Document:

Exhibit
10.1

     

    
       

      EXECUTION COPY

      
        

        

      

      

      
 

      

      

      

      JOINT
VENTURE CONTRIBUTION AND FORMATION AGREEMENT

       

      by and
between

      

      CITIGROUP
INC.

      

      and

      

      MORGAN
STANLEY

      

      

      

      

      Dated as
of January 13, 2009

       

      
 

      
        

      

      
        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      TABLE OF CONTENTS

      

      Page

       

      
        	
                ARTICLE
      1

              	
                DEFINITIONS

              	
                1

              
	
                Section
      1.1

              	
                Defined
      Terms

              	
                1

              
	 
      	 
      	 
      
	
                ARTICLE
      2

              	
                FORMATION
      OF VENTURE; CLOSING; RELATED

              	 
      
	 	

                TRANSACTIONS

              	

                25

              
	
                Section
      2.1

              	
                Formation
      of Company

              	
                25

              
	
                Section
      2.2

              	
                Transactions
      Prior to the Closing

              	
                25

              
	
                Section
      2.3

              	
                Time
      and Place of the Closing

              	
                27

              
	
                Section
      2.4

              	
                Deliveries
      and Other Actions at the Closing

              	
                27

              
	
                Section
      2.5

              	
                Post-Closing
      Adjustments

              	
                29

              
	 
      	 
      	 
      
	
                ARTICLE
      3

              	
                REPRESENTATIONS
      AND WARRANTIES

              	
                31

              
	
                Section
      3.1

              	
                Representations
      and Warranties of Citigroup

              	
                31

              
	
                Section
      3.2

              	
                Representations
      and Warranties of Morgan Stanley

              	
                36

              
	
                 
      

              	 
      	 
      
	
                ARTICLE
      4

              	
                CERTAIN
      INTERIM AND OTHER COVENANTS

              	
                41

              
	
                Section
      4.1

              	
                Conduct
      of Business Prior to Closing

              	
                41

              
	
                Section
      4.2

              	
                Access
      to Information

              	
                45

              
	
                Section
      4.3

              	
                Consents;
      Conditions; Further Assurances

              	
                46

              
	
                Section
      4.4

              	
                Sufficiency
      of Assets

              	
                49

              
	
                Section
      4.5

              	
                Tax
      Matters

              	
                50

              
	
                Section
      4.6

              	
                Real
      Estate Matters

              	
                55

              
	
                Section
      4.7

              	
                Transaction
      Documents

              	
                55

              
	
                Section
      4.8

              	
                Actions
      by Subsidiaries

              	
                56

              
	
                Section
      4.9

              	
                Negotiations
      with Others

              	
                56

              
	
                Section
      4.10

              	
                Termination
      of Agreements

              	
                56

              
	 
      	 
      	 
      
	
                ARTICLE
      5

              	
                CONDITIONS
      TO CLOSING

              	
                57

              
	
                Section
      5.1

              	
                Conditions
      to Citigroup’s Obligations

              	
                57

              
	
                Section
      5.2

              	
                Conditions
      to Morgan Stanley’s Obligations

              	
                58

              
	 
      	 
      	 
      
	
                ARTICLE
      6

              	
                INDEMNIFICATION

              	
                59

              
	
                Section
      6.1

              	
                Survival
      of Representations and Warranties

              	
                59

              
	
                Section
      6.2

              	
                Indemnification

              	
                60

              
	
                Section
      6.3

              	
                Limitations
      on Amounts

              	
                61

              
	
                Section
      6.4

              	
                Other
      Indemnification Provisions

              	
                61

              
	
                Section
      6.5

              	
                Procedures

              	
                63

              
	
                Section
      6.6

              	
                Procedures
      for Non-Party Claims other than Ordinary Course

              	 
      
	 	

                Customer
      Claims

              	

                63

              
	
                Section
      6.7

              	
                Ordinary
      Course Customer Claims

              	
                65

              
	
                Section
      6.8

              	
                Mutual
      Assistance

              	
                66

              
	 
      	 
      	 
      
	
                ARTICLE
      7

              	
                FURTHER
      AGREEMENTS

              	
                66

              

      

      

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

      

      
        	
                Section 7.1

              	
                No
      Commitments

              	
                66

              
	
                Section
      7.2

              	
                Further
      Assurances

              	
                66

              
	 
      	 
      	 
      
	
                ARTICLE
      8

              	
                TERM
      AND TERMINATION

              	
                67

              
	
                Section
      8.1

              	
                Termination
      Prior to Closing

              	
                67

              
	
                Section
      8.2

              	
                Termination
      After Closing

              	
                68

              
	
                Section
      8.3

              	
                Effect
      of Termination

              	
                68

              
	 
      	 
      	 
      
	
                ARTICLE
      9

              	
                MISCELLANEOUS

              	
                68

              
	
                Section
      9.1

              	
                Expenses

              	
                68

              
	
                Section
      9.2

              	
                Publicity

              	
                68

              
	
                Section
      9.3

              	
                Amendment
      or Modification

              	
                69

              
	
                Section
      9.4

              	
                Waiver

              	
                69

              
	
                Section
      9.5

              	
                Entire
      Agreement

              	
                69

              
	
                Section
      9.6

              	
                Third-Party
      Beneficiaries

              	
                69

              
	
                Section
      9.7

              	
                Non-Assignability;
      Binding Effect

              	
                69

              
	
                Section
      9.8

              	
                Severability

              	
                69

              
	
                Section
      9.9

              	
                Injunctive
      Relief

              	
                70

              
	
                Section
      9.10

              	
                GOVERNING
      LAW

              	
                70

              
	
                Section
      9.11

              	
                Submission
      to Jurisdiction

              	
                70

              
	
                Section
      9.12

              	
                WAIVER
      OF JURY TRIAL

              	
                70

              
	
                Section
      9.13

              	
                Notices

              	
                71

              
	
                Section
      9.14

              	
                Counterparts

              	
                72

              
	
                Section
      9.15

              	
                Interpretation

              	
                72

              
	
                Section
      9.16

              	
                Schedules

              	
                72

              

      

      

      
        
          
          

        

        
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      SCHEDULES

      

      
        	
                Schedule

              	 	
                Description

              
	 
      	 	 
      
	
                Schedule
      1.1(a)(1)

              	 	
                Citigroup
      Contributed Assets

              
	 
      	 	 
      
	
                Schedule
      1.1(b)(1)

              	 	
                Citigroup
      Contributed Subsidiaries

              
	 
      	 	 
      
	
                Schedule
      1.1(b)(2)

              	 	
                Morgan
      Stanley Contributed Subsidiaries

              
	 
      	 	 
      
	
                Schedule
      1.1(c)(1)

              	 	
                Citigroup
      Excluded Assets

              
	 
      	 	 
      
	
                Schedule
      1.1(c)(2)

              	 	
                Morgan
      Stanley Excluded Assets

              
	 
      	 	 
      
	
                Schedule
      1.1(d)(1)

              	 	
                Citigroup
      Contributed Leased Real Property

              
	 
      	 	 
      
	
                Schedule
      1.1(d)(2)

              	 	
                Morgan
      Stanley Contributed Leased Real Property

              
	 
      	 	 
      
	
                Schedule
      1.1(e)(1)

              	 	
                Citigroup
      Contributed Real Property

              
	 
      	 	 
      
	
                Schedule
      1.1(f)(1)

              	 	
                Financial
      Statements of the Citigroup Contributed Business

              
	 
      	 	 
      
	
                Schedule
      1.1(f)(2)

              	 	
                Financial
      Statements of the Morgan Stanley Contributed Business

              
	 
      	 	 
      
	
                Schedule
      3.1(e)

              	 	
                Citigroup
      Governmental Approvals and Third Party Approvals

              
	 
      	 	 
      
	
                Schedule
      3.2(e)

              	 	
                Morgan Stanley
      Governmental Approvals and Third Party 

                  Approvals

                

              
	 
      	 	 
      
	
                Schedule
      3.1(f)

              	 	
                Financial Statements,
      Undisclosed Liabilities, No Material Adverse 

                  Effect

                

              
	 
      	 	 
      
	
                Schedule
      4.1(1)

              	 	
                Citigroup
      Conduct of Business Prior to Closing

              
	 
      	 	 
      
	
                Schedule
      4.10(c)(1)

              	 	
                Citigroup
      Intercompany Agreements

              
	 
      	 	 
      
	
                Schedule
      4.10(c)(2)

              	 	
                Morgan
      Stanley Intercompany Agreements

              
	 
      	 	 
      
	
                Schedule
      5.1(d)

              	 	
                Governmental
      Approvals Required for Closing

              
	 
      	 	 
      
	
                Schedule
      6

              	 	
                Employee
      Matters Covenants

              

      

      

      
        
          
          

        

        
          -iii-

          
            

          

        

        
          
          

        

      

       

      EXHIBITS

      

      
        	
                Exhibit

              	 	
                Description

              
	 
      	 	 
      
	
                Exhibit
      A

              	 	
                Terms
      of Deposit Sweep Agreement

              
	 
      	 	 
      
	
                Exhibit
      B

              	 	
                Terms
      of Distribution Agreements

              
	 
      	 	 
      
	
                Exhibit
      C

              	 	
                Terms
      of Employee Matters Agreement

              
	 
      	 	 
      
	
                Exhibit
      D

              	 	
                Terms
      of General Transition Services Agreements

              
	 
      	 	 
      
	
                Exhibit
      E

              	 	
                Terms
      of Limited Liability Company Agreement

              
	 
      	 	 
      
	
                Exhibit
      F

              	 	
                Terms
      of Order Flow Agreements

              
	 
      	 	 
      
	
                Exhibit
      G

              	 	
                Terms
      of Research Agreements

              

      

      

      
        
          
          

        

        
          -iv-

          
            

          

        

        
          
          

        

         

      

      JOINT VENTURE CONTRIBUTION AND FORMATION AGREEMENT

      

      THIS JOINT
VENTURE CONTRIBUTION AND FORMATION AGREEMENT (this “Agreement”) is made
as of January 13, 2009, by and between Citigroup Inc., a Delaware corporation
(“Citigroup”),
and Morgan Stanley, a Delaware corporation (“Morgan Stanley”)
(hereinafter, each of which may be called a “Party” and may
collectively be called the “Parties”).

      

      RECITALS

      

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

      

      B. The
Parties desire to contribute their respective Contributed Businesses to a
Delaware limited liability company to be formed pursuant to Section 2.1 (such
entity and any successor thereof, the “Company”).

      

      C. The
Parties desire to enter into this Agreement to set forth the terms and
conditions for the formation of the Company.

      

      ARTICLE
1 DEFINITIONS

      

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

      

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

      

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

      

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

      

      “Affiliate” means with
respect to any Person, any other Person directly or indirectly controlling,
controlled by, or under common control with such other Person, including but not
limited to such Person’s Subsidiaries; and “control” (including,
with correlative meanings, the terms “controlled by” and
“under common control
with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise. Unless otherwise specifically stated, the term “Affiliate” does not
include: (x) the Company Entities when used with respect to any Party, any
Citigroup Entity or any Morgan Stanley Entity, and (y) the Citigroup Entities or
the Morgan Stanley Entities when used with respect to any Company Entity. “Affiliated” and
“Affiliation”
shall have correlative meanings.

      

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

      

      “Applicable Taxes”
means (i) entity-level Taxes imposed on the Company Entities with respect to a
Contributed Business and (ii) if a Contributed Asset is transferred to the
Company other than through a transfer of Citigroup Contributed Equity Interests
or Morgan Stanley Contributed Equity Interests, as the case may be, non-income
Taxes (other than Transfer Taxes) with respect to such Contributed
Asset.

      

      “Benefit Plan” shall
mean, as applicable, (i) a Citigroup Contributed Business Benefit Plan or
Citigroup Contributed Subsidiary Benefit Plan, and (ii) a Morgan Stanley
Contributed Business Benefit Plan or Morgan Stanley Contributed Subsidiary
Benefit Plan.

      

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

      

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

      

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

      

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      the bankruptcy, insolvency, dissolution, winding-up, general
assignment for the benefit of creditors or receivership of such Person or other
similar proceeding or event.

      

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

      

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

      

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

      

      
        (ii)  the
Citigroup Contributed Equity Interests;

      

      

      
        (iii)  Citigroup’s
Contributed Real Property;

      

      

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

      

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

      

      

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

      

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

      

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

      

      
        (ix)  the
Citigroup Contributed Contracts;

      

      

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

      

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      Citigroup Contributed Business and the Citigroup Excluded Businesses
shall be copied and a copy thereof shall be included within the Citigroup
Contributed Assets) and (B) any income Tax Returns of any Citigroup Entity or
any group of entities that includes a Citigroup Entity;

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

         

      

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

      

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

      

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

      

      

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

      

      

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

      

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

      

      “Citigroup Contributed
Business Benefit Plans” means each Employee Benefit Plan, other than a
Citigroup Contributed Subsidiary Benefit Plan, that has been sponsored by
Citigroup or any of its Subsidiaries and that provides, has provided or will
provide benefits or compensation (assuming any vesting, performance or other
benefit requirements are met) (i) in respect of any Citigroup Contributed
Business Individual or (ii) in respect of which any Company Entity has or may
have any present or future liability.

      

      “Citigroup Contributed
Business Individuals” means the employees and independent contractors of
Citigroup and its Subsidiaries who (i) primarily provide services in connection
with the Citigroup Contributed Business or (ii) are individuals that the Parties
agree prior to the Closing should be treated as Citigroup Contributed Business
Individuals in light of such individuals’ duties and
responsibilities.

      

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

      

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

         

      

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

      

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

      

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

      

      “Citigroup Contributed
Subsidiaries” means as of any date the Subsidiaries of Citigroup listed
on Schedule 1.1(b)(1) (to the extent in existence on the date hereof); provided that the
term “Citigroup Contributed Subsidiaries” shall in the case of Citigroup Contributed
Subsidiaries to be formed after the date of this Agreement, refer to such
entities from and after the date of their formation.

      

      “Citigroup Contributed
Subsidiary Benefit Plan” means each Employee Benefit Plan that is
sponsored by a Citigroup Contributed Subsidiary for the benefit of any current
or former employee, officer, director or independent contractor of the
Subsidiary or any beneficiary or dependent thereof.

      

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

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      

      “Citigroup
Employment Agreements” means any Employment Agreement of a Citigroup
Contributed Business Individual.

      

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

      

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

      

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

      

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

      

      “Citigroup Excluded
Employment Liabilities” means those liabilities, obligations and duties
intended to be treated as such under the terms of the Employee Matters Agreement
and Schedule 6.

      

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

      

      “Citigroup Excluded
Taxes” means any liability, obligation or commitment, whether or not
accrued, assessed or currently due and payable: (i) for any Taxes imposed on or
payable by the Citigroup Entities or with respect to the Citigroup Excluded
Businesses, Citigroup Excluded Assets or Citigroup Excluded Liabilities for any
taxable period; (ii) for any Taxes imposed on or payable by the Citigroup
Contributed Subsidiaries or with respect to the Citigroup Contributed Business,
the Citigroup Contributed Assets or the Citigroup Contributed Liabilities with
respect to any Pre- Closing Tax Period; (iii) for any Taxes of or imposed on any
of the Citigroup Contributed Subsidiaries as a result of Treasury Regulation
Section 1.1502-6(a) (or any similar provision of state, local or foreign Law) as
a result of having been a member of any consolidated, combined, unitary or
affiliated group prior to the Closing; (iv) for any Taxes resulting from any
extraordinary transaction outside the ordinary course of business undertaken by
Citigroup or any of its Affiliates in anticipation of the Closing, including (x)
Taxes with respect to the Citigroup Reorganization (other than Transfer Taxes
required to be borne by Morgan Stanley pursuant to Section 4.5(h)) and (y)
Taxes

      

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      

      with respect to the transactions contemplated by Section 4.10(d);
(v) for any obligation or other liability of a Citigroup Contributed Subsidiary
to indemnify any other Person in respect of or relating to Taxes or to pay an
amount pursuant to a Tax sharing or Tax allocation agreement (other than any
obligation or liability arising under an agreement entered into by a Citigroup
Contributed Subsidiary after the Closing); and (vi) for any Transfer Taxes to
the extent required to be borne by Citigroup pursuant to Section
4.5(h).

      

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

      

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

      

      “Citigroup Tangible Book
Value” means, as of the Closing Date and based on the respective amounts
shown on the Final Closing Balance Sheet of the Citigroup Contributed Business,
the total assets minus goodwill and other intangibles (excluding COLI) minus
total liabilities of the Citigroup Contributed Business, as determined in
accordance with Section 2.5.

      

      “Citigroup
Transferees” means all Citigroup Contributed Business Individuals who, as
of the Service Transfer Date, become employed by (or become independent
contractors of, as the case may be) a Company Entity.

      

      “Citigroup
Transferors” means Citigroup and each Subsidiary of Citigroup that owns
(or, in the case of Citigroup Contributed Liabilities, is responsible for), as
of the date hereof or as of the Closing Date, (i) any equity interest in any
Citigroup Contributed Subsidiary, (ii) any Citigroup Contributed Assets or (iii)
any Citigroup Contributed Liabilities.

      

      “Citigroup Transferred
Plan” means a Citigroup Contributed Business Benefit Plan (or the portion
thereof) and the assets relating thereto, pursuant to Section 3.1 of Schedule 6,
that are contributed to the Company, or expressly assumed by a Company Entity.
Notwithstanding any other provision of this Agreement to the contrary, a
Citigroup Employment Agreement shall only be a Citigroup Transferred Plan if the
Citigroup Contributed Business Individual covered by the Citigroup Employment
Agreement becomes a Citigroup Transferee.

      

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

      

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

      

      “Closing Date” has the
meaning set forth in Section 2.3.

      

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

      

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

      

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

         

      

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

      

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

      

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

      

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

      

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

      

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

      

      “Contributed Business
Individuals” means, collectively, the Citigroup Contributed Business
Individuals and the Morgan Stanley Contributed Business
Individuals.

      

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

      

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

      

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

      

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

      

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

      

      “Contributed Real Property
Lease” means any lease or sublease (or allocable portion thereof) by or
under which Citigroup or one of its Subsidiaries or other
Affiliates

      

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      or Morgan Stanley or one of its Subsidiaries or other Affiliates
holds a leasehold interest or uses or occupies or has the right to use or occupy
any Contributed Leased Real Property or any portion thereof or interest
therein.

      

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

      

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

      

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

      

      “CPA Firm” has the
meaning set forth in Section 2.5(b).

      

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

      

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

      

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

      

      “Deposit Sweep
Agreement” means the agreement among the Parties and the Company,
containing the terms set forth in Exhibit A hereto, to be entered into pursuant
to Section 2.4.

      

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

      

      “Distribution
Agreements” means agreements among each of the Parties and the Company,
containing the terms set forth in Exhibit B hereto, to be entered into pursuant
to Section 2.4.

      

      “Employee Benefit
Plan” means any employee benefit plan, program, policy or other
arrangement providing benefits, whether or not written, including without
limitation any employee welfare benefit plan within the meaning of Section 3(1)
of ERISA, any employee pension benefit plan within the meaning of Section 3(2)
of ERISA (whether or not such plan is subject to ERISA) and any Employment
Agreement, bonus, incentive or deferred compensation, employee loan, severance,
termination, retention, change of control, stock option, stock appreciation,
stock purchase, phantom stock or other equity- based, performance or other
employee or retiree benefit or compensation plan, program, arrangement,
agreement or policy.

      

      “Employee Matters
Agreement” means the agreement to be entered into among the Parties and
the Company, containing the terms set forth in Exhibit C hereto, to be entered
into pursuant to Section 2.4.

      

      “Employment Agreement”
means a contract, offer letter or agreement of an individual with or addressed
to any individual who is rendering or has rendered services thereto as an
employee or consultant (other than on an at-will basis) pursuant to which the
Person or any of its Affiliates has any actual or contingent liability or
obligation to

      

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

      provide compensation and/or benefits in consideration for past,
present or future services, or in respect of the termination of any such
services.

      

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

      

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

      

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

      

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

      

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

      

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

      

      “Final Closing Balance
Sheet” has the meaning set forth in Section 2.5(b).

      

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

      

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

         

      

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

      

      “FINRA” means the
Financial Industry Regulatory Authority.

      

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

      

      “General Transition Services
Agreement” means the agreements among each of the Parties and the
Company, containing the terms set forth on Exhibit D hereto, to be entered into
pursuant to Section 2.4.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

      

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

      

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

      

      “Interests” or “Membership Interests”
means the limited liability company interests of the Company as contemplated by
the LLC Agreement, and such other equity interests of the Company or any
successor to the Company into which such interests may be
converted.

      

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

      

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

      

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

      

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

      

      “LLC Agreement” means
the Limited Liability Company Agreement among the Parties, each Initial
Citigroup Member and each Initial Morgan Stanley Member, to be entered into
pursuant to Section 2.4 hereof, containing the terms set forth in Exhibit E
hereto.

      

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

      

      “Material Adverse
Effect” means (x) with respect to a Person, a material and adverse effect
on the business, operations, financial condition or results of operations
of

      

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

       

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

      

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

      

      such Parent Event (or the underlying cause of such Parent Event)
directly and adversely affects the business, operations, financial condition or
results of operations of such Party's Contributed Business, taken as a whole,
subject to the limitations set forth above in this definition.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      (viii) agreements,
any of the benefits of which will be reduced, increased, accelerated, delayed or
otherwise modified by virtue of the consummation of the

      

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

      

      transactions contemplated hereby in any respect material to the
Company Entities as a whole; and

      

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

      

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

      

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

      

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

      

      
        (ii) the Morgan
Stanley Contributed Equity Interests;

      

      

      
        (iii) Morgan
Stanley’s Contributed Real Property;

      

      

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

      

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

      

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

      

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

      

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

      

      
        (ix) the Morgan
Stanley Contributed Contracts;

      

      

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

      

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

      

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

      

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

      

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

      

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

      

      

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

      

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

      

      “Morgan Stanley Contributed
Business Benefit Plans” means each Employee Benefit Plan, other than a
Morgan Stanley Contributed Subsidiary Benefit Plan, that has been sponsored by
Morgan Stanley or any of its Subsidiaries and that provides, has provided or
will provide benefits or compensation (assuming any vesting, performance or
other benefit requirements are met) (i) in respect of any Morgan Stanley
Contributed Business Individual or (ii) in respect of which any Company Entity
has or may have any present or future liability.

      

      “Morgan Stanley Contributed
Business Individuals” means the employees and independent contractors of
Morgan Stanley and its Subsidiaries who (i) primarily provide services in
connection with the Morgan Stanley Contributed Business or (ii) are

      

      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

      

      individuals that the Parties agree prior to the Closing should be
treated as Morgan Stanley Contributed Business Individuals in light of such
individuals’ duties and responsibilities.

      

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

      

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

      

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

      

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

      

      “Morgan Stanley Contributed
Subsidiaries” means as of any date the Subsidiaries of Morgan Stanley
listed on Schedule 1.1(b)(2) (to the extent in existence on the date hereof);
provided that
the term “Morgan Stanley Contributed Subsidiaries” shall in the

      

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

       

      case of Morgan Stanley Contributed Subsidiaries to be formed after
the date of this Agreement, refer to such entities from and after the date of
their formation.

      

      “Morgan Stanley Contributed
Subsidiary Benefit Plan” means each Employee Benefit Plan that is
sponsored by a Morgan Stanley Contributed Subsidiary for the benefit of any
current or former employee, officer, director or independent contractor of the
Subsidiary or any beneficiary or dependent thereof.

      

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

      

      “Morgan Stanley Employment
Agreements” means any Employment Agreement of a Morgan Stanley
Contributed Business Individual.

      

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

      

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

      

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

      

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

      

      “Morgan Stanley Excluded
Employment Liabilities” means those liabilities, obligations and duties
intended to be treated as such under the terms of the Employee Matters Agreement
and Schedule 6.

      

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

      

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

      

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

       

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

      

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

      

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

      

      “Morgan Stanley Tangible Book
Value” means, as of the Closing Date and based on the respective amounts
shown on the Final Closing Balance Sheet of the Morgan Stanley Contributed
Business, the total assets minus goodwill and other intangibles minus total
liabilities of the Morgan Stanley Contributed Business, as determined in
accordance with Section 2.5.

      

      “Morgan Stanley
Transferees” means all Morgan Stanley Contributed Business Individuals
who, as of the Service Transfer Date, become employed by (or become independent
contractors of, as the case may be) a Company Entity.

      

      “Morgan Stanley
Transferors” means Morgan Stanley and each Subsidiary of Morgan Stanley
that owns (or, in the case of Morgan Stanley Contributed Liabilities, is
responsible for), as of the date hereof or as of the Closing Date, (i) any
equity interest in any Morgan Stanley Contributed Subsidiary, (ii) any Morgan
Stanley Contributed Assets or (iii) any Morgan Stanley Contributed
Liabilities.

      

      “Morgan Stanley Transferred
Plan” means a Morgan Stanley Contributed Business Benefit Plan (or the
portion thereof) and the assets relating thereto, pursuant to Section 3.1 of
Schedule 6, that are contributed to the Company, or expressly assumed by a
Company Entity. Notwithstanding any other provision of this Agreement to the
contrary, a Morgan Stanley Employment Agreement shall only be a Morgan Stanley
Transferred Plan if the Morgan Stanley Contributed Business Individual covered
by the Morgan Stanley Employment Agreement becomes a Morgan Stanley
Transferee.

      

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

      

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

      

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

      

      “NYSE” means the New
York Stock Exchange.

      

      “Objection” has the
meaning set forth in Section 2.5(b).

      

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

      

      “Order Flow
Agreements” means the agreements among each of the Parties and the
Company, containing the terms set forth in Exhibit F hereto, to be entered into
pursuant to Section 2.4.

      

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

      

      “Party” and “Parties” have the
respective meanings set forth in the preamble hereto.

      

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

      

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

      

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

         

      

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

      

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

      

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

      

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

      

      “Preliminary Closing Balance
Sheets” has the meaning set forth in Section 2.5(a)(ii).

      

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

      

      “Preparing Party” has
the meaning set forth in Section 2.5(b).

      

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

      

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

      

      “Receiving Party” has
the meaning set forth in Section 2.5(b).

      

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

      

      “Research Agreements”
means the agreements among each of the Parties and the Company, containing the
terms set forth in Exhibit G hereto, to be entered into pursuant to Section
2.4.

      

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

      

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

      

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

      

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

      

      “Subsidiary” means,
with respect to any Person, any corporation fifty percent (50%) or more of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation is at the time owned by
such Person, directly or indirectly through one or more Subsidiaries,
and

      

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

       

      any other Person, including but not limited to a joint venture, a
general or limited partnership or a limited liability company, in which such
Person, directly or indirectly through one or more Subsidiaries, at the time
owns at least fifty percent (50%) or more of the ownership interests entitled to
vote in the election of managing partners, managers or trustees thereof (or
other Persons performing such functions) or acts as the general partner,
managing member, trustee (or Persons performing similar functions) of such other
Person; provided that,
notwithstanding the foregoing, the Company Entities shall not be deemed a
Subsidiary of any Morgan Stanley Entity or Citigroup Entity on or after the
Closing.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      “Transaction
Documents” means this Agreement, the LLC Agreement, the Distribution
Agreements, the Deposit Sweep Agreement, the General Transition Services
Agreement, the Order Flow Agreements, the Employee Matters Agreement, the Real
Property Transfer Documents and the Research Agreements.

      

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

        

      

      

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

      

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

      

      ARTICLE
2

      

      FORMATION
OF VENTURE; CLOSING; RELATED TRANSACTIONS

      

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

      

      Section
2.2 Transactions Prior
to the Closing. Subject to the terms and conditions hereof, prior to the
Closing:

      

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

      

      
        
          
          

        

        
          -25-

          
            

          

        

        
          
          

        

      

      

      fair market value of all entities described in this clause (B) does
not exceed $50 million, or (C) any entity that is characterized, for federal
income tax purposes, as a foreign corporation and conducts a trade or business
within the United States.

      

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

      

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

      

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

      

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

      

      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

        

         

      

      such Contributed Subsidiary to the Company, such Contributed
Subsidiary is treated as a “disregarded entity” for federal income tax
purposes.

      

      Section
2.3 Time and Place of
the Closing. Subject to the provisions of Article 5, the closing (the
“Closing”) of
the transactions contemplated hereby shall take place at the offices of
Wachtell, Lipton, Rosen & Katz, at 10:00 a.m., New York time, on the
second-to-last Business Day of the calendar month that is not less than three
Business Days following the date on which the conditions set forth in Article 5
have been satisfied or waived, excluding conditions that by their terms are to
be satisfied on the Closing Date, or such other place, time and/or date as is
mutually agreed upon by the Parties. The date on which the Closing occurs is
herein called the “Closing Date.” The
Closing shall be effective as of 11:59 p.m., New York time, on the Closing
Date.

      

      Section
2.4      Deliveries and Other Actions
at the Closing.

      

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

      

      (b) At the
Closing, Citigroup shall, and shall cause each of the Citigroup Transferors to,
transfer, assign and deliver to the Company, as a capital contribution to the
Company, all of their respective right, title and interest in and to the
Citigroup Contributed Assets, free and clear of all Liens, other than Permitted
Liens and Liens created pursuant to the Transaction Documents, and in
consideration therefor, the Company shall issue Membership Interests to the
Initial Citigroup Member(s);

      

      (c) At the
Closing, Morgan Stanley shall, and shall cause each of the Morgan Stanley
Transferors to, transfer, assign and deliver to the Company, as a capital
contribution to the Company, all of their respective right, title and interest
in and to the Morgan Stanley Contributed Assets, free and clear of all Liens,
other than Permitted Liens and Liens created pursuant to the Transaction
Documents, and in consideration therefor, the Company shall issue Membership
Interests to the Initial Morgan Stanley Member(s);

      

      (d) On the day
following the Closing, which shall in any event be the last Business Day of a
calendar month, Morgan Stanley shall pay to Citigroup, by wire transfer of
immediately available funds to an account of Citigroup identified to Morgan
Stanley at least three Business Days prior to Closing, the amount of $2.7
billion, and Citigroup shall transfer in exchange for such payment a number of
Membership Interests such that following such transfer Morgan Stanley shall own
aggregate Membership Interests representing an aggregate ownership percentage of
the Company equal to fifty- one percent (51%) and Citigroup shall own an
aggregate ownership percentage of the Company equal to forty-nine percent
(49%);

      

      (e) At the
Closing, Citigroup, Morgan Stanley and the Company and each of their
Subsidiaries that are a party thereto, if any, shall execute and deliver each of
the Transaction Documents (it being agreed that if the full terms and conditions
of any Transaction Documents cannot be agreed prior to Closing, the terms set
forth in the

      

      
        
          
          

        

        
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      applicable Exhibit associated with any such Transaction Document
shall be deemed to be the full terms and conditions of such Transaction Document
and shall be binding from and after the Closing unless and until superseded by a
full agreement mutually agreed by the Parties with respect to such Transaction
Document). The Transaction Documents shall reflect the terms set forth on the
applicable Exhibits, shall be in form and substance reasonably satisfactory to
each Party and shall not contain any terms not contemplated by the applicable
Exhibit which would materially impact or alter the rights or obligations of any
of the parties thereunder;

      

      (f) At the
Closing, the Parties and the Company shall, and shall cause their respective
applicable Subsidiaries to, execute and deliver such additional instruments of
assignment and conveyance as are necessary and appropriate to convey the
Citigroup Contributed Assets and the Morgan Stanley Contributed
Assets;

      

      (g) At the
Closing, the Parties shall execute and deliver, on behalf of themselves and
their respective Affiliates, mutually acceptable releases providing for the
release of any Claims relating to their respective Contributed Businesses,
except as may arise in connection with this Agreement and the other Transaction
Documents;

      

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

      

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

      

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

      

      (k) At the
Closing, Morgan Stanley shall cause the Company to execute and deliver a written
agreement (which shall be in form and substance reasonably satisfactory to
Citigroup) to be bound by the terms and conditions of this Agreement that are
applicable to the Company and thereafter the Company shall be deemed a “Party”
for purposes of this Agreement.

      

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

      

      
        
          
          

        

        
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      Section 2.5      Post-Closing
Adjustments.

      

      (a) Within
90 days after the Closing Date: (i) Citigroup shall prepare and deliver (or
cause to be prepared and delivered) to Morgan Stanley and the Company an audited
balance sheet for the Citigroup Contributed Business as of the Closing Date
(immediately prior to giving effect to the Closing) (the “Preliminary Citigroup
Closing Balance Sheet”), which shall be prepared in accordance with GAAP
applied on a basis consistent in all respects (except that the Preliminary
Citigroup Closing Balance Sheet shall exclude income tax assets and liabilities
(including deferred income tax assets and liabilities)) with the preparation of
the Financial Statements of the Citigroup Contributed Business, and shall be
accompanied by the auditors’ report thereon from Citigroup’s accountants, and
(ii) Morgan Stanley shall prepare and deliver (or cause to be prepared and
delivered) to Citigroup and the Company an audited balance sheet for the Morgan
Stanley Contributed Business as of the Closing Date (immediately prior to giving
effect to the Closing) (the “Preliminary Morgan Stanley
Closing Balance Sheet” and collectively with the Preliminary Citigroup
Closing Balance Sheet, the “Preliminary Closing
Balance Sheets”), which shall
be prepared in accordance with GAAP applied on a basis consistent in all respects
(except that the Preliminary Morgan Stanley Closing Balance Sheet shall exclude
income tax assets and liabilities (including deferred income tax assets and
liabilities)) with the preparation of the Financial Statements of the Morgan
Stanley Contributed Business, and shall be accompanied by the auditors’ report
thereon from Morgan Stanley’s accountants. For the avoidance of doubt, (i) the
Preliminary Closing Balance Sheets and the Final Closing Balance Sheets shall
reflect only the respective Contributed Businesses and shall not reflect any
businesses or any categories of assets or liabilities that were excluded from
the Financial Statements of the Citigroup Contributed Business or the Financial
Statements of the Morgan Stanley Contributed Business, as applicable, and (ii)
the Financial Statements of the Citigroup Contributed Business and the Financial
Statements of the Morgan Stanley Contributed Business shall be deemed to have
been prepared in accordance with GAAP, and neither Party (nor any representative
thereof) shall make any claim to the contrary, nor shall the CPA Firm be
entitled to make any finding to the contrary, for any purpose of this Section
2.5(a). Each of the Parties shall pay the fees and disbursements of its
accountants. The Company and the Parties shall make reasonably available to each
other and to their respective accountants all relevant books and records, any
work papers (including accountants’ work papers) and other supporting
documentation relating to the Preliminary Closing Balance Sheets.

      

      (b) In the
event that, within 60 days after delivery by one Party (the “Preparing Party”) to
the other Party (the “Receiving Party”) and
the Company of the Preparing Party’s Preliminary Closing Balance Sheet, such
Receiving Party determines that the Preliminary Closing Balance Sheet so
received has not been prepared on a basis consistent with the requirements of
Section 2.5(a), the Receiving Party shall have the right (but not the
obligation) to, on or before the last day of such 60-day period, deliver a
written objection (an “Objection”) to the
Company and the Preparing Party, setting forth, in reasonable detail, the basis
of the Objection and the adjustments to such Preliminary Closing Balance Sheet
which the Receiving Party believes should be made, and the Receiving Party shall
be deemed to have accepted any items not specifically disputed in the Objection;
provided that,
for a period of 15 days following a Receiving Party’s receipt of an Objection to
such Receiving Party’s Preliminary Closing Balance Sheet, the Receiving Party
shall have the right (but not the obligation) to deliver to the Company and the
Preparing Party additional objections to the Preparing Party’s
Preliminary

      

      
        
          
          

        

        
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      Closing Balance Sheet that are based on similar arguments and are of
the same type as the objections that were made by the Preparing Party to the
Receiving Party’s Preliminary Closing Balance Sheet. Failure to notify the
Company and the Preparing Party of an Objection shall constitute acceptance and
approval of such Preliminary Closing Balance Sheet. The Parties shall then have
30 days following the date the Preparing Party receives any Objection
(including, if later, any additional objection made pursuant to the proviso of
the second preceding sentence) to review and respond to such Objection. If the
Parties do not resolve all of their disagreements with respect to the foregoing
by the 30th day following the Preparing Party’s receipt of an Objection
(including, if later, any additional objection made pursuant to the proviso of
the third preceding sentence), they shall refer their remaining differences to a
nationally recognized firm of independent public accountants as to which the
Parties shall mutually agree (the “CPA Firm”), who
shall, acting as experts in accounting and not as arbitrators, determine on a
basis consistent with the requirements of Section 2.5(a), and only with respect
to the specific remaining accounting-related differences set forth in the
applicable Objection and so submitted to the CPA Firm, whether and to what
extent, if any, the relevant Preliminary Closing Balance Sheet(s) require(s)
adjustment in order to comply with the provisions of Section 2.5(a). In the
event that Objections are pending with respect to both Preliminary Closing
Balance Sheets, the Parties shall submit all such Objections to the same CPA
Firm to be considered and resolved at the same time. The Parties shall request
the CPA Firm to use its best efforts to render its determination within 45 days
of its engagement. The CPA Firm’s determination shall be conclusive and binding
upon the Company and the Parties. The Company and the Parties shall make
reasonably available to the CPA Firm and to each other all relevant books and
records, any work papers (including those of the Parties’ respective
accountants) and supporting documentation relating to the Preliminary Closing
Balance Sheets and all other items reasonably requested by the CPA Firm or the
other Party in connection herewith. The “Final Closing Balance
Sheet” of the Citigroup Contributed Business or the Morgan Stanley
Contributed Business, as the case may be, shall be (i) the applicable
Preliminary Closing Balance Sheet if (x) no Objection is delivered during the
initial 60-day period (or, if applicable, the subsequent 15 day period)
specified above or (y) the Parties so agree, (ii) the applicable Preliminary
Closing Balance Sheet, adjusted in accordance with the Objection, in the event
that (x) the Preparing Party does not respond to the Objection during the 30-day
period specified above following receipt of the Objection or (y) the Parties so
agree, or (iii) the applicable Preliminary Closing Balance Sheet, as adjusted
pursuant to the agreement of the Parties or as adjusted by the CPA Firm as
provided above. All fees and disbursements of the CPA Firm shall be shared
equally by the Parties.

      

      (c) If the
Citigroup Tangible Book Value reflected in the Final Closing Balance Sheet of
the Citigroup Contributed Business is less than $5.35 billion, then Citigroup
shall pay such deficiency, plus interest thereon at a rate equal to LIBOR plus
60 basis points during the period from the Closing Date to the date of such
payment, to the Company in immediately available funds within three Business
Days after the ultimate determination of such Final Closing Balance Sheet. If
the Citigroup Tangible Book Value reflected in the Final Closing Balance Sheet
of the Citigroup Contributed Business is more than $5.35 billion, the Company
shall pay (without any contribution from Morgan Stanley or Citigroup) an amount
equal to such excess, plus interest thereon at a rate equal to LIBOR plus 60
basis points during the period from the Closing Date to the date of such
payment, to Citigroup in immediately available funds within three Business Days
after the ultimate determination of such Final Closing Balance Sheet. If the
Morgan Stanley Tangible Book Value reflected in the Final Closing

      

      
        
          
          

        

        
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      Balance Sheet of the Morgan Stanley Contributed Business is less
than $3.98 billion, then Morgan Stanley shall pay such deficiency, plus interest
thereon at a rate equal to LIBOR plus 60 basis points during the period from the
Closing Date to the date of such payment, to the Company in immediately
available funds within three Business Days after the ultimate determination of
such Final Closing Balance Sheet. If the Morgan Stanley Tangible Book Value
reflected in the Final Closing Balance Sheet of the Morgan Stanley Contributed
Business is more than $3.98 billion, the Company shall pay (without any
contribution from Morgan Stanley or Citigroup) an amount equal to such excess,
plus interest thereon at a rate equal to LIBOR plus 60 basis points during the
period from the Closing Date to the date of such payment, to Morgan Stanley in
immediately available funds within three Business Days after the ultimate
determination of such Final Closing Balance Sheet. Any such payments shall be
treated as capital contributions or adjustments necessary for consistency with
the agreed-upon capital allocation of the Parties’ initial ownership percentages
of the Company set forth in Sections 2.4(b) and (c) and shall not change such
allocation in any way. Any payment required to be made to a Party pursuant to
this Section 2.5(c) shall, to the extent possible, be effected in a manner that
does not result in the recognition of income or gain to that Party or its
Subsidiaries for federal income tax purposes.

      

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

      

      ARTICLE
3

      

      REPRESENTATIONS
AND WARRANTIES

      

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

      

      (a) Organization, Standing and
Power of Citigroup and Subsidiaries. Citigroup is a corporation duly
organized, validly existing and in good standing under the

      

      
        
          
          

        

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

      

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

      

      (c) Authority and
Validity. The execution and delivery of this Agreement and each other
Transaction Document to be executed and delivered by Citigroup or any of its
Subsidiaries, the performance of their respective obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby have been, or in the case of Transaction Documents not yet executed and
delivered on the date hereof,

      

      
        
          
          

        

        
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      will be by the Closing, duly and validly authorized by all necessary
corporate or comparable action on the part of such Person. This Agreement and
each other Transaction Document to be executed and delivered by Citigroup or any
of its Subsidiaries have been, or in the case of Transaction Documents not yet
executed on the date hereof will be by the Closing, duly executed and delivered
and are (or will be by Closing) valid and binding obligations of Citigroup or
such Subsidiary, as applicable, that is a party thereto, enforceable against it
in accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting creditors’ rights generally and general equitable
principles (whether considered in a proceeding in equity or at
law).

      

      (d) No Conflicts. Subject
to obtaining the Governmental Approvals and Third Party Approvals
contemplated in Section 3.1(e)(i), the execution and delivery of this Agreement
and each other Transaction Document intended to be executed by Citigroup and its
Subsidiaries, and the performance of their respective obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby (including the contribution of the Citigroup Contributed Assets and the
Citigroup Contributed Business to the Company Entities) do not (i) conflict with
or result in a breach of any provision of any of their respective articles of
incorporation or bylaws or comparable organizational documents, (ii) conflict
with, result in a breach of any provision of, constitute a default (or an event
which with notice or lapse of time or both would become a default) or give to
any Third Party any right of termination, cancellation, amendment or
acceleration under, or result in the creation of a Lien on any of their
respective properties under, or the loss or deferral of any right or the
creation or acceleration of any obligation under, any of the terms, conditions
or provisions of any note, bond, debenture, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which any of them is a
party, or by which any of them or any of their respective properties may be
bound or subject, or (iii) violate or conflict with any Law applicable to such
Person or any of its properties, except, in the cases of clauses (ii) and (iii),
as would not, individually or in the aggregate, be reasonably expected to result
in a Material Adverse Effect on the Citigroup Contributed Business.

      

      (e) Governmental and Third Party
Approvals. No Governmental Approval or Third Party
Approval is required in connection with the execution and delivery by Citigroup
and its Subsidiaries of this Agreement and the other Transaction Documents or
the performance of their respective obligations hereunder and thereunder or the
consummation by Citigroup and its Subsidiaries of the transactions contemplated
hereby and thereby, except for (i) the Governmental Approvals and Third Party
Approvals identified on Schedule 3.1(e), (ii) approvals from clients with
respect to the transfer of their brokerage and advisory accounts in connection
with the Closing and (iii) any other Governmental Approval or Third Party
Approval the failure of which to be obtained would not, individually or in the
aggregate, be reasonably expected to result in a Material Adverse Effect on the
Citigroup Contributed Business. As of the date hereof, no Governmental Authority
or Third Party, with respect to which a Governmental Approval or Third Party
Approval is required to be obtained or made in connection with the transactions
contemplated by this Agreement, has indicated to Citigroup or any of its
Affiliates an intent to (x) take any action or fail to take any action that is
reasonably

      

      
        
          
          

        

        
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      likely to prohibit, materially delay or materially impair the
consummation of the transactions contemplated by this Agreement, or (y) impose
any obligation or condition in connection with such Governmental Approval or
Third Party Approval that is reasonably likely to result in, individually or in
the aggregate, a material liability (other than ordinary course liabilities,
obligations and conditions incurred in connection with obtaining any such
Governmental Approvals) of the Company or any of its Subsidiaries after the
Closing.

      

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

      

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

      

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

      

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

      

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

      

      (g) Capitalization. All
outstanding shares of capital stock of the Citigroup Contributed Subsidiaries
(other than Citigroup Contributed Subsidiaries to be formed after the date
hereof) are duly authorized, validly issued, fully paid and nonassessable, are
subject to no preemptive or similar rights, and were not issued in violation of
any preemptive or similar rights. As of the Closing, all outstanding equity
interests of the

      

      
        
          
          

        

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

      

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

      

      (i) Compliance with Laws.
Each Citigroup Contributed Subsidiary and each Citigroup
Transferor is conducting and has since January 1, 2008 conducted the Citigroup
Contributed Business and is using and operating and has since January 1,
2008

      

      
        
          
          

        

        
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      used and operated the Citigroup Contributed Assets in compliance
with all Laws applicable to it, in each case except as would not reasonably be
expected to have a Material Adverse Effect on the Citigroup Contributed
Business.

      

      (j) Tax. During the past
three years, none of the Citigroup Contributed Subsidiaries
has been a “distributing corporation” or a “controlled corporation” in a
distribution intended to qualify under Section 355(a) of the Code. None of the
Citigroup Contributed Subsidiaries has participated in, or acted as a material
advisor with respect to, any “listed transaction” within the meaning of Treasury
Regulation Section 1.6011-4.

      

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

      

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

      

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

      

      
        
          
          

        

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

      

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

      

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

      

      
        
          
          

        

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

      

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

      

      
        
          
          

        

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

      

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

      

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

      

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

      

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

      

      (g) Capitalization. All
outstanding shares of capital stock of the Morgan Stanley Contributed
Subsidiaries (other than Morgan Stanley Contributed Subsidiaries to be formed
after the date hereof) are duly authorized, validly issued, fully paid and
nonassessable, are subject to no preemptive or similar rights, and were not
issued in violation of any preemptive or similar rights. As of the Closing, all
outstanding equity interests of the Morgan Stanley Contributed Subsidiaries will
be duly authorized and validly issued limited liability company interests or
comparable equity interests of the Morgan Stanley Contributed Subsidiaries, will
be fully paid and nonassessable, will not have been issued in violation of any
preemptive or similar rights and, except as contemplated by the Transaction
Documents, will be subject to no preemptive or similar rights. Upon contribution
by Morgan Stanley (or any of its Subsidiaries) to the Company, the Company will
acquire one hundred percent (100%) of the equity interests of the Morgan Stanley
Contributed Subsidiaries free and clear of any Liens, except for

      

      
        
          
          

        

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

      

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

      

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

      

      (j) Tax. During the past
three years, none of the Morgan Stanley Contributed Subsidiaries
has been a “distributing corporation” or a “controlled corporation” in
a

      

      
        
          
          

        

        
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        distribution intended to qualify under Section 355(a) of the Code.
None of the Morgan Stanley Contributed Subsidiaries has participated in, or
acted as a material advisor with respect to, any “listed transaction” within the
meaning of Treasury Regulation Section 1.6011-4.

        

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

        

        ARTICLE
4

        

        CERTAIN
INTERIM AND OTHER COVENANTS

        

        Section
4.1      Conduct of Business Prior to
Closing.

        

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

        

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

        

        
          
            
            

          

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

        

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

        

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

        

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

        

        (v) materially
increase, or make any binding commitment to materially increase, the benefits
provided by any Benefit Plan or the compensation levels of any Citigroup Key
Contributed Business Individuals or Morgan Stanley Key Contributed Business
Individuals, as the case may be (including any across-the- board increases for
any groups of such employees), grant any rights to severance or termination pay
to, or enter into any employment, consulting or severance agreement with, any
Citigroup Key Contributed Business Individuals or Morgan Stanley Key Contributed
Business Individuals, as the case may be (provided that this
shall not prohibit the making of any severance payments in connection with
terminations of employment occurring following the date hereof and prior to the
Closing in accordance with the terms of severance plans or agreements in
effect

        

        
          
            
            

          

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

        

        (vi) (A)
hire, or transfer from its Contributed Business the employment of, any
Contributed Business Individual or any individual who is intended to be a
Contributed Business Individual (including any employees hired as replacements
for terminating employees), or terminate any such individual in a manner
entitling such individual to severance payments, in each case, except in the
ordinary course of business consistent with past practice; (B) establish, adopt,
enter into or amend any collective bargaining agreement (or other agreement or
understanding with any trade union, works council or other employee
representative body); (C) take any affirmative action to amend or waive any
performance or vesting criteria or accelerate vesting, exercisability or
settlement under any Benefit Plan; (D) transfer the sponsorship of any Benefit
Plan to or from any Citigroup Contributed Subsidiary or Morgan Stanley
Contributed Subsidiary, as the case may be; or (E) in the case of any Citigroup
Key Contributed Business Individual or Morgan Stanley Key Contributed Business
Individual, as the case may be, or any

        

        
          
            
            

          

          
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        individual who is intended to be a Citigroup Key Contributed
Business Individual or Morgan Stanley Key Contributed Business Individual, in
each case who is described in subclause (1) of the definition of Citigroup
Contributed Business Individual and Morgan Stanley Contributed Business
Individual in clause (v) above, enter into any Employment Agreement that
provides for a multi-year compensation guarantee;

        

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

        

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

        

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

        

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

        

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

         

        
          
            
            

          

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

        

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

        

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

        

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

        

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

        

        Section
4.2      Access to
Information.

        

        (a)
Between the date hereof and the Closing, each Party (the “Delivering Party”) shall, and
shall cause its Subsidiaries to, give the other Party (the “Requesting
Party”) and its
representatives reasonable access during normal business hours to the
properties, books and records of the Delivering Party’s Contributed Business and
furnish them with such information and documents in its possession relating to
such Contributed Business as the Requesting Party may from time to time
reasonably request in connection with the consummation of the transactions
contemplated hereby and the performance of the Requesting Party’s obligations
hereunder; provided that the
Requesting Party shall not unreasonably interfere with the conduct of business
of the Delivering Party or any of its Subsidiaries; provided, further, that the
furnishing of such documents or information shall not violate
confidentiality obligations to
a client or other third party or jeopardize the attorney-client privilege of the
Delivering Party or any of its Subsidiaries (in which case the Parties will use
their reasonable best efforts to institute appropriate substitute disclosure
arrangements, to the extent practical in the circumstances); provided, further, that no
Party shall be required to disclose information that is, in its reasonable
judgment, competitively sensitive; and provided, further, that neither
Party shall be required to disclose information in violation of applicable Law,
including information as to Contributed Business Individuals in violation of the
Health Insurance Portability and Accountability Act. All such requests for
access to properties, books and records shall be made to such representatives of
Citigroup or Morgan Stanley, as appropriate, as are designated in writing by
such party from time to time (the “Designated
Representatives”), which Designated

        

        
          
            
            

          

          
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        Representatives shall be solely responsible for coordinating all
such requests and all access permitted hereunder.

        

        (b) All
such information and other documents obtained or provided pursuant to this
Section 4.2 shall be subject to the Confidentiality Agreement.

        

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

        

        Section
4.3      Consents; Conditions;
Further Assurances.

        

        (a)
Between the date hereof and the Closing, each of the Parties hereby agrees to
use its reasonable best efforts to do or cause to be done all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement, and to cooperate with the other
in connection with the foregoing, including using their reasonable best efforts
(i) to obtain, and to cause the Parties’ respective Subsidiaries and other
controlled Affiliates to use their respective reasonable best efforts to obtain,
any and all Governmental Approvals and Third Party Approvals required in
connection with the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents (including, but not limited to,
any and all Governmental Approvals and Third Party Approvals to separate the
Excluded Businesses), (ii) to comply, and cause their respective Subsidiaries
and other controlled Affiliates to use their respective reasonable best efforts
to comply, with all conditions and covenants applicable or related to them as
contemplated by this Agreement and the other Transaction Documents, (iii) to
defend against any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby or by the other Transaction Documents and (iv)
to do, and cause their respective Subsidiaries and other controlled Affiliates
to use their respective reasonable best efforts to do, all such other acts as
are necessary or advisable in order to cause the consummation of the
transactions contemplated hereby and by the other Transaction Documents.
Notwithstanding the foregoing, in the case of any Third Party Approval, in no
event shall Citigroup or Morgan Stanley be obligated to pay any money to any
Person or to offer or grant other financial or other accommodations to any
Person in connection with its obligations under this Section 4.3(a) (it being
agreed that any such payments shall be borne by the Company).

        

        (b)
Without limiting the foregoing, between the date hereof and the Closing, each
Party shall file, or cause to be filed, as promptly as practicable, in each case
in form and

        

        
          
            
            

          

          
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        content in compliance with applicable Laws, each registration,
report, statement, notice, form or other filing requested or required to be
filed by any such Party or its Subsidiaries with the applicable Governmental
Authority under the HSR Act, the Exchange Act, the Securities Act, the Advisers
Act or any other similar Law in connection with the transactions contemplated by
the Transaction Documents.

        

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

        

        (d) At all
times prior to the Closing Date, each Party shall promptly notify the other
Party in writing of any fact, condition, event or occurrence that would
reasonably be expected to result in the failure of any of the conditions
contained in Section 5.2, in the case of Citigroup, and Section 5.1, in the case
of Morgan Stanley, promptly upon becoming aware of the same; provided, however, that no
Party may elect not to proceed to the Closing based solely on any failure to so
notify.

        

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

        

        
          
            
            

          

          
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        and without altering in any material respect the rights or
obligations of the Parties under this Agreement or any other Transaction
Document.

        

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

        

        (g) Prior
to and after the Closing, each Party, at the request of the other, shall use its
reasonable best efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate or assign all obligations
under agreements, leases, licenses and other obligations or liabilities of any
nature whatsoever that constitute Excluded

        

        
          
            
            

          

          
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        Liabilities, or to obtain in writing the unconditional release of
all parties to such arrangements so that, in any such case, the Company Entities
will have no liability or responsibility for such obligations or liabilities;
provided, however, that no
Party shall be obligated to pay any consideration therefor to any third party
(who is not a Subsidiary or Affiliate of such Party) from whom such consents,
approvals, substitutions and amendments are requested. If the applicable Party
is unable to obtain, or to cause to be obtained, any such required consent,
approval, release, substitution or amendment, it shall continue to pay, perform
and discharge fully all such obligations or other liabilities and shall
indemnify the Company Entities, the other Party and the Indemnitees in
accordance with the terms of this Agreement.

        

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

        

        Section 4.4  Sufficiency of
Assets.

        

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

        

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

        

        (c) Prior
to the Closing, Citigroup and Morgan Stanley agree that they will not and will
not permit any of their Affiliates, directly or indirectly, to (i) solicit or
hire any of the financial advisors of the Citigroup Contributed Business or the
Morgan Stanley Contributed Business or (ii) conduct a solicitation program that
is specifically focused on customers or clients of the Citigroup Contributed
Business or the Morgan Stanley Contributed Business, respectively, in their
capacities as such (it being understood that (x) each Party may continue to have
contacts with such customers and clients in the ordinary course of its
respective business, consistent with

        

        
          
            
            

          

          
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        past practice, and (y) nothing shall prohibit the general
solicitation of qualifying Citigroup employees for purposes of becoming private
banking or retail bank customers of Citigroup).

        

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

        

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

        

        Section    4.5 Tax
Matters.

        

        (a)        
  Tax
Indemnification.

        

        (i) Morgan
Stanley shall be responsible for and shall indemnify the other Party, the other
Party’s Affiliates and the Company Entities and their respective Affiliates and
hold them harmless from, without duplication, all liability for (A) Morgan
Stanley Excluded Taxes (except to the extent expressly included and provided for
in the calculation of Morgan Stanley Tangible Book Value reflected in the Final
Closing Balance Sheet of the Morgan Stanley Contributed Business (excluding any
liability or reserve for deferred Taxes established to reflect timing
differences between book and Tax income)); (B) Taxes arising from or in
connection with any breach by Morgan Stanley or any of its Subsidiaries of any
representation contained in Section 3.2(j) or any covenant contained in Section
2.2(a) – (c) and (e), 2.4, 2.5, 4.1(b), 4.5, 4.8 or 4.10(d) of this Agreement;
(C) the Tax Equivalent Amount with respect to any Excess Flow- Through Income
required to be included in gross income by Citigroup or any of its Affiliates
with respect to any Morgan Stanley Contributed Subsidiary; (D) any Taxes imposed
on any Company Entity that are attributable to a failure by such entity to
comply with any federal, state, local or foreign Tax reporting or withholding
requirement during the 9-month period beginning on the Closing Date, if such
failure is due to the use by such entity of any procedure
established

        

        
          
            
            

          

          
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        by Morgan Stanley or any of its Affiliates and in place as of the
Closing Date for the solicitation, collection and maintenance of any forms,
certifications and other information or otherwise is due to any form,
certification or other required information in place as of the Closing Date (or
the absence of any such form, certification or information as of the Closing
Date), except to the extent that such failure is due to a change in Law
following the Closing or to the extent such failure is attributable to a breach
by the Company of the covenant contained in Section 4.5(k); and (E) all costs
and expenses (including but not limited to legal fees and expenses) attributable
to any item in clauses (A) through (D).

        

        (ii)
Citigroup shall be responsible for and shall indemnify the other Party, the
other Party’s Affiliates and the Company Entities and their respective
Affiliates and hold them harmless from, without duplication, all liability for
(A) Citigroup Excluded Taxes (except to the extent expressly included and
provided for in the calculation of Citigroup Tangible Book Value reflected in
the Final Closing Balance Sheet of the Citigroup Contributed Business (excluding
any liability or reserve for deferred Taxes established to reflect timing
differences between book and Tax income)); (B) Taxes arising from or in
connection with any breach by Citigroup or any of its Subsidiaries of any
representation contained in Section 3.1(j) or any covenant contained in Section
2.2(a) – (c) and (e), 2.4, 2.5, 4.1(b), 4.5, 4.8 or 4.10(d) of this Agreement;
(C) the Tax Equivalent Amount with respect to any Excess Flow-Through Income
required to be included in gross income by Morgan Stanley or any of its
Affiliates with respect to any Citigroup Contributed Subsidiary; (D) any Taxes
imposed on any Company Entity that are attributable to a failure by such entity
to comply with any federal, state, local or foreign Tax reporting or withholding
requirement during the 9-month period beginning on the Closing Date, if such
failure is due to the use by such entity of any procedure established by
Citigroup or any of its Affiliates and in place as of the Closing Date for the
solicitation, collection and maintenance of any forms, certifications and other
information or otherwise is due to any form, certification or other required
information in place as of the Closing Date (or the absence of any such form,
certification or information as of the Closing Date), except to the extent that
such failure is due to a change in Law following the Closing or to the extent
such failure is attributable to a breach by the Company of the covenant
contained in Section 4.5(k); and (E) all costs and expenses (including but not
limited to legal fees and expenses) attributable to any item in clauses (A)
through (D).

        

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

        

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

        

        (v) In the
case of any Applicable Taxes with respect to a Straddle Period, (A) real,
personal and intangible property Taxes (“Property Taxes”) of
or with respect to

        

        
          
            
            

          

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

        

        

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

        

        (b)           Tax
Contests.

        

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

        

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

        

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

        

        (iv) If
the resolution of any Tax Contest with respect to a Pre-Closing Tax Period or a
Straddle Period would reasonably be expected to result in a material increase in
the amount of Taxes required to be borne by the Party not in control of such Tax
Contest (the “Non-Controlling Tax
Party”) or would reasonably be expected to result in the Non-Controlling
Tax Party having an obligation to make an indemnity payment pursuant to Section
4.5(a), (A) the Party in control of such Tax Contest (the “Controlling Tax
Party”) shall keep the Non-

        

        
          
            
            

          

          
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        Controlling Tax Party informed of any proceedings, events and
developments relating to or in connection with such Tax Contest; (B) the
Non-Controlling Tax Party shall be entitled to receive copies of all material
correspondence and documents relating to such Tax Contest; and (C) if requested,
the Controlling Tax Party shall consult with the Non-Controlling Tax Party or
its counsel and shall not enter into any settlement or compromise with respect
to any such Tax Contest that could result in an adverse effect on the
Non-Controlling Tax Party that is material without the Non-Controlling Tax
Party’s prior written consent, which consent shall not be unreasonably
withheld.

        

        (c)           Preparation
and Filing of Tax Returns.

        

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

        

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

        

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

        

        (d) Cooperation. Each of
Morgan Stanley, Citigroup, and the Company shall reasonably cooperate, and shall
cause their respective Affiliates, officers, employees, agents, auditors and
representatives to reasonably cooperate, with respect to Tax matters. Morgan
Stanley, Citigroup and the Company agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information and
assistance relating to the Contributed

        

        
          
            
            

          

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

        

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

        

        (f) Characterization of Certain
Transactions. Except to the extent otherwise required pursuant to a
“determination” within the meaning of Section 1313(a) of the Code (or any
comparable provision of state, local or foreign Law), the Parties agree to
treat, for federal income tax purposes, (i) the transactions described in
Section 2.4(b) and 2.4(c) hereof as contributions described in Section 721(a) of
the Code, and (ii) the transaction described in Section 2.4(d) hereof as a
purchase by Morgan Stanley and a sale by Citigroup of a partnership interest in
the Company.

        

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

        

        (h) Transfer Taxes. Any
excise, sales, use, transfer, real property transfer, documentary, stamp or
similar Taxes (“Transfer Taxes”)
resulting from the transfer of the Contributed Assets to the Company and the
transaction described in Section 2.4(d) shall be borne equally by Morgan
Stanley, on the one hand, and Citigroup, on the other. Except as otherwise
provided in the Transaction Documents (other than this Agreement) with respect
to the transactions contemplated thereby, all other Transfer Taxes arising from
the transactions

        

        
          
            
            

          

          
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        contemplated in this Agreement shall be the responsibility of the
Party that incurs such Tax. The Parties shall reasonably cooperate to minimize
the aggregate amount of Transfer Taxes.

        

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

        

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

        

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

        

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

        

        Section
4.7 Transaction
Documents. Each Party shall negotiate in good faith and agree upon the
full terms and conditions of the Transaction Documents in accordance
with

        

        
          
            
            

          

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

        

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

        

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

        

        Section
4.10    Termination of
Agreements.

        

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

        

        (b) Except
as set forth in Section 4.10(c), and subject to applicable Law, at the Closing,
Morgan Stanley shall, and shall cause each of its Subsidiaries that is not a
Morgan

        

        
          
            
            

          

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

        

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

        

        (d)
Immediately prior to the Closing, all intercompany receivables and payables
(other than such receivables or payables related to the supply of services or
products or other commercial contracts in the ordinary course), and all
intercompany loans then existing, in each case between (i) Citigroup and any of
its Subsidiaries, on the one hand, and the Citigroup Contributed Business, on
the other hand, or (ii) Morgan Stanley and any of its Subsidiaries, on the one
hand, and the Morgan Stanley Contributed Business, on the other hand, shall be
settled and repaid in full in cash.

        

        ARTICLE
5

        

        CONDITIONS
TO CLOSING

        

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

        

        (a) Representations and
Warranties. The representations and warranties of Morgan Stanley set
forth in this Agreement shall be true and correct (without giving effect to any
limitation as to “materiality” or “Material Adverse Effect” or similar
qualification set forth therein) as of the date of this Agreement and as of the
Closing Date as though made on and as of such date (except to the extent that
any such representation or warranty expressly speaks as of an earlier date, in
which case such representation or warranty shall be true and correct as of such
earlier date); provided, however,
that

        

        
          
            
            

          

          
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        notwithstanding anything to the contrary contained herein, the
condition set forth in this Section 5.1(a) shall be deemed to have been
satisfied even if any representations or warranties of Morgan Stanley (other
than those contained in Section 3.2(c), which must be true and correct in all
material respects, or in the first sentence of Section 3.2(f)(iv), which must be
true and correct in all respects) are not so true and correct unless the failure
of such representations and warranties of Morgan Stanley to be so true and
correct, individually or in the aggregate, has had or is reasonably likely to
have a Material Adverse Effect on the Morgan Stanley Contributed Business.
Citigroup shall have received a certificate signed by an executive officer of
Morgan Stanley to the effect that the conditions set forth in this Section
5.1(a) have been satisfied.

        

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

        

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

        

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

        

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

        

        (a) Representations and
Warranties. The representations and warranties of Citigroup set forth in
this Agreement shall be true and correct (without giving effect to any
limitation as to “materiality” or “Material Adverse Effect” or similar
qualification set forth therein) as of the date of this Agreement and as of the
Closing Date as though made on and as of such date (except to the extent that
any such representation or warranty expressly speaks as of an earlier date, in
which case such representation or warranty shall be true and correct as of such
earlier date); provided, however, that
notwithstanding anything to the contrary contained herein, the condition set
forth in this Section 5.2(a)

        

        
          
            
            

          

          
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        shall be deemed to have been satisfied even if any representations
or warranties of Citigroup (other than those contained in Section 3.1(c), which
must be true and correct in all material respects, or in the first sentence of
Section 3.1(f)(iv), which must be true and correct in all respects) are not so
true and correct unless the failure of such representations and warranties of
Citigroup to be so true and correct, individually or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect on the Citigroup
Contributed Business. Morgan Stanley shall have received a certificate signed by
an executive officer of Citigroup to the effect that the conditions set forth in
this Section 5.2(a) have been satisfied.

        

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

        

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

        

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

        

        ARTICLE
6

        

        INDEMNIFICATION

        

        Section
6.1      Survival of Representations
and Warranties.

        

        (a) The
representations and warranties contained in Sections 3.1 and 3.2 will survive
the Closing until 18 months following the Closing. No covenants or agreements of
the Parties contained in this Agreement shall survive the Closing Date, except
as expressly set forth in this Agreement and except that covenants which
contemplate or may involve actions to be taken or obligations in effect after
the Closing shall survive in accordance with their terms.

        

        
          
            
            

          

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

        

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

        

        Section
6.2      Indemnification.

        

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

        

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

        

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

        

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

        

        

        
          
            
            

          

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

        

        (c) Citigroup
shall indemnify, defend and hold harmless the Company and its Subsidiaries from
and against any Losses attributable to any write-down or write-off effected in
accordance with GAAP with respect to any loans included in the Citigroup
Contributed Assets that are secured by auction rate securities, net of
associated reserves.

        

        Section
6.3      Limitations on
Amounts.

        

        (a)  An Indemnitor
shall have no liability under Section 6.2(a)(i):

        

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

        

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

        

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

        

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

        

        Section
6.4      Other Indemnification
Provisions.

        

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

        

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

        

        
          
            
            

          

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

        

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

        

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

        

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

        

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

        

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

        

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

        

        
          
            
            

          

          
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        such Loss; provided that any
amounts recovered from Citigroup with respect to such Loss shall be paid to the
Company.

        

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

        

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

        

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

        

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

        

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

        

        
          
            
            

          

          
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        development and implementation of legal strategy for such Non-Party
Claim, subject to Section 6.6(c).

        

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

        

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

        

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

        

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

        

        (g) Pre-Closing
Litigation. Without limiting any other provision in this Agreement and
subject to Section 6.7 in the case of Ordinary Course Customer Claims, the
Parties agree that (i) each Party shall remain responsible for, and control, all
litigation with respect to its Contributed Business pending or threatened in
writing prior to the Closing, including, without limitation, any Claims pending
or threatened in writing by each Party as plaintiff relating to its Contributed
Business (the “Pre-Closing
Litigation”) (which Claims such Party shall continue to prosecute and
shall use good faith efforts to

        

        
          
            
            

          

          
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        obtain a favorable judgment or settlement), and (ii) no Pre-Closing
Litigation shall be contributed to, or be the responsibility of, the Company
Entities, which shall be treated as Indemnitees for purposes of Article 6 with
respect to all such litigation (it being understood that any settlement of any
Claim being pursued as plaintiff will not be settled without the consent of the
Company (which consent will not be unreasonably withheld or delayed) if such
settlement would impair the value of any Contributed Asset in any respect and
any proceeds of any such settlement with respect to any Contributed Asset shall
be paid over to the Company).

        

        Section
6.7      Ordinary Course Customer
Claims.

        

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

        

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

        

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

        

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

        

        (e) Disputes. In the
event of a bona fide dispute by the Parties as to whether a Claim is an
Ordinary Course Customer Claim, the Claim shall not be treated as
an

        

        
          
            
            

          

          
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        Ordinary Course Customer Claim, unless the Company has already
commenced the defense thereof and the Company or any Indemnitee would be
adversely impacted thereby.

        

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

        

        ARTICLE
7 

         

        FURTHER
AGREEMENTS

         

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

        

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

        

        
          
            
            

          

          
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        ARTICLE 8 

         

        TERM
AND TERMINATION

        

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

         

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

           

        

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

        

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

        

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

        

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

        

        (f) by
Citigroup, if (A) within six months of the date hereof either a Change of
Control of Morgan Stanley shall have occurred or a definitive agreement, letter
of

        

        
          
            
            

          

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

        

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

        

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

        

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

        

        ARTICLE
9

        

        MISCELLANEOUS

        

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

        

        Section
9.2 Publicity.
No press release or other public disclosure with respect to this Agreement or
the transactions contemplated hereby may be issued by any Party or its
Affiliates without the other Party’s consent, which consent shall not be
unreasonably withheld, conditioned or delayed by such other Party; provided, however, that if any
Party is required by Law, including the rules of any stock exchange on which
such Party’s securities are listed, to issue a press release or other public
disclosure with respect to this Agreement or the transactions contemplated
hereby, such Party shall consult with the other Party as to the content of such
press

        

        
          
            
            

          

          
            -68-

            
              

            

          

          
            
            

          

        

         

        release or other public disclosure before it is issued to the extent
practicable in the circumstances; and provided, further, that nothing
in this provision shall affect the Company’s right to issue press releases with
respect to its operations following the Closing Date.

        

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

        

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

        

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

        

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

        

        Section
9.7 Non-Assignability;
Binding Effect. This Agreement shall not be assignable, in part or in
whole, by either Party without the prior written consent of the other Party. A
purported assignment of this Agreement or any of the rights, interests or
obligations hereunder not in compliance with the provisions of the Agreement
shall be null and void ab initio. Subject to the foregoing, this Agreement shall
inure to the benefit of and be binding upon the Parties and their respective
successors and permitted assigns.

        

        Section
9.8 Severability. Every
provision of this Agreement is intended to be severable. If any term or
provision hereof is declared or held illegal or invalid, in whole or in part,
for any reason whatsoever, such illegality or invalidity shall not affect the
validity or enforceability of the remainder of the Agreement, and such provision
shall be deemed amended or modified to the extent, but only to the extent,
necessary to cure such illegality or invalidity.

        

        
          
            
            

          

          
            -69-

            
              

            

          

          
            
            

          

        

         

        Upon such determination of illegality or invalidity, the Parties
shall negotiate in good faith to amend this Agreement to effect the original
intent of the Parties. In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of this Agreement, including that provision, in any other
competent jurisdiction.

        

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

        

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

        

        Section
9.11 Submission to
Jurisdiction. Each Party irrevocably submits to the exclusive
jurisdiction of (i) the state courts of the State of Delaware and (ii) the
United States District Court for the District of Delaware for the purposes of
any suit, action or other proceeding arising out of or relating to this
Agreement, any other Transaction Document or any transaction contemplated hereby
or thereby. Each Party agrees to commence any action, suit or proceeding
relating hereto only in either such court. Each Party irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (A) the state court of the State of Delaware, or (B) the United States
District Court for the District of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum. Each Party further irrevocably consents to the service
of process out of any of the aforementioned courts in any such suit, action or
other proceeding by the mailing of copies thereof by mail to such Party at its
address set forth in this Agreement, such service of process to be effective
upon acknowledgment of receipt of such registered mail; provided that nothing
in this Section 9.11 shall affect the right of any Party to serve legal process
in any other manner permitted by Law. The consent to jurisdiction set forth in
this Section 9.11 shall not constitute a general consent to service of process
in the State of Delaware and shall have no effect for any purpose except as
provided in this Section 9.11. The Parties agree that a final judgment in any
such suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
Law.

        

        Section
9.12    WAIVER OF JURY
TRIAL.  EACH OF THE PARTIES HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW

        

        
          
            
            

          

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

        

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

        

        If to
Citigroup:

        

        Citigroup
Inc.

        399 Park
Avenue

        New York,
New York  10022

        Attention:  Deputy
General Counsel

        Facsimile:  
(212) 559-7050

        Telephone: (212)
559-7057

        

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

        

        Davis Polk
& Wardwell

        450
Lexington Avenue

        New York,
New York  10017

        Attention:  George
R. Bason, Jr.

          
John A. Bick

        Facsimile:  
(212) 450-3800

        Telephone:
(212) 450-4000

        

        If to
Morgan Stanley:

        

        Morgan
Stanley

        1585
Broadway

        New York,
New York  10036

        Attention:
General Counsel

        Facsimile:  
(212) 761-0331

        Telephone: (212)
761-4000

         

        
          
            
            

          

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

        

        Wachtell,
Lipton, Rosen & Katz

        51 West
52nd
Street

        New York,
New York  10019

        Attention:  Edward
D. Herlihy

          
Steven A. Rosenblum

        Facsimile:  
(212) 403-2000

        Telephone: (212)
403-1000

        

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

        

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

        

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

        

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

        

        [THE NEXT
PAGE IS THE SIGNATURE PAGE]

        

        

        

        
          
            
            

          

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

         

        
          
            	 	CITIGROUP
      INC.	 
	 	 	 	 	 
	 	By:	

                     /s/ Jane
      Fraser

                  	 
	 	 	Name: 	 Jane
      Fraser	 
	 	 	Title:  	 
      Head of Strategy and M&A 	 
	 	 	 	 	 

          

        

         

        
           

          
            
              	 	MORGAN
      STANLEY	 
	 	 	 	 	 
	 	By:	 /s/ James
      P. Gorman	 
	 	 	Name: 	James
      P. Gorman	 
	 	 	Title:  	Co-Presidentexv10w1

Exhibit 10.1

RAYMOND PLANK

RESTATED EMPLOYMENT AND CONSULTING AGREEMENT

     This Agreement made this 15th day of January, 2009, by and between Apache Corporation, a
Delaware corporation, (hereinafter called the “Company”) and Raymond Plank (hereinafter called the
“Executive”).

WITNESSETH:

     WHEREAS, the Executive is the founder of the Company and is presently Chairman of the Board of
Directors of the Company and has served the Company continuously for more than 54 years since its
formation as its president, principal executive officer and/or chairman; and

     WHEREAS, the Executive has made extraordinary contributions to the growth and development of
the Company over the past 54 years, during which he has guided the Company from its founding as a
small domestic U.S. company with initial capital of $250,000 to an international oil and gas
company with an enterprise value at year-end 2008 of approximately $27 billion and significant
assets and operations on five continents; and

     WHEREAS, the Company and the Executive entered into an employment agreement dated December 5,
1990, as heretofore amended, which provides for, among other things, certain payments to the
Executive and the Executive’s continued engagement as a consultant and advisor to the Company for
the remainder of his life following the termination of his service as an officer and employee; and

     WHEREAS, as set forth in this Agreement, on the date hereof, the Executive will retire as an
officer and employee of the Company and as a director of the Company; and

     WHEREAS, the parties desire to provide for certain payments to the Executive and for the
release by the Executive of all claims he may have against the Company except for the payments to
be made as provided in this Agreement; and

     WHEREAS, the parties desire to amend and restate the terms and conditions of the existing
agreement referenced above to provide for the foregoing; and

     WHEREAS, the Management Development and Compensation Committee of the Board of Directors and
the Board of Directors (in a meeting without the participation of Mr. Plank and Steven Farris, the
Company’s Chief Executive Officer) have determined that the execution and delivery of this
Agreement and its terms and provisions are in the best interests of the Company;

     NOW THEREFORE, it is mutually agreed by and between the parties hereto as follows:

     1. Retirement and Resignation. Effective on the date hereof, the Executive’s
employment shall terminate, and the Executive shall cease to be an officer and employee of the
Company and its subsidiaries and affiliates. In addition, the Executive hereby resigns from his
positions as a director of the Company and its subsidiaries and affiliates.

 

 

     2. Advisory Term and Duties. The Company agrees to, and does hereby, engage and retain
the Executive, for the period commencing with the date hereof and continuing for the remainder of
his life (hereinafter called the “Advisory Term”), as an advisor and consultant to the Company to
provide such services of an advisory or consultative nature as may reasonably be requested by its
Chief Executive Officer or Board of Directors. The Executive hereby agrees to provide such
services.

     3. Compensation — Advisory Term Services. In lieu of paying the Executive annual
compensation during the Advisory Term at an annual rate equal to 50% of the annual rate of
compensation being paid to him as an officer immediately preceding the commencement of the Advisory
Term as provided in the existing agreement, the Company shall pay to the Executive, and the
Executive shall accept from the Company in full payment for his services during the entire Advisory
Term, compensation in the aggregate amount of $13,576,323, which shall be paid as a single lump-sum
payment immediately upon execution and delivery of this Agreement.

     4. Expenses — Advisory Term. During the Advisory Term, the Company will reimburse the
Executive for any and all reasonable and proper expenses of any kind incident to the rendition of
the advisory and consultative services requested and rendered hereunder. From the date hereof and
continuing through December 31, 2010, in support of the advisory and consultative services the
Executive is to provide during such period, the Company will provide the Executive with necessary
and reasonable office space (which office space may be located at a location separate from but
reasonably near to the Company’s Houston headquarters), secretarial support, continued use of an
apartment in Houston, and access to a Company car and driver in Houston, in each case at the
Company’s expense and the same as or similar to what the Company provides to the Executive at the
date of this Agreement. In addition, during 2009 and 2010, the Company will provide to the
Executive up to 60 hours in each such year of usage of Company aircraft.

     5. Services. The Executive shall perform his duties faithfully, diligently, and to
the best of his ability during the Advisory Term.

     6. Founder’s Achievement and Performance Award. Immediately upon execution and
delivery of this Agreement, the Company will pay a founder’s achievement and performance award of
$5,400,000 to the Executive in recognition of his extraordinary contributions to the growth and
development of the Company over the past 54 years, during which he has guided the Company from its
founding as a small domestic U.S. company with initial capital of $250,000 to an international oil
and gas company with an enterprise value at year-end 2008 of more than $27 billion and significant
assets and operations on five continents.

     7. Restricted Stock Units and Stock Options. Immediately upon execution and delivery
of this Agreement, the Company will pay $6,285,819 to the Executive in respect of the Restricted
Stock Units and Stock Options of the Company held by him and listed on Schedule A hereto, and all
such Restricted Stock Units and Stock Options shall immediately thereupon be cancelled and the
Executive shall have no further rights thereunder.

2

 

     8. Performance Bonus for 2008. In February 2009, the Company will pay the Executive a
performance bonus in respect of 2008, in an amount to be determined by the
Management Development and Compensation Committee and the Board of Directors under the
Company’s cash incentive bonus plan for senior officers in accordance with their customary
practices and procedures.

     9. Restrictive Covenant. The Executive agrees that so long as this Agreement is in
full force and effect, he will not, directly or indirectly, either as principal, agent,
stockholder, or in any other capacity, engage in or have a financial interest in, any business
which is competitive to the business of the Company and its subsidiaries, except that nothing
contained herein shall preclude the Executive from (i) purchasing or owning stock in any such
business, provided that his holdings do not exceed one percent of the issued and outstanding
capital stock and/or (ii) passively investing, directly or indirectly, in individual productive,
exploratory or development wells in an amount not exceeding $2 million per transaction or $20
million in the aggregate under this clause (ii). For the purposes hereof, a business will be
deemed competitive if it involves the business of oil or natural gas exploration, development or
production or the production, manufacture or distribution of any product similar to those produced,
manufactured or distributed by the Company or any of its subsidiaries, or the rendering of any
services similar to those offered or rendered by the Company or any of its subsidiaries. The
Executive expressly agrees that upon a breach or violation of the foregoing provisions of this
Section 9, the Company, in addition to all other remedies, shall be entitled, as a matter of right,
to injunctive relief in any court of competent jurisdiction.

     10. Secret Processes. The Executive will not divulge, furnish or make accessible to
anyone (otherwise than in the regular course of the business of the Company or any of its
subsidiaries) any knowledge or information with respect to confidential or secret processes,
formulas, machinery, plans, devices or material of the Company or any of its subsidiaries, with
respect to any confidential or secret engineering, development or research work of the Company or
any of its subsidiaries, or with respect to any other confidential or secret aspect of the business
of the Company or any of its subsidiaries. The Executive expressly agrees that upon a breach or
violation of the foregoing provisions of this Section 10, the Company, in addition to all other
remedies, shall be entitled, as a matter of right, to injunctive relief in any court of competent
jurisdiction.

     11. Death. In the event of the death of the Executive, the Company shall pay to his
designee, if any, or to his estate, the amount of $750,000 in equal monthly installments over 10
years ($6,250 per month), commencing the first day of the first month following the death of the
Executive. The Executive may designate the recipient of these payments by delivering to the
Company, his written designation prior to his death. Such designation may be changed by the
Executive at any time prior to his death by executing and delivering to the Company a subsequent
written designation of recipient. If the Executive has made no designation, then such amount shall
be paid to the Executive’s estate in a lump sum. If the Executive’s designee survives him, but dies
before the entire balance of monthly payments have been made, then the balance shall be paid to
such designee’s estate in a lump sum.

     12. Benefits. During the Advisory Term, the Company shall provide health, dental and
vision insurance for the Executive and his spouse and eligible dependents to the same extent, and
offering the same benefits, as the Company provides its executives, except that the insurance shall
be supplemental and secondary to the benefits, if any, available to the Executive or his
spouse under Medicare, Medicaid, or any other form of public insurance or benefit plan
available to the Executive without payment of premiums.

3

 

     13. Waiver and Release. The Executive acknowledges that, except for the payments to
be made as provided in this Agreement, he has been paid in full all amounts to which he is entitled
or may make claim as a result of his employment by the Company, including all salary and
incentives.

     In further consideration of the foregoing, except as provided in the last paragraph of this
Section 13, and the obligations undertaken by the Company pursuant to this Agreement, the Executive
hereby releases and forever discharges the Company and each of its subsidiaries and assigns, and
each of their respective employees, agents, directors and representatives, from (and hereby
covenants not to sue or make claim against any of such entities or persons in respect of) any and
all claims, demands, obligations, causes of action, debts, expenses, damages, judgments, orders and
liabilities of whatever kind or nature, in law, equity or otherwise, whether now known or unknown,
suspected or unsuspected, matured or unmatured and whether or not concealed or hidden, which the
Executive now owns or holds or has at any time heretofore owned or held or had, or at any time own
or hold or have, against the Company, or any of its subsidiaries or assigns, or any of their
respective employees, agents, directors or representatives, and also releases and discharges,
without limiting the generality of the foregoing, any and all of the foregoing which arise out of
or are in any way relating to his employment by, and/or service as a director of, the Company, or
the termination of his employment, including any claims arising from any alleged violation by the
Company of any federal, state or local statutes, ordinances or common laws.

     The release set forth in this Section 13 is intended as a release of all claims against the
Company, whether now known or unknown by the Executive. In furtherance thereof, the Executive
expressly waives any right or claim of right to assert hereafter that any claim, demand, obligation
and/or cause of action has, through ignorance, oversight, error or otherwise, been omitted from the
terms of this Agreement. The Executive makes this waiver with full knowledge of his rights, after
consulting with legal counsel, and with specific intent to release both known and unknown claims.

     Notwithstanding the foregoing, nothing in the release set forth in this Section 13 nor
anything else in this Agreement shall be deemed a waiver or release by the Executive of any right
that the Executive now has to claim indemnification for liabilities or claims asserted after the
date hereof in connection with his activities as a director, officer or employee of the Company
pursuant to any applicable statute, under any insurance policy, or pursuant to the Restated
Certificate of Incorporation or Bylaws of the Company, including without limitation any liabilities
or claims asserted after the date hereof that relate to actions, omissions or events on or prior to
the date hereof.

     14. Successors, etc. of the Company. This Agreement shall inure to the benefit of and
be binding upon (i) the Company, its successors, and assigns, including without limitation any
person, partnership or corporation which may acquire all or substantially all of the Company’s
assets and business, or with or into which the Company may be consolidated or merged, and this
provision shall apply in the event of any subsequent merger, consolidation or transfer, and
(ii) the Executive, his heirs, assigns, executors and personal representatives.

4

 

     15. Entire Agreement. The parties hereto agree that this Agreement contains the entire
understanding and agreement between the parties and cannot be amended, modified or supplemented in
any respect, except by a subsequent written agreement entered into by both parties hereto.

     16. Replacement. This Agreement replaces and supersedes the Restated Employment
Agreement dated December 5, 1990, as heretofore amended, between the Company and the Executive
regarding employment and all other agreements between the parties regarding employment or
compensation.

     17. Notices. All notices hereunder shall be deemed effective when delivered in person
or 24 hours after deposit thereof in the mails, by registered mail, addressed or delivered to, in
the case of:

			
	          Company:	 	Apache Corporation

One Post Oak Central

2000 Post Oak Boulevard, Suite 100

Houston, Texas 77056-4400

Attn: Vice President — Human Resources

			
	          Executive:	 	Raymond Plank

Apache Corporation

One Post Oak Central

2000 Post Oak Boulevard, Suite 100

Houston, Texas 77056-4400

Attn: Deborah Isaacks

     18. Applicable Law. This Agreement, and all amendments hereto, shall be governed in
all respects by the laws of the state of Texas, without regard to the conflict of law provisions
thereof.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officers and the Executive has hereunto set his hand, all as of the day and year first
above written.

	 	 	 	 	 	 	 	 	 
	RAYMOND PLANK	 	 	 	APACHE CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	     /s/ Raymond Plank
 

	 	 	 	By:
	 	     /s/ G. Steven Farris
 

Name: G. Steven Farris
	 	  
	 

	 	 	 	 	 	Title: President, Chief Executive Officer

   
     
and Chief Operating Officer	 	 

5

 

Schedule A

	 	 	 	 	 	 	 	 	 
	 	 	Grant	 	Quantity
	Grant	 	Date	 	Unvested
	SAP Conditional Grants
	 	 	 	 	 	 	 	 
	SAP81
	 	 	5/5/2005	 	 	 	7,405	 
	SAP108
	 	 	5/5/2005	 	 	 	16,665	 
	SAP162
	 	 	5/7/2008	 	 	 	9,260	 
	SAP216
	 	 	5/7/2008	 	 	 	13,890	 
	 
	 	 	 	 	 	 	 	 
	Restricted Stock Units
(RSUs) Grants
	 	 	 	 	 	 	 	 
	Exec Restricted
	 	 	5/4/2005	 	 	 	5,375	 
	Exec Restricted
	 	 	5/3/2006	 	 	 	9,400	 
	Exec Restricted
	 	 	5/1/2007	 	 	 	15,525	 
	2007RSU
	 	 	5/7/2008	 	 	 	12,500	 
	 
	 	 	 	 	 	 	 	 
	Non-Qualified Stock
Option Grants
	 	 	 	 	 	 	 	 
	2005 SOP
	 	 	5/5/2005	 	 	 	15,875	 
	2005 SOP
	 	 	5/3/2006	 	 	 	28,150

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