not limited to confidentiality and non-competition provisions) between Morgan Stanley (or a Morgan Stanley Subsidiary or Affiliate) and Discover Business Employees and between Morgan Stanley (or a Morgan Stanley
Subsidiary or Affiliate) and Morgan Stanley Employees whom Discover reasonably determines have substantial knowledge of the Discover Business, such that each of Morgan Stanley, Discover and their respective Subsidiaries and Affiliates shall all
enjoy the rights and benefits under such agreements (including, without limitation, rights and benefits as a third-party beneficiary), with respect to such Party’s and its respective Subsidiaries’ and Affiliates’ business operations;
provided, however, that (a) in no event shall Morgan Stanley be permitted to enforce the restrictive covenant agreements against Discover Business Employees for action taken in their capacity as employees of Discover or its
Subsidiaries, and (b) in no event shall Discover be permitted to enforce the restrictive covenants agreements of Morgan Stanley Business Employees for action taken in their capacity as employees of Morgan Stanley or its Subsidiaries.

  

 32 

 Section 11.02. Non-Solicitation of Employees. For a period of eighteen months following the
Distribution (i) neither Discover nor any Discover Subsidiary shall employ or knowingly solicit for employment any individual who is, or was within the six-month period prior to the solicitation, an employee of Morgan Stanley or any Morgan
Stanley Affiliate, without the written consent of Morgan Stanley and (ii) neither Morgan Stanley nor any Morgan Stanley Subsidiary shall employ or knowingly solicit for employment any individual who is, or was within the six-month period prior
to the solicitation, an employee of Discover or any Discover Affiliate, without the written consent of Discover. The foregoing shall not apply (a) to any individual whose employment was involuntarily terminated by the relevant former employer
or (b) with respect to general solicitations made through print, media or internet advertisements that are not directed or focused on such individuals and any resulting employment. 
 Section 11.03. Severance. (a) Effective as of the Distribution Date, Discover may establish one or more severance plans and policies
with respect to Discover Business Employees as Discover deems appropriate in its discretion. Morgan Stanley shall have no liability or obligation under any Morgan Stanley severance plan or policy with respect to Discover Business Employees who
remain employed or whose employment terminates on or after the Distribution Date. 
 (b) Following the Distribution Date, Morgan Stanley
shall continue to be responsible for administering all payments and benefits under the applicable Morgan Stanley severance policies or any termination agreements with Former Discover Employees whose employment has terminated prior to the
Distribution Date for an eligible reason under such policies or in accordance with such agreements; provided that Discover shall reimburse, and shall indemnify Morgan Stanley, and its Subsidiaries and Affiliates, for any amounts payable to Former
Discover Employees under such policies, and Discover shall be charged for the continuation of welfare plan benefits to such Former Discover Employees and their dependents on and after the Distribution Date on terms consistent with the methodology
specified in the appropriate costs and reimbursement provisions of the applicable Transition Services Agreement. 
 (c) Morgan Stanley agrees
to indemnify Discover against any loss or liability resulting from Morgan Stanley’s gross negligence, willful misconduct or bad faith in the administration of its severance policies or any termination agreement with a Discover Business
Employee. 
 (d) It is not intended that any Discover Business Employee will be eligible for termination or severance payments or benefits
from Morgan Stanley or its Subsidiaries or Affiliates as a result of the transfer or change of employment from Morgan Stanley to Discover or their respective Subsidiaries or Affiliates. Notwithstanding the preceding sentence, in the event that any
such termination or 

  

 33 

 
severance payments or benefits become payable on account of such transfer, change or the refusal of a Discover Business Employee to accept employment with
Discover, Discover shall indemnify Morgan Stanley, and its Subsidiaries and Affiliates, for the amount of such termination or severance payments or benefits. 
 Section 11.04. Accrued Vacation Days Off. Discover shall recognize and assume all liability for all vacation, holiday, sick leave, flex days, personal days and Paid-Time Off, including banked time, accrued
by Discover Business Employees as of the Distribution Date and Discover shall credit each Discover Business Employee with such accrual. 
 Section 11.05. Leaves of Absence. Discover will continue to apply the leave of absence policies maintained by Morgan Stanley to inactive Discover Business Employees who are on an approved leave of absence as of the Distribution
Date. Leaves of absence taken by Discover Business Employees prior to the Distribution Date shall be deemed to have been taken as employees of Discover. 
 Section 11.06. Morgan Stanley Assets. Except as otherwise set forth herein, Morgan Stanley shall retain all reserves, bank accounts, trust funds or other balances maintained with respect to Morgan Stanley
Non-ERISA U.S. Benefit Arrangements. 
 Section 11.07. Morgan Stanley Deferred Compensation Plans. (a) For purposes of this
Section 11.07, “Discover Deferred Compensation Accounts” shall mean, with respect to all Morgan Stanley non-qualified cash-based deferred compensation plans, the account balances under all such plans, as of June 30, 2007,
of each Discover Business Employee and each Former Discover Employee who is a participant in any such plan. Morgan Stanley shall cause the Discover Deferred Compensation Accounts under any of such plans to be fully vested, for purposes of the
respective plans, immediately prior to the Distribution Date. The aggregate employer liability in respect of the Discover Deferred Compensation Accounts shall be transferred to and assumed by Discover, except for any portion thereof that was
credited to such account in respect of a period during which such employee was providing services to Morgan Stanley or to a Morgan Stanley affiliate other than Discover and its Subsidiaries. 
 (b) Beginning on the Distribution Date and continuing through the date of payment described herein, the return credited to the Discover Deferred
Compensation Accounts shall be based exclusively on LIBOR, as determined by Morgan Stanley, reset monthly. On January 15, 2008, or as soon as administratively practicable thereafter, Morgan Stanley and Discover, as applicable, shall remit such
account balances to the respective Discover Business Employees and Former Discover Employees. 
  

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 ARTICLE 12 
 GENERAL PROVISIONS 
 Section 12.01. Preservation of Rights to Amend.
The rights of Morgan Stanley or Discover to amend or terminate any plan, program, or policy referred to herein shall not be limited in any way by this Agreement. 
 Section 12.02. Confidentiality. Each Party agrees that the specific terms and conditions of this Agreement and any information conveyed or otherwise received by or on behalf of a Party in conjunction
herewith are confidential and are subject to the terms of the confidentiality provisions set forth in the Distribution Agreement. 
 Section 12.03. Administrative Complaints/Litigation. Except as otherwise provided in this Agreement, as of and after the Distribution Date, Discover shall assume, and be solely liable for, the handling, administration,
investigation and defense of actions, including, without limitation, ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights and unemployment compensation claims, asserted at
any time against Morgan Stanley, or Discover or their respective Affiliates by any Discover Business Employee or Former Discover Employee (including any dependent or beneficiary of any such Employee) or any other person, to the extent such actions
or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant, or otherwise) to or with the Discover Business. To the extent that any legal action relates to a putative or certified class
of plaintiffs, which includes both Morgan Stanley Business Employees (or Former Morgan Stanley Employees) and Discover Business Employees (or Former Discover Employees) and such action involves employment or benefit plan related claims, reasonable
costs and expenses incurred by the Parties in responding to such legal action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of Morgan Stanley Business Employees (or Former Morgan
Stanley Employees) and Discover Business Employees (or Former Discover Employees) included in or represented by the putative or certified plaintiff class. The procedures contained in the indemnification and related litigation cooperation provisions
of the Distribution Agreement shall apply with respect to each Party’s indemnification obligations under this Section 12.03. 
 Section 12.04. Reimbursement and Indemnification. The Parties hereto agree to reimburse each other, within 30 days of receipt from the other Party of reasonable verification, for all costs and expenses which each may incur on
behalf of the other as a result of any of the Welfare Plans, Pension Plans and Non-ERISA U.S. Benefit Arrangements and, as contemplated by Section 11.03, any termination or severance payments or benefits. All liabilities retained, assumed or
indemnified against by Discover pursuant to this Agreement, and all liabilities 

  

 35 

 
retained, assumed or indemnified against by Morgan Stanley pursuant to this Agreement, shall in each case be subject to the indemnification provisions of the
Distribution Agreement. Notwithstanding anything to the contrary, no provision of this Agreement shall require Discover or any Discover Subsidiary to pay or reimburse to Morgan Stanley or any Morgan Stanley Affiliate any benefit-related cost item
that Discover or any Discover Subsidiary has previously paid or reimbursed to Morgan Stanley or any Morgan Stanley Affiliate. 
 Section 12.05. Costs of Compliance with Agreement. Except as otherwise provided in this Agreement or any other Distribution Document, each Party shall pay its own expenses in fulfilling its obligations under this Agreement.

 ARTICLE 13 
 MISCELLANEOUS 
 Section 13.01. Notices. Any notice, instruction, direction or demand under the terms of
this Agreement required to be in writing shall be duly given upon delivery, if delivered by hand, facsimile transmission, or mail, to the following addresses: 
  

	 	(a)	If to Morgan Stanley to: 

 Morgan Stanley 
 1585 Broadway 
 New York, NY 10036 

Attn: Martin M. Cohen, Director of Company Law 
 Facsimile: (212) 507-3334 
 with a copy to: 
 Davis Polk & Wardwell 
 450 Lexington Avenue 
 New York, NY 10017 
 Attn: Paul Kingsley,
Esq./Jeffrey Small, Esq. 
 Facsimile: (212) 450-3277/(212) 450-3500 
  

	 	(b)	If to Discover to: 

 Discover Financial Services

 2500 Lake Cook Road 
 Riverwoods, IL 60015 
 Attn: General Counsel—Contracts 
 Facsimile: (224) 405-4584 
  

 36 

 or to such other addresses or telecopy numbers as may be specified by like notice to the other Party. All such notices,
requests and other communications shall be deemed given, (a) when delivered in person or by courier or a courier services, (b) if sent by facsimile transmission (receipt confirmed) on a Business Day prior to 5 p.m. in the place of receipt,
on the date of transmission (or, if sent after 5 p.m., on the following Business Day) or (c) if mailed by certified mail (return receipt requested), on the date specified on the return receipt. 
 Section 13.02. Amendments; No Waivers. From and after the Distribution, any provision of this Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Morgan Stanley and Discover, or in the case of a waiver, by the Party against whom the waiver is to be effective. 
 (a) No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 Section 13.03. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and permitted assigns; provided that neither Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other Party hereto.
If any Party or any of its successors or permitted assigns (i) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer
all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made so that the successors and assigns of such Party shall assume all of the obligations of such Party under the
Distribution Documents. 
 Section 13.04. Governing Law. This Agreement shall be construed in accordance with and governed by the
law of the State of New York, without regard to the conflicts of laws rules thereof. 
 Section 13.05. Counterparts; Effectiveness;
Third-Party Beneficiaries. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no
party shall 

  

 37 

 
have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). Neither this Agreement nor any
provision hereof is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and permitted assigns. No Employee or other current or former
employee of Morgan Stanley or Discover or any Subsidiary or Affiliate of either (or his/her spouse, dependent or beneficiary), or any other person not a party to this Agreement, shall be entitled to assert any claim hereunder. Without limiting the
foregoing, the provisions of this Agreement are not intended to, nor shall they confer upon any Person other than the Parties hereto any right or expectation as to the adoption, amendment, maintenance, continuation, operation or funding of any
employee benefit plan, policy or arrangement. 
 Section 13.06. Entire Agreement. This Agreement and the other Distribution
Documents constitute the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the
subject matter hereof and thereof. No representation, inducement, promise, understanding, condition or warranty not set forth herein or in the other Distribution Documents has been made or relied upon by any party hereto. Regardless of anything else
contained herein, the parties do not intend for this Agreement to amend any employee benefit plans or arrangements. 
 Section 13.07.
Jurisdiction. Any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in the United States District Court for the Southern
District of New York or any other New York State court sitting in New York County, and each of the Parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is
brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the
foregoing, each Party agrees that service of process on such Party as provided in Section 13.01 shall be deemed effective service of process on such Party. 
 Section 13.08. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. 
  

 38 

 Section 13.09. Severability. If any one or more of the provisions contained in this Agreement
should be declared invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement shall not in any way be affected or impaired thereby 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 a declaration, the Parties shall modify this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible. 
 Section 13.10. Survival. All covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Date indefinitely, unless a specific survival or other applicable period is
expressly set forth herein. 
 Section 13.11. Captions. The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof. 
 Section 13.12. Specific Performance. Each Party to this
Agreement acknowledges and agrees that damages for a breach or threatened breach of any of the provisions of this Agreement would be inadequate and irreparable harm would occur. In recognition of this fact, each Party agrees that, if there is a
breach or threatened breach, in addition to any damages, the other nonbreaching Party to this Agreement, without posting any bond, shall be entitled to seek and obtain equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction, attachment, or any other equitable remedy which may then be available to obligate the breaching Party (i) to perform its obligations under this Agreement or (ii) if the breaching Party is unable,
for whatever reason, to perform those obligations, to take any other actions as are necessary, advisable or appropriate to give the other Party to this Agreement the economic effect which comes as close as possible to the performance of those
obligations (including, but not limited to, transferring, or granting liens on, the assets of the breaching Party to secure the performance by the breaching Party of those obligations). 
 Section 13.13. Limited Liability. Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director,
employee, officer, agent or representative of Discover or Morgan Stanley, nor any individual employed or previously employed by Discover or Morgan Stanley or their respective Affiliates and serving or previously serving as a fiduciary of any benefit
plan of Discover or Morgan Stanley or their respective Affiliates (or any body consisting of such individuals), in his, her or its capacity as such, shall have any liability in respect of or relating to the covenants or obligations of Discover or
Morgan Stanley under this Agreement and, to the fullest extent legally 

  

 39 

 
permissible, each of Discover and Morgan Stanley, for itself and its respective stockholders, directors, employees, officers and Affiliates, waives and
agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable law. 
 Section 13.14. Mutual Drafting. This Agreement shall be deemed to be the joint work product of Morgan Stanley and Discover and any rule of construction that a document shall be interpreted or construed against a drafter of such
document shall not be applicable. 
 Section 13.15. Implementation. 
 (a) The parties shall use an operating committee (the “Operating Committee”) to implement the terms of this Agreement. Each of Morgan
Stanley and Discover shall appoint an equal number of employees to the Operating Committee, such number to be as Morgan Stanley and Discover shall agree as appropriate. The Operating Committee will oversee the implementation and ongoing operation of
this Agreement and shall attempt in good faith to resolve disputes between the parties. Each of the parties shall have the right to replace one or more of its Operating Committee members at any time with employees or officers with comparable
knowledge, expertise and decision-making authority. 
 (b) The Operating Committee shall act by a majority vote of its members. If the
Operating Committee fails to make a decision, resolve a dispute or agree upon any necessary action, the unresolved matter shall be referred to a Senior Officer of each of Morgan Stanley and Discover notified to the other party for such purpose from
time to time, who shall attempt in good faith within a period of 14 days to conclusively resolve any such matter. 
 (c) During the term of
this Agreement, the full Operating Committee shall meet at such times as it considers appropriate. Meetings of the Operating Committee may be in person or via teleconference and shall be convened and held in accordance with such procedures as the
Operating Committee may determine from time to time. 
 Section 13.16. Effect if Distribution Does Not Occur. Notwithstanding
anything in this Agreement to the contrary, if the Distribution Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect. 
 Section 13.17. Corporate Authorization. The officers of Morgan Stanley and Discover are hereby authorized, empowered and directed, in the
name and on behalf of each of Morgan Stanley and Discover, respectively, to take or cause to be taken all such further action, to execute and deliver or cause to be executed and delivered all such further agreements, certificates, instruments and
documents, to 

  

 40 

 
make or cause to be made all such filings with governmental or regulatory authorities, and to pay or cause to be paid all such fees and expenses, in each
case which shall in such officers’ judgment be deemed necessary, proper or advisable to effect and carry out the intent of this Agreement, such determination to be evidenced conclusively by such officers’ execution and delivery thereof or
taking of action in respect thereto. 
 [Remainder of page intentionally left blank] 
  

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 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a duly
authorized officer as of the date first written above. 
  

			
	MORGAN STANLEY
		
	By:	 	 /s/ Robert W. Scully

	Name:	 	Robert W. Scully
	Title:	 	Co-President

  

			
	 DISCOVER FINANCIAL SERVICES

		
	By:	 	 /s/ David W. Nelms

	Name:	 	David W. Nelms
	Title:	 	Chief Executive OfficerTransition Services Agreement, dated June 30, 2007

 Exhibit 10.3 
 TRANSITION SERVICES AGREEMENT 
 by and between 
 MORGAN STANLEY 
 and 
 DISCOVER FINANCIAL SERVICES 
 Dated as of
June 30, 2007 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	PAGE
	ARTICLE 1	  	
	DEFINITIONS	  	
			
	Section 1.01.	  	Definitions	  	1
		
	ARTICLE 2	  	
	PURCHASE AND SALE OF SERVICES	  	
			
	Section 2.01.	  	Purchase and Sale of Services	  	6
	Section 2.02.	  	Subsidiaries	  	6
	Section 2.03.	  	Additional Services	  	6
	Section 2.04.	  	Services Provided by Recipient	  	7
	Section 2.05.	  	Third Party Licenses and Consents	  	7
		
	ARTICLE 3	  	
	SERVICE COSTS; OTHER CHARGES	  	
			
	Section 3.01.	  	Service Costs Generally	  	7
	Section 3.02.	  	Taxes	  	7
	Section 3.03.	  	Invoicing and Settlement of Costs	  	8
		
	ARTICLE 4	  	
	THE SERVICES	  	
			
	Section 4.01.	  	Standards of Service	  	8
	Section 4.02.	  	Changes to the Services	  	9
	Section 4.03.	  	Management of Services By Provider	  	9
	Section 4.04.	  	Operating Committee	  	9
	Section 4.05.	  	Disaster Recovery and BCP	  	10
		
	ARTICLE 5	  	
	DISCLAIMER, LIABILITY AND INDEMNIFICATION	  	
			
	Section 5.01.	  	EXCLUSION OF WARRANTIES	  	10
	Section 5.02.	  	Limitation of Liability	  	10
	Section 5.03.	  	Indemnification of Provider by Recipient	  	11
	Section 5.04.	  	Indemnification of Recipient by Provider	  	12
	Section 5.05.	  	Taxes	  	12
	Section 5.06.	  	Indemnification as Exclusive Remedy	  	12
	Section 5.07.	  	Conduct of Proceedings	  	12
	Section 5.08.	  	Notice of Certain Matters	  	12

  

 i 

					
	ARTICLE 6	  	
	TERM AND TERMINATION	  	
			
	Section 6.01.	  	Term	  	13
	Section 6.02.	  	Termination	  	13
	Section 6.03.	  	Effect of Termination	  	14
		
	ARTICLE 7	  	
	ADDITIONAL AGREEMENTS	  	
			
	Section 7.01.	  	Confidential Information	  	15
	Section 7.02.	  	Ownership of Assets	  	16
	Section 7.03.	  	Security	  	17
	Section 7.04.	  	Access To Information	  	18
	Section 7.05.	  	Labor Matters	  	18
		
	ARTICLE 8	  	
	MISCELLANEOUS	  	
			
	Section 8.01.	  	Prior Agreements	  	20
	Section 8.02.	  	Other Agreements	  	20
	Section 8.03.	  	No Agency; Independent Contractor Status	  	20
	Section 8.04.	  	Subcontractors	  	20
	Section 8.05.	  	Force Majeure	  	20
	Section 8.06.	  	Entire Agreement	  	21
	Section 8.07.	  	Information	  	21
	Section 8.08.	  	Notices	  	21
	Section 8.09.	  	Governing Law	  	22
	Section 8.10.	  	Jurisdiction	  	22
	Section 8.11.	  	WAIVER OF JURY TRIAL	  	23
	Section 8.12.	  	Severability	  	23
	Section 8.13.	  	Amendments and Waivers	  	23
	Section 8.14.	  	Successors and Assigns	  	23
	Section 8.15.	  	Counterparts	  	23
			
	Exhibit A	  	Service Costs	  	
	Exhibit B	  	Compliance with Gramm-Leach-Bliley Act and Data Protection Laws	  	
		
	 Schedules
	  	

  

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 TRANSITION SERVICES AGREEMENT 
 This Transition Services Agreement (this “Agreement”) is entered into as of June 30, 2007 by and between Morgan Stanley, a Delaware
corporation (“Morgan Stanley”), and Discover Financial Services, a Delaware corporation (“Discover”). 
 RECITALS 
 WHEREAS, Morgan Stanley and Discover have entered enter into a Separation and Distribution Agreement (as
defined below) providing for the distribution by Morgan Stanley to its shareholders of all of the common stock of Discover that is held by Morgan Stanley; 
 WHEREAS, Morgan Stanley has heretofore directly or indirectly provided certain services to members of the Discover Group (as defined below); and

 WHEREAS, Discover has heretofore directly or indirectly provided certain services to the Morgan Stanley Group (as defined below).

 NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Morgan Stanley and
Discover, for themselves, their successors and permitted assigns, hereby agree as follows: 
 ARTICLE 1 
 DEFINITIONS 
 Section 1.01.
Definitions. (a) As used in this Agreement, the following terms shall have the following meanings, applicable both to the singular and the plural forms of the terms described: 
 “Actions” has the meaning set forth in Section 5.03. 
 “Affiliate” has the meaning set forth in the Separation and Distribution Agreement; provided that the Affiliates of each party for purposes of this Agreement shall be determined after giving
effect to the consummation of the Distribution. 
 “Agreement” has the meaning set forth in the preamble hereto. 

“Applicable Law” means, with respect to any Person, any federal, state, local or foreign law (statutory, common or otherwise),
constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling, directive, guidance, instruction, direction, permission, waiver, notice, 

 
condition, limitation, restriction or prohibition or other similar requirement enacted, adopted, promulgated, imposed, issued or applied by a Governmental
Authority that is binding upon or applicable to such Person, its properties or assets or its business or operations, as amended unless expressly specified otherwise. 
 “Baseline Period” has the meaning set forth in Section 2.04. 
 “Business
Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. 
 “Change of Control” means, with respect to Morgan Stanley or Discover, (i) the direct or indirect acquisition (by merger, consolidation, business combination or otherwise) by any Person or group
of Persons of beneficial ownership (as defined in Rule 13d-1 and Rule 13d-5 under the Securities Exchange Act of 1934) of 50% or more of the Total Voting Power of Morgan Stanley or Discover, as applicable, (ii) any merger, consolidation or
other business combination of Morgan Stanley or Discover, as applicable, or a Subsidiary of Morgan Stanley or Discover, as applicable, with any Person after giving effect to which (x) the shareholders of Morgan Stanley or Discover, as
applicable, immediately prior to such transaction do not own at least 50% of the Total Voting Power of the ultimate parent entity of the parties to such transaction or (y) individuals who were directors of Morgan Stanley or Discover, as
applicable, immediately prior to such transaction (or their designees) do not constitute a majority of the board of directors of such ultimate parent entity, and (iii) the direct or indirect acquisition by any Person or group of Persons of all
or substantially all of the assets of Morgan Stanley or Discover, as applicable. 
 “Confidential Information” has the
meaning set forth in Section 7.01. 
 “Data Protection Laws” means the European Commission Data Protection Directive
(95/46/EC) or Data Protection Act 1998 or any implementing or related legislation of any member state in the European Economic Area. 
 “Delaware Commissioner” means the Office of the Delaware State Bank Commissioner or any successor thereto. 
 “Discover” has the meaning set forth in the preamble hereto. 
 “Discover Entity” means any member
of the Discover Group. 
 “Discover Group” means Discover and its Subsidiaries as of and after the Distribution Date.

 “Discover Systems” means any computer software program or routine or part thereof owned, licensed or provided by any
Discover Entity or its suppliers on 

  

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any Discover Entity’s behalf, each as modified, maintained or enhanced from time to time by any Discover Entity, any Morgan Stanley Entity or any third
party. 
 “Distribution” has the meaning set forth in the Separation and Distribution Agreement. 
 “Distribution Date” has the meaning set forth in the Separation and Distribution Agreement. 
 “FDIC” means the Federal Deposit Insurance Corporation or any successor thereto. 
 “force majeure” has the meaning set forth in Section 8.05. 
 “FSA” means the United Kingdom Financial Services Authority or any successor thereto. 
 “Governmental Authority” means any multinational, foreign, federal, state, local or other governmental, statutory or administrative
authority, regulatory body or commission or any court, tribunal or judicial or arbitral authority which has any jurisdiction or control over either party (or their Affiliates), including without limitation the FSA, FDIC and the Delaware
Commissioner. 
 “Gramm-Leach-Bliley Act” means the Gramm-Leach-Bliley Act of 1999, or any successor federal statute
thereto, and the rules and regulations thereunder, as may be amended or supplemented from time to time. 
 “Group” means the
Discover Group or Morgan Stanley Group as applicable. 
 “Insolvency Event” means with respect to either party, as
applicable, (i) the making by such party of any assignment for the benefit of creditors of all or substantially all of its assets or the admission by such party in writing of its inability to pay all or substantially all of its debts as they
become due; (ii) the adjudication of such party as bankrupt or insolvent or the filing by such party of a petition or application to any tribunal for the appointment of a trustee or receiver for such party or any substantial part of the assets
of such party; or (iii) the commencement of any voluntary or involuntary bankruptcy proceedings (and, with respect to involuntary bankruptcy proceedings, the failure to be discharged within 60 days), reorganization proceedings or similar
proceeding with respect to such party or the entry of an order appointing a trustee or receiver or approving a petition in any such proceeding. 
 “Invoice Date” has the meaning set forth in Section 3.03(a). 
 “Morgan Stanley” has the
meaning set forth in the preamble hereto. 
  

 3 

 “Morgan Stanley Entity” means any member of the Morgan Stanley Group. 
 “Morgan Stanley Group” means Morgan Stanley and its Subsidiaries (other than any Subsidiary or member of, or other entity in, the
Discover Group) as of and after the Distribution Date. 
 “Morgan Stanley Systems” means any computer software program or
routine or part thereof owned, licensed or provided by any Morgan Stanley Entity or its suppliers on any Morgan Stanley Entity’s behalf, each as modified, maintained or enhanced from time to time by any Morgan Stanley Entity, any Discover
Entity or any third party. 
 “Non-Compliance Notice” has the meaning set forth in Section 5.08. 
 “Payer” has the meaning set forth in Section 3.02(c). 
 “Payee” has the meaning set forth in Section 3.02(c). 
 “Payment Date” has the meaning set forth in Section 3.03(b). 
 “Person” means individual, corporation, limited liability company, partnership, association, trust or other entity or organization,
including a governmental or political subdivision or an agency or instrumentality thereof. 
 “Personal Information” means
personally identifiable information as defined under applicable Data Protection Laws of either party which the other party receives or to which the other party otherwise has access. 
 “Prior Agreements” has the meaning set forth in Section 8.01. 
 “Provider” has the meaning set forth in Section 2.01. 
 “Provider Entity” means any member of the Provider Group. 
 “Provider Group” means, as the context requires, the Discover Group or the Morgan Stanley Group. 
 “Provider Indemnified Person” has the meaning set forth in Section 5.02. 
 “Recipient” has
the meaning set forth in Section 2.01. 
 “Recipient Entity” means any member of the Recipient Group. 
 “Recipient Group” means, as the context requires, the Discover Group or the Morgan Stanley Group. 
  

 4 

 “Recipient Indemnified Person” has the meaning set forth in Section 5.04.

 “Schedule” means a Schedule attached hereto forming part of this Agreement and “Schedules” shall have a
corresponding meaning. 
 “Separation and Distribution Agreement” means the Separation and Distribution Agreement dated as
of June 29, 2007, by and between Morgan Stanley and Discover. 
 “Service Costs” has the meaning set forth in
Section 3.01. 
 “Services” has the meaning set forth in Section 2.01. 
 “Subsidiary” means, with respect to any Person, any other entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person; provided that for the purposes of Sections 2.02, 2.03 and 4.01, shall be limited to
those Subsidiaries of a Person as at the Distribution Date only and any Subsidiaries formed in connection with any internal reorganization of such Person. 
 “Supplier” has the meaning set forth in Section 3.02(b). 
 “Supply
Recipient” has the meaning set forth in Section 3.02(b). 
 “Supported Companies” means Goldfish Bank Limited,
Goldfish Card Services Limited, Goldfish Credit Enhancing, Inc., Goldfish Credit Servicing, Inc. and Goldfish Procurement, Inc. 
 “Systems” means the Morgan Stanley Systems or the Discover Systems, individually, or the Morgan Stanley Systems and the Discover Systems, collectively, as the context may indicate or require. 
 “Tax” means any tax, levy, impost, duty or other similar charge (including any penalty or interest payable in connection with any
failure to pay or delay in paying the same). 
 “Total Voting Power” means, with respect to any Person, the total combined
voting power of all securities of such Person entitled to vote generally in the election of directors of such Person. 
 “UK Transfer
Regulations” means the Transfer of Undertakings (Protection of Employment) Regulations 2006, as amended or superseded from time to time. 
  

 5 

 “VAT” means value added tax implemented by member states of the European Union pursuant
to Directive 2006/112/EC and legislation supplemental thereto, and any tax of a similar nature imposed under the laws of any jurisdiction which is not a member state of the European Union. 
 ARTICLE 2 
 PURCHASE AND SALE
OF SERVICES 
 Section 2.01. Purchase and Sale of Services. On the terms and subject to the conditions
of this Agreement and in consideration of the Service Costs described below, each of Morgan Stanley and Discover (each in its capacity as provider of Services, “Provider”) agrees to provide to the other party (in its capacity as
recipient of Services, “Recipient”), or procure the provision to Recipient of, and Recipient agrees to purchase from Provider, the transition services (the “Services”) as set forth on the Schedules. 
 Section 2.02. Subsidiaries. It is understood that (i) except as provided in this Section 2.02, the Services to be provided to Recipient
under this Agreement shall, at Recipient’s request, be provided to any Person that is a Subsidiary of Recipient and (ii) Provider may satisfy its obligation to provide or procure Services hereunder by causing one or more of its
Subsidiaries to provide or procure such Services. With respect to Services provided to, or procured on behalf of, any Subsidiary of Recipient, Recipient agrees to pay on behalf of such Subsidiary all amounts payable by or in respect of such Services
pursuant to this Agreement. Recipient agrees that Provider shall only be required to provide the Services specified in Schedules UKM25 to UKM45 and UKM58 to UKM60 to the relevant Supported Companies. The immediately preceding sentence shall not be
deemed to limit the rights of the Supported Companies to receive any additional Services in accordance with Section 2.03. 
 Section
2.03. Additional Services. Except for the Services expressly contemplated to be provided in accordance with Section 2.01 and this Section 2.03, Provider shall have no obligation under this Agreement to provide any services to the
Recipient Group. Provider agrees to (i) consider in good faith (but shall have no obligation to accept) any requests by Recipient for the provision of any continued or additional services that Recipient considers are reasonably necessary to
accommodate normal growth in Recipient’s business and (ii) use reasonable efforts in good faith to provide continued or additional services that Recipient considers are reasonably necessary to transfer responsibility for the provision of
any Services from Provider to Recipient or any third party as Recipient may designate during the term of this Agreement, and upon termination or expiration of any Service or of this Agreement, including as to data migration. Any such continued or
additional services will be on such terms and conditions (including pricing) as the parties shall mutually agree. 
  

 6 

 Section 2.04. Services Provided by Recipient. If it is necessary for Recipient to provide any
services or resources to Provider or any third party regarding any aspect of the Recipient Group business or Services (the “Recipient Services”) so that Provider, any Subsidiary of Provider or third party provider may provide or
have provided the Services hereunder, Recipient shall provide such services or resources (i) in a timely and effective manner; (ii) without cost to Provider, any Subsidiary of Provider or any third party and (iii) in a manner that
ensures that the nature, quality and standard of care of the Recipient Services provided shall be substantially the same as have been provided by the Recipient Group’s business during the twelve months prior to the date hereof (such
twelve-month period, the “Baseline Period”). 
 Section 2.05. Third Party Licenses and Consents. Provider and
Recipient shall use commercially reasonable efforts to obtain all governmental or third party licenses and consents required for the provision of any Service by Provider in accordance with the terms of this Agreement; provided that the costs
relating to obtaining any such licenses or consents shall be borne by Recipient; provided further that Provider shall not be required to provide such Service (x) unless and until the required licenses and/or consents have been obtained
or (y) in the event the required licenses and/or consents are terminated or revoked. 
 ARTICLE 3 
 SERVICE COSTS; OTHER CHARGES 
 Section 3.01. Service Costs Generally. Unless any Schedule hereto indicates otherwise or the parties shall agree in writing to a different
arrangement, for each period in which Recipient receives a Service hereunder, Recipient shall pay Provider such fees and costs as set forth in Exhibit A hereto (“Service Costs”) which costs shall be adjusted appropriately in
the event of the termination of any Service or as otherwise contemplated by this Agreement. 
 Section 3.02. Taxes. (a) Recipient
shall pay all applicable sales or use taxes incurred with respect to provision of the Services. These taxes shall be incremental to other payments or charges identified in this Agreement. 
 (b) All amounts to be paid under this Agreement shall be exclusive of VAT, if any. Where, under this Agreement, any person (the
“Supplier”) makes or is deemed to make a supply to another person (the “Supply Recipient”) for VAT purposes and VAT is or becomes chargeable in respect of such supply, the Supply Recipient shall pay to the Supplier
an amount equal to such VAT: (i) where the consideration for such supply consists wholly of money, at the same time as paying such consideration; or (ii) where the consideration does not consist wholly of money, on or before the later of
the date which is 30 days after the date on 

  

 7 

 
which such VAT is demanded in writing or when the supply is made; provided that the Supply Recipient shall first have received an invoice in respect
of such supply. 
 (c) Where this Agreement requires any party (the “Payer”) to reimburse another party (the
“Payee”) for any costs or expenses, the Payer shall also at the same time pay and indemnify the Payee against all VAT incurred by the Payee in respect of the costs or expenses to the extent that the Payee determines that neither it,
nor any other member of any group of which it is a member for VAT purposes, is entitled to credit or repayment from the relevant tax authority in respect of VAT. 
 (d) All sums payable under this Agreement shall be paid free and clear of all deductions or withholdings unless the deduction or withholding is required by law, in which event the amount of the payment due from the
party required to make such payment (other than amounts of interest) shall be increased to an amount which after any withholding or deduction leaves an amount equal to the payment which would have been due if no such deduction or withholding had
been required. 
 Section 3.03. Invoicing and Settlement of Costs. (a) Unless any Schedule hereto indicates otherwise or the
parties shall agree in writing to a different arrangement, Provider shall invoice or notify in writing on a monthly basis (not later than the 15th day of each month) an officer of Recipient designated by Recipient from time to time for such purpose
(the date of delivery of such invoice being referred to herein as the “Invoice Date”). 
 (b) Recipient agrees to pay on or
before the date (each, a “Payment Date”) that is 45 days after the Invoice Date by wire transfer of immediately available funds payable to the order of Provider all amounts invoiced by Provider pursuant to Section 3.03(a). If
Recipient fails to pay any monthly payment on or before the relevant Payment Date, Recipient shall be obligated to pay, in addition to the amount due on such Payment Date, to the extent permitted by Applicable Law, interest on such amount at the
rate of 6% per annum compounded monthly from the relevant Payment Date through the date of payment. 
 ARTICLE 4 
 THE SERVICES 
 Section 4.01. Standards of Service. (a) The level or volume of any specific Service required to be provided to Recipient hereunder shall not exceed the level or volume of such Service as historically utilized by the Recipient
Group during the Baseline Period. In providing any Service, Provider shall have no obligation to allocate human, equipment or other resources in excess of the level of resources historically allocated to the provision to the Recipient Group of such
Service by Provider during the Baseline Period. 
  

 8 

 (b) The manner, nature, quality and standard of care applicable to the delivery by Provider of the
Services hereunder shall be substantially the same as that of similar services which Provider provides from time to time throughout its business. 
 (c) Provider agrees that all Services it provides or causes to be provided will be provided in compliance with Applicable Law. 
 (d) If any member of the Recipient Group shall purchase, lease or otherwise acquire any business, assets or properties or rights in respect thereof, Provider shall have no obligation to provide any Services hereunder in respect of such
acquired business, assets or properties. 
 Section 4.02. Changes to the Services. It is understood and agreed that Provider may from
time to time modify, change or enhance the manner, nature, quality and/or standard of care of any Service provided to Recipient to the extent Provider is making a similar change in the performance of such services for the Provider Group and provided
that any such modification, change or enhancement will not reasonably be expected to have a material adverse effect on such Service. Provider shall furnish to Recipient substantially the same notice (in content and timing), if any, as Provider
furnishes to its own organization with respect to such modifications, changes or enhancements. Any incremental expense incurred by Provider in making any such modification, change or enhancement to the Services performed hereunder or in providing
such Services on an ongoing basis shall be taken into account in the calculation of Service Costs as contemplated by Section 2.01. 
 Section 4.03. Management of Services By Provider. Except as may otherwise be expressly provided in this Agreement, the management of and control over the provision of the Services by Provider shall reside solely with Provider and
notwithstanding anything to the contrary Provider shall be permitted to choose the methodology, systems and applications it utilizes in the provision of such Services. The provision, use of and access to the Services shall be subject to (i) any
technical and operational changes that may be required to manage any restrictions imposed by Provider in respect of data access; (ii) Providers’ business, operational and technical environment, standards, policies and procedures as may be
modified from time to time; (iii) any Recipient Services and/or other third party services, resources or dependencies; (iv) any Applicable Law; and (v) the terms of this Agreement. 
 Section 4.04. Operating Committee. (a) The parties shall use an operating committee (the “Operating Committee”) to implement
the terms of this Agreement. Each of Morgan Stanley and Discover shall appoint an equal number of employees to the Operating Committee, such number to be as Morgan Stanley and Discover shall agree as appropriate from time to time. The Operating

  

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Committee will oversee the implementation and ongoing operation of this Agreement and shall attempt in good faith to resolve disputes between the parties.
Each of the parties shall have the right to replace one or more of its Operating Committee members at any time with employees or officers with comparable knowledge, expertise and decision-making authority. 
 (b) The Operating Committee shall act by a majority vote of its members. If the Operating Committee fails to make a decision, resolve a dispute or agree
upon any necessary action, the unresolved matter shall be referred to a senior officer of each of Morgan Stanley and Discover notified to the other party for such purpose from time to time, who shall attempt in good faith within a period of 14 days
to conclusively resolve any such matter. 
 (c) During the term of this Agreement, the full Operating Committee shall meet at such times as
it considers appropriate. Meetings of the Operating Committee may be in person or via teleconference and shall be convened and held in accordance with such procedures as the Operating Committee may determine from time to time. 
 Section 4.05. Disaster Recovery and BCP. Each party will maintain and operate and shall use reasonable efforts to ensure that all material
subcontractors shall maintain and operate contingency, business continuity and disaster recovery facilities and procedures for the purposes of performing its obligations under this Agreement consistent with the facilities and procedures maintained
and operated by such party in respect of its business generally. 
 ARTICLE 5 
 DISCLAIMER, LIABILITY AND INDEMNIFICATION 
 Section 5.01. EXCLUSION OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SERVICES ARE PROVIDED “AS-IS” WITH NO WARRANTIES, AND PROVIDER EXPRESSLY EXCLUDES AND DISCLAIMS ANY
WARRANTIES UNDER OR ARISING AS A RESULT OF THIS AGREEMENT, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT OR ANY OTHER
WARRANTY WHATSOEVER. 
 Section 5.02. Limitation of Liability. (a) Recipient agrees that none of the members of the
Provider Group and their respective directors, officers, agents, and employees (each, a “Provider Indemnified Person”) shall have any liability, whether direct or indirect, in contract or tort or otherwise, to any Recipient Entity
or any other Person for or in connection with the Services rendered or to be 

  

 10 

 
rendered by or on behalf of any Provider Indemnified Person pursuant to this Agreement, the transactions contemplated hereby or any actions or inactions by
or on behalf of Provider Indemnified Person in connection with any such Services or transactions, except (i) to the extent any damages have been finally determined by a court of competent jurisdiction to have resulted from such Provider
Indemnified Person’s gross negligence or willful misconduct in connection with any such Services, actions or inactions or (ii) as contemplated by Section 7.05(d). 
 (b) Notwithstanding the provisions of Section 5.02(a), none of the members of the Provider Group shall be liable for any special, indirect,
incidental, consequential or punitive damages of any kind whatsoever in any way due to, resulting from or arising in connection with any of the Services or the performance of or failure to perform Provider’s obligations under this Agreement.
This disclaimer applies without limitation (i) to claims arising from the provision of the Services or any failure or delay in connection therewith, (ii) to claims for lost profits, (iii) regardless of the form of action, whether in
contract, tort (including negligence), strict liability, or otherwise, and (iv) regardless of whether such damages are foreseeable or whether any member of the Provider Group has been advised of the possibility of such damages. 
 (c) None of the members of the Provider Group shall have any liability to any Recipient Entity or any other Person for failure to perform Provider’s
obligations under this Agreement or otherwise, where such failure to perform is not caused by the gross negligence or willful misconduct of the Provider Entity providing such Services and such failure to perform similarly affects the Provider Group
receiving such Services and does not have a disproportionately adverse effect on the Recipient Group, taken as a whole. 
 (d) In addition to
the foregoing, Recipient agrees that it shall, in all circumstances, use commercially reasonable efforts to mitigate and otherwise minimize its damages and those of the other Recipient Entities, whether direct or indirect, due to, resulting from or
arising in connection with any failure by Provider to comply fully with its obligations under this Agreement. 
 Section 5.03.
Indemnification of Provider by Recipient. Recipient agrees to indemnify and hold harmless each Provider Indemnified Person from and against any damages, and to reimburse each Provider Indemnified Person for all reasonable expenses as they are
incurred in investigating, preparing, pursuing, or defending any claim, action, proceeding, or investigation, whether or not in connection with pending or threatened litigation and whether or not any Provider Indemnified Person is a party
(collectively, “Actions”), arising out of or in connection with Services rendered or to be rendered by or on behalf of any Provider Indemnified Person pursuant to this Agreement, the transactions contemplated hereby or any actions
or inactions by or on behalf of any Provider Indemnified Person in connection with any such Services or transactions; provided  

  

 11 

 
that Recipient shall not be responsible for any damages of any Provider Indemnified Person to the extent such damages have been finally determined by a court
of competent jurisdiction to have resulted from such Provider Indemnified Person’s gross negligence or willful misconduct in connection with any of such Services, actions or inactions (it being understood and agreed that the provision by any
Provider Entity of any of the Services without obtaining the consent of any party to any contract or agreement to which any Provider Entity is a party as of the date hereof shall not constitute gross negligence or willful misconduct by any Provider
Entity; provided that the relevant Provider Entity has used commercially reasonable efforts to obtain the relevant consent). 
 Section 5.04. Indemnification of Recipient by Provider. Provider agrees to indemnify and hold harmless each member of the Recipient Group and their respective directors, officers, agents, and employees (each, a
“Recipient Indemnified Person”) from and against any damages, and shall reimburse each Recipient Indemnified Person for all reasonable expenses as they are incurred in investigating, preparing, or defending any Action, to the extent
such damages have been finally determined by a court of competent jurisdiction to have arisen out of the gross negligence or willful misconduct of any Provider Indemnified Person in connection with the Services rendered or to be rendered pursuant to
this Agreement. 
 Section 5.05. Taxes. If a party is required to make any payment under Section 5.03 or 5.04, it shall upon
demand pay to the Person receiving such payment an amount equal to any loss, liability or cost which the receiving Person determines will or has been (directly or indirectly) suffered or incurred on account of Tax by the receiving Person in respect
of such payment, net of any Tax benefit arising in respect of the damages giving rise to such payment. 
 Section 5.06. Indemnification as
Exclusive Remedy. Except for the termination rights provided under Sections 6.02(b) and 6.02(c), the indemnification provisions of this Article 5 shall be the exclusive remedy for breach of the Agreement. 
 Section 5.07. Conduct of Proceedings. Any proceedings relating to indemnification under Section 5.03 or 5.04 or Clause (b) of Exhibit
B shall be conducted in accordance with the procedures set forth in Section 7.03 of the Separation and Distribution Agreement. 
 Section 5.08. Notice of Certain Matters. If Recipient at any time believes that Provider is not in full compliance with its obligations under Sections 4.01(a), 4.01(b) or 4.01(c), Recipient shall so notify Provider in writing
promptly (but not later than 15 days) after becoming aware of such possible non-compliance by Provider. Such notice (a “Non-Compliance Notice”) shall set forth in reasonable detail the basis for Recipient’s belief as well as
Recipient’s view as to the steps to 

  

 12 

 
be taken by Provider to address the possible non-compliance. For the 30 days after receipt of such a notice, the members of the Operating Committee (or, if
so determined by them, other representatives of Provider and Recipient) shall work in good faith to develop a plan to resolve the matters referred to in the Non-Compliance Notice. In the event such matters are not resolved through such discussions,
the matter shall be referred for resolution as contemplated by Section 4.04(b). If such matters are not resolved pursuant to Section 4.04(b) Recipient may elect, by notice delivered within 14 days following completion of the time period
contemplated by Section 4.04(b), to terminate Provider’s obligation to provide or procure, and its obligation to purchase, the Service or Services referred to in its Non-Compliance Notice in accordance with Section 6.02. In the event
such matters are resolved through such discussions or, notwithstanding the failure to resolve such matters Recipient does not elect to terminate such Service or Services within such 14-day period, Recipient shall not be entitled to deliver another
Non-Compliance Notice or pursue other remedies with respect to same or any substantially similar matter so long as, in the event of a resolution, Provider complies in all material respects with the terms of such resolution. In no event shall any
termination of any Service or Services pursuant to this Section 5.08 limit or affect Recipient’s right to seek remedies in respect of any breach by Provider of any of its obligations under this Agreement prior to such termination, subject
to the limitations set forth in this Article 5. 
 ARTICLE 6 
 TERM AND TERMINATION 
 Section 6.01. Term. Except
as otherwise provided in this Article 6, in Section 8.05, or in any Schedule or as otherwise agreed in writing by the parties, the term of this Agreement with respect to each Service shall commence as of the Distribution Date or, if later, the
date on which such Service is added as a Schedule, and shall cease as of the applicable date set forth in the applicable Schedule or such earlier date as determined in accordance with Section 6.02. This Agreement shall terminate in its entirety
upon the expiration of the terms (as determined pursuant to the preceding sentence) of all Services; provided that the provisions of Articles 5, 6, 7 and 8 shall survive any such termination indefinitely. 
 Section 6.02. Termination. (a) Except as otherwise provided in any Schedule hereto, Recipient may from time to time terminate this
Agreement with respect to one or more of the Services it receives, in whole or in part, upon giving at least 60 days’ prior notice to Provider. 
 (b) Provider may terminate any Service or any part thereof it provides at any time if (i) a related Service or a third party service pursuant to which Provider provides such Service to Recipient has been
terminated or (ii) Recipient shall have failed to perform any of its material obligations under this Agreement relating to 

  

 13 

 
any such Service, Provider has notified Recipient in writing of such failure and such failure shall have continued for a period of 60 days after receipt by
Recipient of written notice of such failure. For the avoidance of doubt, the failure by Recipient to pay the full amount of any invoice when due shall be considered a breach of Recipient’s material obligation under this Agreement. With respect
to clause (i) of this Section 6.02(b), if Provider receives written notice from any third party service provider that such Person intends to terminate such service, Provider and Recipient shall use commercially reasonable efforts to secure
the continued provision of that service from such third party or an alternative service provider; provided that any costs incurred in doing so shall be borne by Recipient. 
 (c) Recipient may terminate any Service it receives as provided in the applicable Schedule or at any time if Provider shall have failed to perform any of
its material obligations under this Agreement relating to any such Service, Recipient has notified Provider in writing of such failure, and such failure shall have continued for a period of 30 days after receipt by Provider of written notice of such
failure. 
 (d) At any time following announcement of a transaction involving a Change of Control of Recipient, Provider may elect, by
delivery of notice in writing to Recipient, to terminate any or all Services hereunder, such termination to take effect, subject to Section 6.02(a), on the date or dates specified by Provider in such notice; provided that without the
written consent of Recipient, no such termination of Service shall occur prior to the closing of such Change of Control transaction. 
 (e)
Upon completion of the sale or other disposition of any portion of the Recipient Group’s business, assets or properties, Provider’s obligation to provide any Service in respect of the business, assets or properties so disposed shall
terminate automatically and without any notice or other action by Provider, and the aggregate level or volume of such Service required to be provided to the Recipient Group and (if applicable) the Service Costs payable by Recipient in respect
thereof shall be reduced appropriately. 
 (f) Either party may terminate this Agreement at any time with immediate effect upon serving
written notice upon the other party if the other party suffers an Insolvency Event. 
 Section 6.03. Effect of Termination.
(a) Other than as required by law, upon termination of any Service pursuant to Section 6.02, Provider shall have no further obligation to provide the terminated Service and Recipient shall have no obligation to pay any fees relating to
such Services; provided that notwithstanding such termination, (i) Recipient shall remain liable to Provider for fees owed and payable in respect of Services provided prior to the effective date of the termination, and (ii) Provider
shall continue to charge Recipient for administrative 

  

 14 

 
and program costs relating to benefits paid after but incurred prior to the termination of any Service and other services required to be provided after the
termination of such Service and Recipient shall be obligated to pay such expenses in accordance with the terms of this Agreement. 
 (b)
Termination of this Agreement as provided for herein shall not prejudice or affect any rights or remedies which shall have accrued or shall thereafter accrue to either party. 
 (c) Following notice of termination of any Service, Provider and Recipient agree to cooperate in providing for an orderly transition of such Service to
Recipient or a successor service provider. Provider agrees to (i) provide promptly, and in any event no later than 60 days following termination of such Service, copies in a usable format then in existence designated by Provider, of all records
relating directly or indirectly to benefit determinations of Recipient employees, including but not limited to compensation and service records (to the extent relevant to such Service), correspondence, plan interpretative policies, plan procedures,
administrative guidelines, minutes, or any data or records required to be maintained by law and (ii) cooperate reasonably with Recipient in developing a transition schedule. Recipient shall promptly reimburse Provider, upon request, for any and
all reasonable costs and expenses incurred by Provider or any of its Subsidiaries arising out of or in connection with the performance of its obligations under this Section 6.03(c). For the avoidance of doubt, this Section 6.03(c) is
subject to the provisions of Section 2.03. 
 ARTICLE 7 
 ADDITIONAL AGREEMENTS 
 Section 7.01. Confidential Information. The
parties hereby covenant and agree to maintain confidential all Confidential Information relating to the other party or any of such other party’s Subsidiaries. Without limiting the generality of the foregoing, each party shall cause its
employees and agents to exercise the same level of care with respect to Confidential Information relating to the other party or any of its Subsidiaries as it would with respect to proprietary information, materials and processes relating to itself
or any of its Subsidiaries. “Confidential Information” shall mean all information, materials and processes relating to a party or any Subsidiary of such party obtained by the other party or any Subsidiary of such other party at any
time (whether prior to or after the date hereof) in any format whatsoever (whether orally, visually, in writing, electronically or in any other form) relating to, arising out of or in connection with the Services rendered or to be rendered hereunder
and shall include, but not be limited to, economic and business information or data, business plans, computer software and information relating to employees, vendors, customers, products, financial performance and projections, processes, strategies
and systems but shall not include (i) information 

  

 15 

 
which becomes generally available to the public other than by release in violation of the provisions of this Section 7.01, (ii) information which
becomes available on a non-confidential basis to a party from a source other than the other party to this Agreement, provided the party in question reasonably believes that such source is not or was not bound to hold such information
confidential and (iii) information acquired or developed independently by a party without violating this Section 7.01 or any other confidentiality agreement with the other party. Except with the prior written consent of the other party,
each party will use the other party’s Confidential Information only in connection with the performance of its obligations hereunder and each party shall use commercially reasonable efforts to restrict access to the other party’s
Confidential Information to those employees of such party requiring access for the purpose of providing Services hereunder. Notwithstanding any provision of this Section 7.01 to the contrary, a party may disclose such portion of the
Confidential Information relating to the other party to the extent, but only to the extent, the disclosing party reasonably believes that such disclosure is required under law or the rules of a Governmental Authority; provided that the
disclosing party first notifies the other party hereto of such requirement and allows such party a reasonable opportunity to seek a protective order or other appropriate remedy to prevent such disclosure. The parties acknowledge that money damages
would not be a sufficient remedy for any breach of the provisions of this Section 7.01 and that the non-breaching party shall be entitled to equitable relief in a court of law in the event of, or to prevent, a breach or threatened breach of
this Section 7.01. 
 Section 7.02. Ownership of Assets. (a) Morgan Stanley Systems and any and all enhancements thereof or
improvements thereto are and shall remain the sole exclusive property of the Morgan Stanley Entities and their suppliers. From and after the creation of any and all such Morgan Stanley Systems or enhancements thereof or improvements thereto by
Discover or by any contractor, Affiliate or other third party on Discover’s behalf, in each case, pursuant to this Agreement, Discover agrees to assign and hereby assigns to Morgan Stanley or the applicable Morgan Stanley Entity, any and all
right, title and interest that Discover or such contractor, Affiliate or third party may have in such Morgan Stanley Systems or enhancements thereof or improvements thereto. 
 (b) Discover Systems and any and all enhancements thereof or improvements thereto are and shall remain the sole exclusive property of the Discover
Entities and their suppliers. From and after the creation of any and all such Discover Systems or enhancements thereof or improvements thereto by Morgan Stanley or by any contractor, Affiliate or third party on Morgan Stanley’s behalf, in each
case, pursuant to this Agreement, Morgan Stanley agrees to assign and hereby assigns to Discover or the applicable Discover Entity, any and all right, title and interest that Morgan Stanley or such contractor, Affiliate or third party may have in
such Discover Systems or enhancements thereof or improvements thereto. 
  

 16 

 (c) From the date hereof until the termination of this Agreement, each party grants to the other and its
suppliers a non-exclusive, royalty-free right and license to use the Morgan Stanley Systems or the Discover Systems, as applicable, solely to provide the Services contemplated hereunder. Notwithstanding anything to the contrary hereunder, each party
agrees to cooperate with the other (and shall cause its suppliers to so cooperate) to cause the orderly return of the other party’s Systems and property upon the termination of this Agreement or upon written request, whichever is earlier.

 (d) With respect to any Systems that a Morgan Stanley Entity or a Discover Entity, as applicable, is required to maintain or enhance
hereunder, as between Morgan Stanley and Discover, all right, title and interest in and to such enhancements and any related documentation, whether created by the party that provides the Service or any contractor, Affiliate or supplier on such
party’s behalf, shall be owned exclusively by and vested exclusively in the party by whom the applicable System is owned, licensed or provided. 
 (e) As between any Morgan Stanley Entity, on the one hand, and any Discover Entity, on the other hand, all right, title and interest in and to all data processed hereunder shall be owned exclusively by the Morgan
Stanley Entity or Discover Entity that originally supplied it to the other. Morgan Stanley and Discover hereby assign to the other, and shall cause any of its or their contractors, Affiliates or suppliers to assign to the other, as applicable, all
right, title and interest that Morgan Stanley or Discover, as applicable, may have in the other’s data. 
 (f) Each party shall have
written agreements with its employees consistent with past practices, and shall cause any contractor, Affiliate or third party performing Services on its behalf pursuant to this Agreement to also have written agreements with its employees that are
consistent with its obligations hereunder, including the obligations to disclose and assign all right, title and interest in intellectual property rights as contemplated in Sections 7.01 and 7.02. Each party agrees not to voluntarily terminate or to
amend or modify such agreements with respect to the provisions described above without providing at least 30 days prior written notice thereof and further agrees that any such amendments or modifications to such agreements shall be prospective only.

 Section 7.03. Security. (a) Each member of the Recipient Group and its employees, authorized agents and subcontractors shall
only use or access Services and/or any of Provider’s Systems, premises or data such Person is authorized by Provider to use or access. In no event shall any member of the Recipient Group and its employees, authorized agents and subcontractors
access any Services and/or any of Provider’s Systems, premises or data without Provider’s prior written consent. Each member of the Recipient Group and its employees, authorized agents and subcontractors shall comply with Provider’s
policies and procedures in relation to the use and access of the Services and Provider’s Systems. 
  

 17 

 (b) In connection with the provision of Services hereunder, to the extent either party has access to or
acquires Personal Information such party will, and will cause the relevant member of its Group to, comply with, as applicable, Title V of Gramm-Leach-Bliley Act, the Data Protection Laws and any other laws concerning Personal Information. Without
limiting the generality of the foregoing, both parties agree to comply with the covenants set forth in Exhibit B. 
 Section 7.04.
Access To Information. (a) The provisions of Section 5.01 of the Separation and Distribution Agreement shall apply to matters arising in connection with, or otherwise relating to, the provision of Services hereunder. 
 (b) For the avoidance of doubt, if requested by Recipient, Provider will permit Recipient such access to Provider’s books, records, accountants,
accountants’ work papers, personnel and facilities with respect to the Services as is reasonably necessary to enable the management of Recipient to demonstrate compliance with the requirements set forth in Section 404 of the Sarbanes-Oxley
Act of 2002, as amended, and the rules and regulations of the Securities Exchange Commission promulgated thereunder. In connection with the foregoing, if at any time Recipient shall identify any material deficiencies in the processes utilized by
Provider in the provision of Services hereunder, Provider and Recipient will cooperate in good faith to develop and implement commercially reasonable action plans and timetables to remedy such deficiencies and/or implement adequate compensating
controls. 
 Section 7.05. Labor Matters. (a) All labor matters relating to employees of Provider and its Subsidiaries
(including, without limitation, employees involved in the provision of Services to any Recipient Entity) shall be within the exclusive control of Provider, and Recipient shall not take any action affecting such matters. Nothing in this Agreement is
intended to transfer the employment of employees engaged in the provision of any Service from one party to the other, whether pursuant to the European Union Acquired Rights Directive, UK Transfer Regulations or otherwise. All employees and
representatives of a party and any of its Affiliates will be deemed for all compensation, employee benefits, tax and social security contribution purposes to be employees or representatives of such party or its Affiliates (or their subcontractors)
and not employees or representatives of the other party or any of its Affiliates (or their subcontractors). In providing the Services, such employees and representatives will be under the direction, control and supervision of Provider or its
Affiliates (or their subcontractors) and not of Recipient. 
 (b) Recipient shall notify Provider within seven days of any employee or former
employee of the Provider Group claiming or asserting that the 

  

 18 

 
termination of the provision of all or any of the Services constitutes the transfer of an undertaking or part thereof, or a service provision change, within
the meaning of the UK Transfer Regulations, such that their contract of employment transfers or will transfer from Provider to Recipient. 
 (c) Provider shall within 14 days of being so informed by Recipient, at its sole discretion be entitled to offer employment to the employee on terms and conditions which are in all material respects (except as to occupational pension
arrangements) not less favorable than those which he or she enjoyed immediately before the date of the termination or intended termination, such offer to remain open for acceptance for 14 days. 
 (d) In the event that the offer referred to in Section 7.05(c) above is not made or such an offer is made and not accepted by the employee within 14
days, (i) Recipient shall be entitled to terminate such employee’s provision of all or any of the Services and therefore dismiss such employee and (ii) Provider shall indemnify Recipient in respect of the following: 
 (A) any costs, liabilities and expenses that Recipient incurs as a result of a claim or threatened claim by such employee (or part of such
claim) that relates to facts or events occurring prior to the alleged transfer date in relation to his/her employment with Provider; 
 (B) any costs, liabilities and expenses that Recipient incurs as a result of a claim or threatened claim that Provider or Recipient failed to comply with their obligations under Regulation 13 of the UK Transfer Regulations in respect of
such employee; 
 (C) Recipient’s reasonable legal costs incurred in dealing with such termination; 
 (D) any notice pay payable to such employee; and 
 (E) any severance payment made to such employee, up to a maximum of three weeks’ salary per year of service. 
 (e) In the event that a claim within the scope of Section 7.05(b) is made or alleged, Recipient and Provider shall give to each other such
assistance as may reasonably be required by the other in relation to the claim. Where any such claim is one in respect of which the indemnity in Section 7.05 (d) applies, Provider shall be entitled to have the conduct of the claim, at its
own expense. 
 (f) The provisions of Sections 7.05(b) to 7.05(e) shall not apply to claims brought or asserted by any of: Mandhir Mandair,
Maurice Varcoe, Adam Greenbaum, Suniti Dhupelia, Anna Satchell, Jaini Gudhka and Cheng Fang Liang. 
  

 19 

 ARTICLE 8 
 MISCELLANEOUS 
 Section 8.01. Prior Agreements. In the event there is any conflict
between the provisions of this Agreement, on the one hand, and provisions of prior services agreements among any Provider Entity and any Recipient Entity (the “Prior Agreements”), on the other hand, the provisions of this Agreement
shall govern. 
 Section 8.02. Other Agreements. In the event there is any inconsistency between the provisions of this
Agreement, on the one hand, and the provisions of the Separation and Distribution Agreement, on the other hand, the provisions of the Separation and Distribution Agreement shall govern. 
 Section 8.03. No Agency; Independent Contractor Status. Nothing in this Agreement shall constitute or be deemed to constitute a partnership
or joint venture between the parties hereto or constitute or be deemed to constitute any party the agent or employee of the other party for any purpose whatsoever and neither party shall have authority or power to bind the other or to contract in
the name of, or create a liability against, the other in any way or for any purpose. The parties hereto acknowledge and agree that Provider is an independent contractor in the performance of each and every part of this Agreement and nothing herein
shall be construed to be inconsistent with this status. Provider shall have the authority to select the means, methods and manner by which any Service is performed. 
 Section 8.04. Subcontractors. (a) Provider may hire or engage one or more subcontractors to perform all or any of its obligations under this Agreement; provided that, subject to
Section 5.02, Provider shall in all cases remain primarily responsible for ensuring that obligations with respect to the standards of services set forth in this Agreement are satisfied with respect to any Service provided by a subcontractor
hired or engaged by Provider. 
 (b) If Recipient terminates any Service prior to its scheduled expiration and as a result of such
termination any Provider Indemnified Person suffers or incurs any liability or damages arising out of or in connection with any third party contract pursuant to which Recipient had received the relevant Service, such Provider Indemnified Person
shall be entitled to indemnification in accordance with Section 5.03. 
 Section 8.05. Force Majeure. (a) For purposes of
this Section 8.05, “force majeure” means an event beyond the reasonable control of either party, which by its nature could not have been foreseen by such party, or, if it could have been foreseen, was unavoidable, and includes
without limitation, acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, threat, declaration, continuation, escalation or acts of war (declared or undeclared) or acts of
terrorism, failure or shortage of energy sources, 

  

 20 

 
raw materials or components, strike, walkout, lockout or other labor trouble or shortage, delays by unaffiliated suppliers or carriers, and acts, omissions
or delays in acting by any Governmental Authority or the other party. 
 (b) Without limiting the generality of Section 5.02(a), neither
party shall be under any liability for failure to fulfill any obligation under this Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered, or delayed as a consequence of circumstances
of force majeure; provided that such party shall have used commercially reasonable efforts to minimize to the extent practicable the effect of force majeure on its obligations hereunder; provided further that nothing in this
Section 8.05 shall be construed to require the settlement of any strike, walkout, lockout or other labor dispute on terms which, in the reasonable judgment of the affected party, are contrary to its interests. It is understood that the
settlement of a strike, walkout, lockout or other labor dispute will be entirely within the discretion of the affected party. The party affected by the force majeure event shall notify the other party of that fact as soon as practicable. 

Section 8.06. Entire Agreement. This Agreement (including the Schedules constituting a part of this Agreement) and any other writing
signed by the parties that specifically references this Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter hereof. This Agreement is not intended to confer upon any Person other than the parties hereto, their Affiliates and their respective successors and permitted assigns any rights or remedies
hereunder. 
 Section 8.07. Information. Subject to Applicable Law and privileges, each party hereto covenants and agrees to
provide the other party with all information regarding itself and transactions under this Agreement that the other party reasonably believes are required to comply with all applicable federal, state, county and local laws, ordinances, regulations
and codes, including, but not limited to, securities laws and regulations. 
 Section 8.08. Notices. Any notice, instruction,
direction or demand under the terms of this Agreement required to be in writing shall be duly given upon delivery, if delivered by hand, facsimile transmission, or mail, to the following addresses: 
  

	 	(a)	If to Morgan Stanley to: 

 Morgan Stanley

 1585 Broadway 
 New York, NY 10036 
 Attn: Martin M. Cohen, Director of Company Law 
 Facsimile: (212) 507-3334 
  

 21 

 with a copy to: 
 Davis Polk & Wardwell 
 450 Lexington Avenue 
 New York, NY 10017 
 Attn: Paul Kingsley, Esq./Jeffrey Small, Esq. 
 Facsimile: (212) 450-3277/(212) 450-3500 
  

	 	(b)	If to Discover to: 

 Discover Financial
Services 
 2500 Lake Cook Road 
 Riverwoods, IL 60015 
 Attn: General Counsel - Contracts 
 Facsimile: (224) 405-4584 
 or to such
other addresses or telecopy numbers as may be specified by like notice to the other parties. All such notices, requests and other communications shall be deemed given, (a) when delivered in person or by courier or a courier services,
(b) if sent by facsimile transmission (receipt confirmed) on a Business Day prior to 5 p.m. in the place of receipt, on the date of transmission (or, if sent at or after 5 p.m. at the place of receipt, on the following Business Day) or
(c) if mailed by certified mail (return receipt requested), on the date specified on the return receipt. 
 Section 8.09.
Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to the conflicts of laws rules thereof. 
 Section 8.10. Jurisdiction. Any Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or any other New York State court sitting in New York County, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 8.08 shall be deemed effective
service of process on such party. 
  

 22 

 Section 8.11. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 Section 8.12. Severability. If any provision of this Agreement or any part thereof shall be invalid or unenforceable, such invalidity or unenforceability shall not render the entire Agreement invalid. Rather, the Agreement shall be
construed as if not containing the particular invalid or unenforceable provision, and the rights and obligations of each party shall be construed and enforced accordingly. 
 Section 8.13. Amendments and Waivers. (a) Any provision of this Agreement (including the Schedules hereto) may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. 
 (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 Section 8.14. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the written consent of the other party
hereto. 
 Section 8.15. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which, when taken together, shall constitute one agreement. 
 [Remainder of page intentionally left
blank] 
  

 23 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective
authorized officers as of the date first above written. 
  

					
	MORGAN STANLEY
		
	By:	 	/s/ Robert W. Scully
		 	Name:	 	Robert W. Scully
		 	Title:	 	Co-President
	
	DISCOVER FINANCIAL SERVICES
		
	By:	 	/s/ David W. Nelms
		 	Name:	 	David W. Nelms
		 	Title:	 	Chief Executive Officer

 Summary of Schedules 
 A. Morgan Stanley to Discover 
 Morgan Stanley will provide to Discover certain services in each of the areas listed
below. Morgan Stanley will provide each of these services for specified terms not exceeding 18 months, except as otherwise indicated. 
  

			
	 Business Function
	  	 Key Area

	Administration	  	Community Affairs
	Business Technology / Corporate Services	  	Technology Support
	Corporate Services	  	Mail & Distribution (UK)
	Corporate Services	  	Multimedia (UK)
	Corporate Services	  	Property Services (UK)
	Financial Control Group	  	Accounts Payable
	Financial Control Group	  	Accounts Receivable
	Financial Control Group	  	Payroll
	Financial Control Group	  	Finance Applications and Related Services
	Financial Control Group	  	Hyperion
	Financial Control Group	  	IT Support Services
	Financial Control Group	  	U.S. Cash Control
	Financial Control Group	  	Secondment of Finance Personnel (UK)
	Financial Control Group	  	U.S. Payroll – Support for Retirees and Inactives*
	Finance-Tax	  	Tax IT Services
	Finance-Tax	  	VAT Processing Support (UK)
	Human Resources	  	Corporate Compensation
	Human Resources	  	Executive Compensation
	Human Resources	  	Firmwide Data, Reporting and Analytics
	Human Resources	  	Human Resource Information Systems
	Human Resources	  	International Services
	Human Resources	  	Performance Management
	Human Resources	  	U.S. Benefits
	Human Resources	  	HR Services
	Information Security	  	Provision of Entitlements Service (UK)
	Information Security	  	Provision of Information Security Services Relating to Brand Protection (UK)**
	Internal Audit	  	Information Technology – Applications
	Mortgage Lending	  	Mortgages
	Presentation Software	  	Finance
	Technology	  	Infrastructure
	Treasury	  	Cash Management

  

	*	Service to be provided for a term not exceeding 24 months 

  

	**	Service to be provided for a term not exceeding 36 months 

 B. Discover
to Morgan Stanley 
 Discover will provide to Morgan Stanley certain services in each of the areas listed below. Morgan Stanley will provide these service
for terms not exceeding 12 months, except as otherwise indicated. 
  

 2 

			
	 Business Function
	  	 Key Area

	Cardmember Services	  	Business Continuity Planning – Crisis Management
	Credit Corporation	  	Mortgage Lending*
	Credit Corporation	  	Technology*
	Financial Control Group	  	Payroll
	Human Resources	  	Shared Services
	International	  	Business Continuity Planning – Employee Accountability System (UK)
	International	  	Business Continuity Planning – Work Area Recovery (UK)
	Mortgage Lending	  	Finance
	Mortgage Lending	  	Lending
	Technology	  	Infrastructure

  

	*	Service to be provided for a term not exceeding 18 months 

 Discover
agrees to furnish supplementally to the Securities and Exchange Commission a copy of the schedules to this agreement upon the request of the Securities and Exchange Commission in accordance with Item 601(b)(2) of Regulation S-K. 
  

 3

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